"KEEPING IT REAL ESTATE" by The Network Agency

Sept. 25, 2020

Avoid common misguided decisions as a first time home buyer

Overwhelmed is usually the right word attached to first time home buyers.  It’s a huge undertaking financially, mentally and emotionally for most.  Although it’s cumbersome, it’s also one of the best personal assets one can have.  If you’re ready to make the move but feel flooded with confusion, breath!  We made a list of common mistakes first-time home buyers make.  Be informed and maybe you’ll have smooth sailing in the home-buying process. 
  • Not considering all the costs 
There’s several costs that come from being a home owner.  Your mortgage, property insurance, taxes, electric, water and like most, the internet (and yes, higher speeds come with greater costs).  Before you get serious about home shopping, look deeper into your savings and ensure you’re able to pay for all these additional charges.  
  • Falling in love with a house before a loan falls in love with you 
Get pre-qualified!  Finding your perfect home and wondering if you’re able to afford it is disastrous on all angles.  Knowing your budget, getting pre-qualified then beginning your home search is always easier and more efficient.  When you know it’s the right time to buy a home, get pre-approved to ensure you put your best foot forward. 
  • Not hiring Real Estate professionals.
If you’re a home cook binging on top-chef, you can’t expect to go to any restaurant and run a great restaurant service.
It’s the same for real estate, it’s a very tricky realm of negotiations, paperwork and laws that would spin your head around unless you have professionals by your side.  After all, you’re only as good as your weakest link so ensure that you’re going in with the best team.  Partner with Real Estate professionals before starting your home search. 
  • Don’t be too picky (remember, you can make changes once you move in) 
While it’s great knowing what you want when it comes to buying a home, some first time buyers get stuck on their “must have” lists and if that list is too long and specific, you’ll end up searching for a very, very… very long time.   Figure out what you really need versus what you want and on top of it, know what you can afford. 
  • Have Vision (Past the 70s ceiling fan on that open-house you were in) 
Although first-impressions are important when attending open houses, consider that even homes that do not look move-in ready, may have hidden potential.  Imagine the home not just as how it is, but how it can be once you move in.  It’s an important skill especially if you’re buying a fixer-upper. 
  • This house isn’t just for now, don’t ignore the future. 
If you’re planning on living in the house for a long period of time, think ahead.  If you’re a couple not thinking about children but are open to the idea, consider all the features your chosen home has and plan accordingly.  Questions like whether your home is within a good school district, are there great parks nearby? Is the neighborhood fit for raising a family? Among many other factors are the things you should consider.  Whether you’ve already been looking or just considering buying your first home, digest this list and hopefully you’ll learn from others past mistakes. 
Posted in Buying a Home
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Sept. 19, 2020

Lowering Monthly Payments Via Mortgage Recasting.. what you should know!

Dropping a lump sum towards your mortgage won’t automatically lower your payments
If you’re one of the lucky few that’s got extra cash laying around and you’re thinking of paying down your mortgage early, you should know it’s not a short cut in reducing your payment.  Unless you ask your lender to recast your mortgage, it won’t change your payment.  That extra principal payment will reduce your interest charge over the life of the loan, but don’t count on having extra cash in your pocket every month.  Before forking up a lump sum towards your mortgage, know your options. 
 Mortgage Recasting, What is it?
First, you’ll need to know the term amortization.  It’s the action or process of gradual writing off the initial cost of an asset.  Mortgage recasting is a lender re-amortizing the loan after the home owner provides a sizeable lump sum payment.  For your payment to change, the loan must be re-amortized to show lower principal balance. 
Ask your lender first!
Recasting your mortgage might not be an option.  The lender isn’t required to and some loans aren’t eligible to recast mortgages; the takeaway? always ask first if your lender is willing to do so.  
Consider alternatives for your cash
Current mortgage rates are very low and depending on your existing mortgage, it may make more sense to refinance your loan instead of recasting it.  This may allow you to save on interest payments over the life of the loan and reduce your monthly while using the extra cash for other investments.  Or, consider paying down the principal then refinancing the loan. 
If your interest rate is low, expanding your portfolio by investing the extra cash may be an option. Consider your interest expense relative to your long-term expected returns; if a homebuyer has a 30-year fixed for 2.85% and their long-term assumption for investment returns is 6%, they would’ve used leverage in achieving better financial results.  Let’s face it, it’s hard to enjoy the benefits of paying down your mortgage early until you’re living “debt-free, stress-free”.  
Flexibility is all-important
If you’re one of those good-eggs who’ve saved diligently, or created a windfall by making sound stock moves or maybe you just inherited a large amount of money; homeowners who buy a new house before selling their old one may also consider using the proceeds from the sale to pay down their new mortgage.  Most importantly, remember to discuss recasting your mortgage with your lender first before making any bank withdrawals. 
Consider the flexibility in your financial decisions.  If you decide to use the extra money to pay down your loan, it won’t be readily available for emergencies or other goals especially if you haven’t improved your monthly cash flows without a mortgage recast.  Think of cash as opportunity and you’d want to ensure you’re making the most of it. 

https://www.usatoday.com/story/money/2020/07/30/what-is-mortgage-loan-recasting/112446088/

Posted in Homeowners
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Sept. 18, 2020

Proposition 15 in the Nov 2020 California Ballot -- are you for or against?

 

As we slowly recover from the unrelenting bombardment of “what now?” In 2020 while our government responds by throwing money at all the issues, we often ask “how are we going to pay for all of this?” 

 

The state of California answered that question with a 16.8% marginal tax aimed at those with earnings of $5 million per year via Assembly bill 1253. If you’re thinking “If their earnings are that high, what’s another 3.5% of their income to help relieve it all?” 

 

Think about this, most small business owners would be the ones facing the extra burden.  With Nevada, Texas and Washington paying $0 in State Income Taxes, how long would these same small business owners remain in California? And if we export a substantial amount of our tax base— who’ll be left to pick up the tab? 

 

Proposition 15 is proposing to split the property tax roll which taxes commercial differently than residential parcels.  And the answer to who would pick up the tab? YOU.   Simply, if a rise in cost is applied to commercial real estate rent, those business owners wouldn’t have much other choice but to pass those higher expenses to customers. 

 

An opportunity for a significant tax grab could also be a way wherein capital gains taxes are deferred through 1031 exchanges.  

 

Congress can propose eliminating this loophole and generate billions in tax revenue by deferring long-term capital gains taxes through sale of income property.  It currently works like this- The seller enters a contract, creates a qualified intermediary prior to closing, closes, net sale proceeds go into an accommodator account and the seller identifies an upleg purchase inside 45 days from close, then buys the unplug at the earlier of 180 days from close or the filing date of next year’s tax returns.  Simple!

 

Thousands of these are done every year.  List of deferred are federal long-term capital gains of 15-20%, , 3.8% for the affordable care act, depreciation recapture of 25% and California state taxes on capital gains of 13.3%.  That’s an enormous amount!  If we tax those sales today over allowing deferrals, just think of the revenue it would generate. 

 

Good in theory, but here’s the catch— 

 

Income property owners often ask, “If I sell, what would I do with the proceeds?  I don’t want to pay half my gain in taxes.”  So if congress were to make changes in the rules or disallow 1031 exchanges altogether, sellers wouldn’t have much motivation to sell causing a fall-off in the income property market. 

 

On the other side of that coin are the multitude of industries that drink from the sale and purchase of commercial Real Estate fountain.  Businesses like Title companies, transactional lawyers, CPAs, escrow holders, lenders, property inspectors, environmental engineers and contractors, etc.  would largely suffer. 

 

https://ballotpedia.org/California_Proposition_15,_Tax_on_Commercial_and_Industrial_Properties_for_Education_and_Local_Government_Funding_Initiative_(2020)

Posted in Community News
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July 10, 2020

Add Value To Your Home With These 9 DIY Improvements

Add Value To Your Home With These 9 DIY Improvements

 

 

Whether you’re prepping your house to go on the market or looking for ways to maximize its long-term appreciation, these nine home improvement projects are great ways to add function, beauty, and real value to your home.

 

The best part is, once you’ve secured the materials, most of these renovations can be completed over the course of a weekend. And they don’t require a lot of specialized skills or experience. So grab your toolbox, then get ready to boost your home’s appeal AND investment potential!

 

 

1. Spruce Up Your Landscaping

 

Landscaping improvements can increase a home’s value by 10-12%.1 But which outdoor features do buyers care about most? According to a survey of Realtors, a healthy lawn is at the top of their list. If your lawn is lacking, overseeding or laying new sod can be a worthwhile investment—with an expected return of 417% and 143% respectively.1

 

Planting flowers is another great way to enhance your home’s curb appeal. And if you choose a perennial variety, your blooms should return year after year. For an even longer-term impact, consider planting a tree. According to the Council of Tree and Landscape Appraisers, a mature tree can add up to $10,000 to the value of your home.2

 

 

2. Clean The Exterior

 

When it comes to making your house shine, a sparkling facade can be just as important as a clean interior. Real estate professionals estimate that washing the outside of a house can add as much as $15,000 to its sales price.3

 

A rented pressure washer from your local home improvement store can help you remove built-up dirt and grime from your home’s exterior, walkway, and driveway. Just be sure to read the instructions carefully—and only use it on surfaces that can withstand the intensity. When in doubt, a scrub brush and bucket of sudsy water will often do the trick.

 

 

3. Add A Fresh Coat Of Paint

 

New paint can have a big impact on both the appearance and value of a property. In fact, it’s one of the most effective ways to revitalize a home’s exterior, update its interior, and make it appear larger and brighter. The best part? Painting is relatively easy and inexpensive!

 

To get the maximum return at resale, stick with a modern but neutral color palette that will appeal to a broad range of buyers. According to a recent survey of home design experts, cool neutrals are a safe bet when it comes to interior paint. And respondents chose white and gray as the best exterior paint colors to use when selling a home.4 However, it’s important to consider a property’s architecture, existing fixtures, and regional design preferences, as well.  

 

 

4. Install Smart Home Technology

 

In a recent survey, 78% of real estate professionals said their buyer clients were willing to pay more for a home with smart technology features.5 The most requested smart devices? Thermostats (77%), smoke detectors (75%), home security cameras (66%), and locks (63%).6

 

The good news is, many of these gadgets are fairly easy to install. And some of them, including smart thermostats and light bulbs, will pay for themselves over time by making your home more energy efficient. In fact, many manufacturers report that smart thermostats can cut back on heating and cooling costs by 10-20%.7  

 

If you already own a smart speaker, like Amazon Alexa or Google Home, choose devices that will pair with your existing technology. This will enable you to create a truly integrated (and in many cases voice-activated) smart home experience.

 

 

5. Modernize Your Window Treatments

 

Smart—or motorized—blinds are also growing in popularity, and several manufacturers make models you can order and install on your own. But they’re not the only way to modernize your window treatments.

 

If you have old aluminum blinds, consider replacing them with plantation shutters, which are energy efficient, durable, and have strong buyer appeal.8 Roman and roller shades are another stylish alternative, and they come in a variety of colors and fabrics, which you can personalize to meet your design and privacy preferences.

 

Fortunately, upgrading your blinds has gotten easier and less expensive in recent years. There are a number of retailers that specialize in affordable window coverings that are simple to measure and hang yourself.

 

 

6. Replace Outdated Fixtures

 

Drastically transform the look and feel of your home by swapping out dingy and dated fixtures for contemporary alternatives. Start by assessing your current light fixtures, faucets, cabinet hardware, door knobs, and even switch plates. Then prioritize replacing those that are particularly outdated or in highly-visible areas, such as your entryway or kitchen.

 

Even if your home is fairly new, consider trading your builder-grade fixtures for higher-end options to give it a more upscale appearance. And forget the old rule about sticking to one metal tone throughout your property. According to designers, mixing metal finishes can add interest and character to a space.9

 

For more designer insights and decor trends, contact us for a free copy of our recent report: “Top 5 Home Design Trends for a New Decade.”

 

 

7. Upgrade Your Bathroom Mirror

 

A minor bathroom remodel offers one of the best returns on investment, with a $1.71 increase in home value for every $1 you spend.10 We’ve already explored several improvements you can make to your bathroom: new paint, fixtures, and hardware. Now complete the look by upgrading your vanity’s mirror.

 

Before you purchase a new mirror, examine your existing one to see how it is attached to the wall. Some vanity mirrors are glued to the wall and difficult to remove without shattering the glass or damaging the sheetrock behind it.11

 

If you prefer to keep your existing mirror, you can paint the frame—or add one if it’s currently frameless. There are several online retailers that will send you the frame components cut to your specifications, which you can assemble and mount yourself. Much like a work of art, your vanity mirror serves as a focal point for your bathroom, so let your creativity shine through!

 

 

8. Shampoo Your Carpet

 

Carpet is notorious for trapping dust, dirt, and allergens. It’s one of the reasons that most buyers prefer hard surface flooring.12 But if you love your carpet, or you’re not ready to invest in an alternative, make an effort to keep it clean and odor-free.

 

To properly maintain your carpet, you should vacuum it weekly. Experts also recommend a deep shampoo at least every two years.13 Fortunately, this is a cheap and easy DIY project you can knock out in about 20 minutes per room. According to Consumer Reports, you can rent a machine and purchase cleaning fluid and supplies for around $90. With an average return on your investment of 169%, it’s well worth the effort and expense.14

 

 

9. Customize Your Closet

 

Real estate professionals estimate that a closet remodel can add $2500 to a home’s selling price. And while a professional renovation can cost upwards of $6000, there are many high-quality DIY closet systems you can customize and install yourself.15

 

Experts recommend taking a thorough inventory of your wardrobe and accessories before you get started. Make sure frequently-worn pieces are easy to reach, and store seasonal and seldom-used items on high shelves. Place shoe racks near the closet entrance so they are easy to access.16 A little planning can go a long way toward building a closet that you (and your future buyers!) will love.

 

 

GET A COMPLIMENTARY ANALYSIS OF YOUR PROJECT

 

We’ve been talking averages. But the truth is, the actual impact of a home improvement project will vary depending on your particular home and neighborhood. Before you get started, contact us to schedule a free virtual consultation. We can help you determine which upgrades will offer the greatest return on your effort and investment.

 

 

Sources:

1.      HomeLight -
https://www.homelight.com/blog/improve-curb-appeal-landscaping/

2.      National Association of Realtors -
https://www.realtor.com/advice/home-improvement/landscape-renovations-that-pay-off/

3.      HouseLogic.com - https://www.houselogic.com/save-money-add-value/add-value-to-your-home/adding-curb-appeal-value-to-home/

4.      Fixr -
https://www.fixr.com/blog/2020/01/14/paint-color-trends-in-2020/

5.      T3 Sixty -
https://blog.coldwellbanker.com/wp-content/uploads/2018/01/CES2018-Smart-Homes-An-Emerging-Real-Estate-Opportunity.pdf

6.      Consumer Reports -
https://www.consumerreports.org/smart-home/smart-home-tech-upgrades-to-help-sell-your-house/

7.      American Council for Energy Efficient Economy
https://www.aceee.org/sites/default/files/publications/researchreports/a1801.pdf

8.      Forbes - https://www.forbes.com/sites/trulia/2016/07/05/10-upgrades-under-1000-that-increase-home-values-2/#47b0d3162e60

9.      Insider -
https://www.insider.com/home-design-rules-you-should-be-breaking-2020-1

10.   Zillow -
https://www.zillow.com/sellers-guide/roi-for-bathroom-remodel/

11.   Lowes -
https://www.lowes.com/n/how-to/remove-a-bathroom-mirror

12.   HomeLight -
https://www.homelight.com/blog/what-flooring-increases-home-value/

13.   Angie’s List -
https://www.angieslist.com/articles/how-often-should-i-clean-my-carpets.htm

14.   HomeLight -
https://www.homelight.com/blog/projects-that-increase-home-value/

15.   National Association of Realtors - https://www.nar.realtor/research-and-statistics/research-reports/remodeling-impact

16.   EasyClosets -
https://www.easyclosets.com/tips-ideas/2016/10/02/how-to-plan-your-walk-in-closet/

Posted in Buying a Home, Community News, Market Updates, Real Estate News, Selling Your Home
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Feb. 3, 2020

HOME EQUITY: Build Wealth and Leverage for Future Investments

Home Equity Guide
by Sean Najera

Homeownership offers many advantages over renting, including a stable living environment, predictable monthly payments, and the freedom to make modifications. Neighborhoods with high rates of homeownership have less crime and more civic engagement. Additionally, studies show that homeowners are happier and healthier than renters, and their children do better in school.1 

But one of the biggest perks of homeownership is the opportunity to build wealth over time. Researchers at the Urban Institute found that homeownership is financially beneficial for most families,2 and a recent study showed that the median net worth of homeowners can be up to 80 times greater than that of renters in some areas.3

So how does purchasing a home help you build wealth? And what steps should you take to maximize the potential of your investment? Find out how to harness the power of home equity for a secure financial future.

 

WHAT IS HOME EQUITY?

Home equity is the difference between what your home is worth and the amount you owe on your mortgage. So, for example, if your home would currently sell for $250,000, and the remaining balance on your mortgage is $200,000, then you have $50,000 in home equity.

$250,000 (Home’s Market Value)

– $200,000 (Mortgage Balance)

______________________________

$50,000 (Home Equity)

The equity in your home is considered a non-liquid asset. It’s your money; but rather than sitting in a bank account, it’s providing you with a place to live. And when you factor in the potential of appreciation, an investment in real estate will likely offer a better return than any savings account available today.

 

HOW DOES HOME EQUITY BUILD WEALTH?

A mortgage payment is a type of “forced savings” for home buyers. When you make a mortgage payment each month, a portion of the money goes towards interest on your loan, and the remaining part goes towards paying off your principal, or loan balance. That means the amount of money you owe the bank is reduced every month. As your loan balance goes down, your home equity goes up.

Additionally, unlike other assets that you borrow money to purchase, the value of your home generally increases, or appreciates, over time. For example, when you pay off your car loan after five or seven years, you will own it outright. But if you try to sell it, the car will be worth much less than when you bought it. However, when you purchase a home, its value typically rises over time. So when you sell it, not only will you have grown your equity through your monthly mortgage payments, but in most cases, your home’s market value will be higher than what you originally paid. And even if you only put down 10% at the time of purchase—or pay off just a small portion of your mortgage—you get to keep 100% of the property’s appreciated value. That’s the wealth-building power of real estate.

 

WHAT CAN I DO TO GROW MY HOME’S EQUITY FASTER?

Now that you understand the benefits of building equity, you may wonder how you can speed up your rate of growth. There are two basic ways to increase the equity in your home:

  • Pay down your mortgage.

We shared earlier that your home’s equity goes up as your mortgage balance goes down. So paying down your mortgage is one way to increase the equity in your home.

Some homeowners do this by adding a little extra to their payment each month, making one additional mortgage payment per year, or making a lump-sum payment when extra money becomes available—like an annual bonus, gift, or inheritance.

Before making any extra payments, however, be sure to check with your mortgage lender about the specific terms of your loan. Some mortgages have prepayment penalties. And it’s important to ensure that if you do make additional payments, the money will be applied to your loan principal.

Another option to pay off your mortgage faster is to decrease your amortization period. For example, if you can afford the larger monthly payments, you might consider refinancing from a 30-year or 25-year mortgage to a 15-year mortgage. Not only will you grow your home equity faster, but you could also save a bundle in interest over the life of your loan.

  • Raise your home’s market value.

Boosting the market value of your property is another way to grow your home equity. While many factors that contribute to your property’s appreciation are out of your control (e.g. demographic trends or the strength of the economy) there are things you can do to increase what it’s worth.

For example, many homeowners enjoy do-it-yourself projects that can add value at a relatively low cost. Others choose to invest in larger, strategic upgrades. Keep in mind, you won’t necessarily get back every dollar you invest in your home. In fact, according to Remodeling Magazine’s latest Cost vs. Value Report, the remodeling project with the highest return on investment is a garage door replacement, which costs about $3600 and is expected to recoup 97.5% at resale. In contrast, an upscale kitchen remodel—which can cost around $130,000—averages less than a 60% return on investment.4

Of course, keeping up with routine maintenance is the most important thing you can do to protect your property’s value. Neglecting to maintain your home’s structure and systems could have a negative impact on its value—therefore reducing your home equity. So be sure to stay on top of recommended maintenance and repairs.

 

 

HOW DO I ACCESS MY HOME EQUITY IF I NEED IT?

When you put your money into a checking or savings account, it’s easy to make a withdrawal when needed. However, tapping into your home equity is a little more complicated.

The primary way homeowners access their equity is by selling their home. Many sellers will use their equity as a downpayment on a new home. Or some homeowners may choose to downsize and use the equity to supplement their income or retirement savings.

But what if you want to access the equity in your home while you’re still living in it? Maybe you want to finance a home renovation, consolidate debt, or pay for college. To do that, you will need to take out a loan using your home equity as collateral. 

There are several ways to borrow against your home equity, depending on your needs and qualifications:5

  • Second Mortgage – A second mortgage, also known as a home equity loan, is structured similar to a primary mortgage. You borrow a lump-sum amount, which you are responsible for paying back—with interest—over a set period of time. Most second mortgages have a fixed interest rate and provide the borrower with a predictable monthly payment. Keep in mind, if you take out a home equity loan, you will be making monthly payments on both your primary and secondary mortgages, so budget accordingly.
  • Cash-Out Refinance – With a cash-out refinance, you refinance your primary mortgage for a higher amount than you currently owe. Then you pay off your original mortgage and keep the difference as cash. This option may be preferable to a second mortgage if you have a high interest rate on your current mortgage or prefer to make just one payment per month.
  • Home Equity Line of Credit (HELOC) – A home equity line of credit, or HELOC, is a revolving line of credit, similar to a credit card. It allows you to draw out money as you need it instead of taking out a lump sum all at once. A HELOC may come with a checkbook or debit card to enable easy access to funds. You will only need to make payments on the amount of money that has been drawn. Similar to a credit card, the interest rate on a HELOC is variable, so your payment each month could change depending on how much you borrow and how interest rates fluctuate.
  • Reverse Mortgage – A reverse mortgage enables qualifying seniors to borrow against the equity in their home to supplement their retirement funds. In most cases, the loan (plus interest) doesn’t need to be repaid until the homeowners sell, move, or are deceased.6

Tapping into your home equity may be a good option for some homeowners, but it’s important to do your research first. In some cases, another type of loan or financing method may offer a lower interest rate or better terms to fit your needs. And it’s important to remember that defaulting on a home equity loan could result in foreclosure. Ask us for a referral to a lender or financial adviser to find out if a home equity loan is right for you.

 

WE’RE HERE TO HELP YOU

Wherever you are in the equity-growing process, we can help. We work with buyers to find the perfect home to begin their wealth-building journey. We also offer free assistance to existing homeowners who want to know their home’s current market value to refinance or secure a home equity loan. And when you’re ready to sell, we can help you get top dollar to maximize your equity stake. Contact us today to schedule a complimentary consultation!

 

The above references an opinion and is for informational purposes only. It is not intended to be financial advice. Consult a financial professional for advice regarding your individual needs.

 

Sources:

 

  1. National Association of Realtors –
    https://www.nar.realtor/blogs/economists-outlook/highlights-from-social-benefits-of-homeownership-and-stable-housing
  2. Urban Institute –
    https://www.urban.org/urban-wire/homeownership-still-financially-better-renting
  3. Census Bureau –
    https://www.census.gov/library/stories/2019/08/gaps-in-wealth-americans-by-household-type.html
  4. Remodeling Magazine –
    https://www.remodeling.hw.net/cost-vs-value/2019/
  5. Investopedia –
    https://www.investopedia.com/mortgage/heloc/home-equity/
  6. Bankrate –
    https://www.bankrate.com/mortgage/reverse-mortgage-guide/
Posted in Buying a Home, Community News, Market Updates, Real Estate News, Selling Your Home
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Jan. 8, 2020

20/20 Vision in to the Real Estate Market

01 Jan 2020  by Sean Najera

 

The US is in the middle of one of the longest economic expansions in its history, and experts think there is still room to grow. In fact, a recent survey by the National Association for Business Economics found that experts believe the U.S. economy will remain positive throughout 20/20.

Despite what the experts believe, we know that recessions are a natural and necessary part of any business cycle. So the question is, when will this period of growth end and how will an eventual recession impact the real estate market?

It is easy to assume that a recession would lead to a decline in housing prices like everyone remembers in 2008. But what happened in 2008 was not typical at all. What happened in 2008 was the worst economic downturn since the Great Depression of the 1930s. The fact that most of us only remember what happened in 2008 and had to live through it makes for a lot of concern. Truth is, in the last five recessions real estate prices actually went up the majority of the time. Outside of 2008, real estate prices declined only once in 1990 which was only by less than one percent.

So what does this mean to you? How do we combine historical information with today's data in order to have a clear 20/20 Vision? Here's where experts predict the housing market is headed in 20/20 and beyond.

PRICES OF HOMES WILL CONTINUE TO RISE

Regardless of a recession or not, experts believe home prices will continue to trend upwards. 20/20 will have a faster rate of growth compared to 2019, especially in lower entry level homes of the market. In fact, entry-level home prices are expected to increase faster than incomes this year, making it even harder for first-time home buyers to enter the market.

Builders continue to focus on expensive, higher profit homes and less on entry-level homes. With the continued shortage of starter homes and low mortgage interest rates, home prices will continue to be pushed upwards. And unless the housing supply is addressed, home prices and rents will continue to outgrow income gains.

What does it mean for you? If you have the ability and desire to buy a home now, don’t let a fear of recession or falling prices hold you in limbo. Economists expect home values, as well as rent prices, to continue rising. So you’ll likely pay more the longer you wait.

 

LOW INVENTORY WILL CONTINUE

People are staying in their homes longer. In 2019, the average homeowner had stayed in their home for 13 years, up from just eight years in 2010. That means there are fewer homes available today for those who want to buy.

The National Association of Realtors expects new construction of entry-level homes to total one million this year, which would be the highest level since 2007. Builders shifting to building smaller more affordable homes could offer some relief but experts predict inventory shortage will continue to grow and maybe even reach a historic low.

What does it mean for you? If you’re looking to buy a starter home, be prepared to compete for the best listings. Start your search early, and if you’re up against a deadline (like a new baby), build in plenty of time to find the right home. We can help you assess your options, including new construction and up-and-coming developments.

 

LOW MORTGAGE RATES WILL REMAIN

Mortgage rates have declined more than a full percentage point since November 2018 and experts predict rates to continue to remain low at around 3.7%, through mid-2021.

While it may not seem significant, on a $200,000 30-year fixed-rate mortgage, that lower rate means buyers could save around $145 on their monthly payment and more than $52,000 over the life of their mortgage. Lower mortgage rates make homeownership more accessible and affordable for buyers.

Although mortgage rates are expected to stay low, you still need to act now. Economic factors, shifts in supply and demand, or unforeseen impacts of the November election could cause rates to rise unexpectedly. If you plan on staying in your home long term make sure you lock in those low rates now.

What does it mean for you? If you’re looking to buy a home, act soon to lock in a historically low mortgage rate. It will minimize your monthly payment and could save you a bundle over the long term. And if you plan to stay in your current home for a while, consider whether it makes sense to refinance your mortgage at today’s lower rates.

 

MILLENNIALS ARE IN THE DRIVERS SEAT

Millennials are expected to account for more than half of all mortgages this year, outnumbering Generation X and Baby Boomers combined. It’s not surprising, considering their age and stage of life. In 2020, the largest cohort of millennials will turn 30, and the oldest millennials will turn 39.8

Family changes tend to drive home-buying decisions. Millennials are going to be active in the housing market not just because they’re just at the age when they’re thinking about becoming first-time home buyers, but they’re also in the age range when they’re having kids.

Younger millennials flocked to urban centers that offered easy access to work, shopping, and restaurants. But high prices, lack of square footage, and subpar schools are driving millennials out to the suburbs as they begin to marry and expand their families. 

In response, a new model for suburban living has emerged. “Hipsturbias,” or mixed-use communities that bring the live/work/play concept to the suburbs, were recently named one of the top real estate trends for 2020.

What does it mean for you? If you’re a millennial who has been priced out of urban living or is looking for more space for your growing family, a number of suburbs in our area have a lot to offer. We can point you towards the communities that will best meet your needs. And if you’re a homeowner with plans to sell, give us a call. We know how to market your home to millennials … and can help you sell quickly for top dollar by appealing to this leading market segment!

 

WE’RE HERE TO GUIDE YOU

While national real estate numbers can provide a “big picture” outlook, real estate is local. As local market experts, we can guide you through the ins and outs of our market and the issues most likely to impact sales and home values in your particular neighborhood. 

If you’re considering buying or selling a home in 2020, contact us now to schedule a free consultation. We’ll work with you to develop an action plan to meet your real estate goals this year.

 

START PREPARING TODAY

 


If you plan to BUY this year:

  1. Get pre-approved for a mortgage. If you plan to finance part of your home purchase, getting pre-approved for a mortgage will give you a jump-start on the paperwork and provide an advantage over other buyers in a competitive market. The added bonus: you will find out how much you can afford to borrow and budget accordingly.
  2. Create your wish list. How many bedrooms and bathrooms do you need? How far are you willing to commute to work? What’s most important to you in a home? We can set up a customized search that meets your criteria to help you find the perfect home for you.
  3. Come to our office. The buying process can be tricky. We’d love to guide you through it. We can help you find a home that fits your needs and budget, all at no cost to you. Give us a call to schedule an appointment today!

If you plan to SELL this year:

  1. Call us for a FREE Comparative Market Analysis. A CMA not only gives you the current market value of your home, it will also show how your home compares to others in the area. This will help us determine which repairs and upgrades may be required to get top dollar for your property, and it will help us price your home correctly once you’re ready to list.
  2. Prep your home for the market. Most buyers want a home they can move into right away, without having to make extensive repairs and upgrades. We can help you determine which ones are worth the time and expense to deliver maximum results.
  3. Start decluttering. Help your buyers see themselves in your home by packing up personal items and things you don’t use regularly and storing them in an attic or storage locker. This will make your home appear larger, make it easier to stage … and get you one step closer to moving when the time comes!
Posted in Buying a Home, Market Updates, Real Estate News, Selling Your Home
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Dec. 26, 2019

Everything You Need to Know About iBuyers and the “Instant Cash Offer”

By Sean Najera

Technology is changing the way we do almost everything, and real estate transactions are no exception. In fact, a new crop of tech companies wants to revolutionize the way we buy and sell homes. 

iBuyer startups like Opendoor, Offerpad, and Properly are rapidly expanding into new territories, and now established players, like Zillow, are starting to get in on the action. Also known as Direct Buyers, these companies use computer algorithms to provide sellers with a quick cash offer to buy their home.

While the actual market share of iBuyers remains small, their big advertising budgets have helped create a noticeable buzz in the industry. This has left many of our clients curious about them and how they work.

In this article, we explain their business model, weigh the pros and cons of working with an iBuyer, and share strategies you can use to protect yourself if you choose to explore this new option to buy or sell your home.

 

FIRST, HOW DOES THE iBUYER PROCESS WORK?

While each company operates a little differently, the basic premise is the same. A seller (or seller’s agent) completes a brief online form that asks questions about the size, features, and condition of the property. Some also request digital photos of the home. 

The iBuyer will use this information to determine whether or not the home fits within their “buy box,” or set of criteria that matches their investment model. They are generally looking for houses they can easily value and “flip.” In most cases, their ideal property is a moderately priced, single-family home located in a neighborhood with many similar houses. The property shouldn’t require any major renovations before listing.1 These qualities make it easier to assess value (lots of comparable sales data) and help to reduce risk and minimize carrying costs.

Once the iBuyer has used their algorithm to determine the amount they are willing to pay, they will email an offer to the seller, usually within a few days. The offer should also disclose the company’s service fee, which is typically between 7% and 12% of the purchase price.2

If the seller accepts, an in-person visit and inspection are scheduled. The iBuyer will ask for a reduction in price to cover any defects they find during the process. Once the sale closes, they will make the necessary updates and repairs and then resell the home on the open market.

 

WHAT ARE THE PROS AND CONS OF SELLING TO AN iBUYER?

Of course, the biggest benefit of selling your home to an iBuyer is convenience. For some homeowners, the stress and disruption of preparing and listing their home can feel overwhelming. And what busy family with kids and pets wouldn’t want to skip the hassle of keeping their house “show ready” for potential buyers? Additionally, many sellers like the predictability of a cash buyer and the flexibility to choose their closing date.

However, this added convenience does come at a cost. An iBuyer is an investor looking to make a profit. So their purchase offer is usually below true market value. When you tack on service fees of up to 12% and deductions for updates and repairs, studies show that sellers who work with iBuyers net a lower amount than those that list the traditional way.3

In fact, a MarketWatch investigation found that transactions involving iBuyers net the seller 11% less than if they would have sold their home with an agent on the open market.2

 

WHAT ARE THE PROS AND CONS OF BUYING FROM AN iBUYER?

Buying a home from an iBuyer is a lot like buying a home from any investor. The pros are that it’s usually clean, neutral, and moderately updated. You’ll often find fresh paint and modern finishes. And because it’s uninhabited (no one is living there), you don’t have to work around a seller’s schedule to see the home. 

However, there are some pitfalls to avoid when working with iBuyers. Speed is of the essence, so sometimes the renovations are rushed and the quality can suffer. Also, their investment margins don’t leave much room for negotiating a price reduction or additional repairs. That leaves buyers —who have already invested hundreds of dollars in an inspection—little recourse if any issues are uncovered.4

That’s one of the reasons we always recommend viewing properties with an agent. During your visit, a real estate professional can point out any “red flags” at the home, provide background information about the neighborhood, and help you assess its true market value. That way, you don’t invest time and money in a high-risk or overpriced property. Safety is also a concern. Some companies allow buyers to access their homes via a smartphone app. While it may seem convenient, it provides an easy way for squatters and others to enter the home illegally.5 

Luckily, since most iBuyers (and traditional sellers) pay a buyer agent’s commission, you can benefit from the guidance and expertise of a real estate professional … at no cost to you!

 

HOW CAN I PROTECT MYSELF IF I CHOOSE TO WORK WITH AN iBUYER?

While it may seem like the “quick and easy” way to go, working with an iBuyer can present some unique challenges. For example, they are notorious for presenting a strong initial purchase offer and then whittling it down with a long list of costly updates and repairs once they complete their inspection.2 And unlike a traditional buyer who is incentivized to make a deal work, iBuyers can easily walk away if you don’t meet their demands.

Just like you wouldn’t go to court without a lawyer, you shouldn’t enter into a real estate transaction without an advocate to represent you. Having a professional agent on your side can be especially important when negotiating with an iBuyer. Remember, they employ sophisticated representatives and a team of lawyers who are focused on maximizing their profits, not yours. You need someone in your corner who has the skills and knowledge to ensure you get a fair deal and who understands the terms of their contracts, so you don’t encounter any unpleasant surprises along the way.

Overall, we think the emergence of new technology that helps to streamline the real estate process is exciting. And if we believe a client can benefit from working with an iBuyer, we present it as an option. But there is—inevitably—a cost to the convenience. After all, most iBuyers eventually list the properties they acquire on the open market, which is still the best place to find a buyer if you want to maximize the sales price of your home.

 

EXPLORE YOUR OPTIONS

 

Do you want to learn more about iBuyers and other options currently available in our area to buy or sell your home? We can help you determine the best path, given your unique circumstances. Contact us to schedule a free, no-obligation consultation!

 

Sources:

  1. The Dallas Morning News – https://www.dallasnews.com/business/real-estate/2019/07/11/so-called-ibuyer-real-estate-firms-pitch-programs-to-buy-your-house-help-you-hunt-for-another/
  2. MarketWatch – https://www.marketwatch.com/story/selling-your-home-to-an-ibuyer-could-cost-you-thousands-heres-why-2019-06-11
  3. Forbes – https://www.forbes.com/sites/alyyale/2019/08/16/study-shows-ibuyers-cost-home-sellers-thousands-is-convenience-worth-the-price/#697ac0c42269
  4. US News & World Report – https://realestate.usnews.com/real-estate/articles/what-to-expect-when-buying-a-home-from-an-ibuyer
  5. Inman – https://www.inman.com/2019/09/11/police-arrest-couple-found-squatting-in-opendoor-home-with-their-kids/
Posted in Community News, Real Estate News, Selling Your Home
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Dec. 24, 2019

Gifts and Gadgets for Every Room in the House

Gifts and Gadgets for Every Room in the House

by Sean Najera

 

Are you searching for new and innovative gift ideas this holiday season? If so, check out our list of the hottest home technology offerings. We’ve selected a few of our favorites for every room in the house.

These smart systems and devices add comfort, convenience, and a “cool factor” that will delight your friends and family.  So think about who you know that loves the latest gadgets … or add a few of these to your own wish list!

 

ENTRYWAY
Ensure the safety of your loved ones with these smart security upgrades.

Smart Lighting

Ring, a company best known for its video doorbells, has added smart lights to its series of integrated devices. The Ring Smart Light System includes motion sensors, pathlights, spotlights, and even step lights, which can be turned on and off using voice commands when paired with an Amazon Alexa device. Users may opt to receive a notification when motion is detected on the premises, and—if integrated with Ring security cameras—access a live video stream for an added layer of security. Systems start at $69.99.

Video Doorbell

Video doorbells have become an increasingly popular security enhancement for homes, and for a good reason. Homeowners can detect activity at their front door while away, view visitors via video stream, and communicate without opening the door. Since Ring released its first smart doorbell in 2013, a number of competitors have entered the market. The Nest Hello Video Doorbell has some unique features—like facial recognition, package detection, and pre-recorded quick responses—that place it near the top of the pack. Retails for $229.

Smart Lock

Smart locks are a great way to ensure your friends and family are never left out in the cold, and the August Smart Lock Pro+ Connect is among the most highly rated. It’s one of the easiest models to install because it pairs with an existing deadbolt. The Smart Lock Pro enables a user to lock and unlock their door remotely with an app on their phone. And with the auto-lock/unlock feature, it can be set to open automatically upon approach and relock after entry. Retails for $279.

 

LIVING ROOM
These fun and functional gifts are perfect for anyone who is big on style—but short on time.

Automated Planter

Caring for household plants is easier than ever with the latest advancements in technology. Perfect for frequent travelers or forgetful friends, the Dewplanter uses moisture in the air to water plants without manual intervention. Now nature lovers can enjoy the beauty and health benefits of houseplants without the hassle. Plus, for each unit sold, the company pledges to plant a tree somewhere it’s needed. Retails for $69.50.

Smart Art

Instead of buying your favorite art lover a single painting, why not give him or her 30,000? With the Meural Canvas, you can access an extensive collection of artwork from around the world to display digitally in your own home. Meural utilizes proprietary technology to deliver an anti-glare matte display that automatically adjusts to the lighting in the room. Personal artwork and photographs can be showcased, as well. Retails for $445 with annual membership.

Motorized Shades

Motorized window coverings aren’t new, but a lower price point and enhanced features have helped to boost their popularity. The latest Motorized Shades from Somfy can be preprogrammed to raise or lower at certain times of day or controlled on-demand via a remote, smartphone app, or voice command when paired with Amazon Alexa or Google Home. They can also be set to operate automatically in response to the amount of sunlight or temperature of the room. Contact a dealer for pricing.

 

KITCHEN
These kitchen gadgets make life a little easier and a lot more enjoyable. They’re perfect for your busiest friends and family members!

Pressure Cooker

Have you jumped on the multi-cooker bandwagon yet? If so, you know how fast and simple these multifunctional appliances make meal preparation. The InstantPot Duo is a pressure cooker, sauté pan, steamer, slow cooker, rice cooker, food warmer, and yogurt maker all-in-one. It reduces cooking time and lowers energy consumption. Who wouldn’t love one of these versatile tools? With numerous cookbooks and blogs devoted to InstantPot recipes, the meal options are virtually endless. Retails for $99.95.

Cocktail Machine

Cocktail connoisseurs will appreciate the ease and convenience of the Bartesian Premium Cocktail Machine. Listed among “Oprah’s Favorite Things” for 2019, the Bartesian mixes drinks with the touch of a button. Simply fill the canisters with base spirits, choose a cocktail capsule, and the machine does the rest. Now you can mix a margarita, whiskey sour, cosmopolitan, and other favorites as easily as you brew a cup of coffee. Retails for $349.

Smart Refrigerator

Kitchens are often called the “heart of the home,” and a new refrigerator from Samsung aims to be the hub. The Samsung Family Hub Refrigerator helps busy families stay organized. Grocery shopping becomes a breeze with built-in cameras that allow owners to peek inside their fridge from anywhere. The interactive touchscreen displays pictures, notes, and reminders for family members. And the integrated SmartThings app enables users to control smart devices and appliances from a central point. Base model starts at $3,099.

 

 

BEDROOM
Almost nothing beats a good night’s sleep. Help your loved ones wake up refreshed with these smart devices for the bedroom.

Baby Sleep Soother

As any parent knows, when your baby isn’t getting sleep, neither are you. Help everyone in the family catch some z’s with a Bubzi Co Soothing Owl. This cuddly creature plays lullabies while projecting a starry scene on the bedroom wall to calm young children and help them drift off to sleep. And for every purchase, Bubzi Co makes a donation to Postpartum Support International. Retails for $30.95.

Sunrise Alarm Clock

Know someone who hates getting up in the morning? Alarm clocks that utilize light instead of a noisy alarm can provide a more peaceful transition in and out of sleep. The Philips SmartSleep Connected Sleep and Wake-Up Light includes customizable sunrise and sunset simulation, guided breathing exercises, and sensors that track room conditions, like temperature, humidity, noise, and light. Retails for $199.95.

Smart Thermostat

Temperature fluctuations during the night can disrupt sleep. The Nest Learning Thermostat uses smart technology to track a user’s preferences and build a schedule around them. Homeowners can place one of its integrated sensors in their bedroom to maintain a consistent temperature throughout the night. And Nest thermostats cut energy consumption, so they’ll rest easier knowing they’re saving the planet and money on utility bills . Retails for $249.

 

BATHROOM
Bathrooms don’t have to be boring. Technology can add flair to the daily routine.

Waterproof Speaker

Music enthusiasts and podcast fans will enjoy streaming their favorites in the shower with a wireless waterproof speaker. The Ultimate Ears Wonderboom 2 is a mid-priced and versatile option that can go from the bath to the beach. It packs an impressive 13-hour battery life in a small, portable case that’s waterproof, dust-proof, and floatable. Retails for $99.99.

Digital Smart Scale

A scale isn’t an appropriate gift for everyone, but diet and fitness enthusiasts may appreciate the high-tech features available with the Withings Body+. It tracks weight, body water, and fat, muscle, and bone mass for up to eight users. It can also be set to display local weather and the previous day’s step count. Customized pregnancy and baby modes make this a suitable choice for a growing family, as well. Retails for $99.95.

Vanity TV Mirror

For a truly luxe bathroom addition, consider an integrated vanity television mirror. The Seura TV Mirror seamlessly incorporates video into a bathroom vanity. It’s vanishing glass technology makes it possible to view the television through a mirror. When turned off, the screen completely disappears. Add lighting or a custom frame to complete the look. Starts at $3,099 for a 19” display.

 

OUR GIFT TO YOU

Are you considering a permanent technology upgrade for your own home? Give us a call first! Buyer expectations and preferences vary depending on price point, architectural style, and neighborhood. We can help you determine how the enhancement will impact the value of your home before you make the investment.

Posted in Community News, Real Estate News
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Dec. 24, 2019

5 Steps to Finding Your Next Home

5 Steps to Finding Your Next Home

by Sean Najera

 

Whether you’re a first-time buyer or a seasoned homeowner, shopping for a new home can feel daunting. In fact, 56% of buyers said that “finding the right property” was the most difficult step in the home buying process.1

Buying a home is a significant commitment of both time and money. And a home purchase has the power to improve both your current quality of life and your future financial security, so the stakes are high.

Follow these five steps—and complete the corresponding worksheet offered below—to assess your priorities, streamline your search, and choose your next home with confidence.

 

STEP 1: Set Your Goals and Priorities

The first step to finding your ideal home is determining WHY you want to move. Do you need more space? Access to better schools? Less maintenance? Or are you tired of throwing money away on rent when you could be building equity? Pinpointing the reasons why you want to move can help you assess your priorities for your home search. 

Don’t forget to think about how your circumstances might change over the next few years. Do you expect to switch jobs? Have more children? Get a pet? A good rule of thumb is to choose a house that will meet your family’s needs for at least the next five to seven years.2 Be sure to set your goals accordingly.

 

STEP 2: Determine Your Budget

Many financial professionals recommend following the “28/36 Rule” to determine how much you can afford to spend on a home. The rule states that you should spend no more than 28% of your gross monthly income on housing expenses (e.g., mortgage, taxes, insurance) and a maximum of 36% of your gross monthly income on your total debt obligations (i.e., housing expenses PLUS any other debt obligations, like car loans, student loans, credit card debt, etc.).3

Of course, the 28/36 rule only provides a rough guideline. Getting pre-qualified or pre-approved for a mortgage BEFORE you begin shopping for homes will give you a much more accurate idea of how much you can borrow. Add your pre-approved mortgage amount to your downpayment to find out your maximum purchasing potential.

 

STEP 3: Choose a Location

When it comes to real estate, WHERE you choose to buy is just as important as WHAT you choose to buy.

Do you prefer a rural, urban, or suburban setting? How long of a commute are you willing to make? Which neighborhoods feed into your favorite schools? These decisions will impact your day-to-day life while you live in the home.

Another important factor to consider is how the area is likely to appreciate over time. Choosing the right neighborhood can raise the profit potential of your home when it comes time to sell. Look for communities that are well maintained with high home-ownership rates, low crime rates, and access to good schools, desired retail establishments, and top employers.4

 

 

STEP 4: Decide Which Features You Need (and Want) in a Home

Start with the basics, like your ideal number of bedrooms, bathrooms, and square footage. Do you prefer a one-story or two-story layout? Do you want a swimming pool?

Keep in mind, you may not find a home with all of your “wants,” or even all of your “needs” … at least not at a price you can afford. The reality is, most of us have to make a few compromises when it comes to buying a home.

Some buyers will opt for a longer commute to get a larger, newer home in the suburbs. Others will sacrifice hardwood floors or an updated kitchen so that their kids can attend their desired school. 

If you’re faced with a tough choice about how or what to compromise in your home search, return to STEP 1. What were your original goals and motivations for moving? Reminding yourself of your true priorities can often provide the clarity that you need.

 

STEP 5: Meet with a Real Estate Agent

A good real estate agent can remove much of the stress and uncertainty from the home search process. From setting goals to securing a loan to selecting the best neighborhood to meet your needs, we will be there to assist you every step of the way.

And no one has more access to home listings, past sales data, or market statistics than a professional agent. We can set up a customized search that alerts you as soon as a new listing you might like goes live. Better yet, we get notified about many of the hottest homes even BEFORE they hit the market.

You might guess that the VIP service we provide is very expensive. Well, the good news is, we can represent you throughout the entire home buying process at NO COST to you. It’s true; the home seller pays a buyer agent’s fee at closing. So you can benefit from our time, experience, and expertise without paying a dime. It’s no wonder 87% of buyers choose to purchase their home with the help of an agent.1

And although we’ve listed it here as STEP 5, the reality is, it’s never too early (or too late) to contact an agent about buying a home. Whether you plan to buy today, next month, or next year, there are steps you can (and should) be taking to prepare for your purchase.

Call us today to schedule a free consultation!

 

The above references an opinion and is for informational purposes only.  It is not intended to be financial advice. Consult a financial professional for advice regarding your individual needs.

 

Sources:

  1. NAR 2019 Home Buyers & Sellers Generational Trends Report – https://www.nar.realtor/sites/default/files/documents/2019-home-buyers-and-sellers-generational-trends-report-08-16-2019.pdf
  2. Architectural Digest – https://www.architecturaldigest.com/story/this-is-how-long-you-should-live-in-your-house-before-selling-it
  3. Investopedia – https://www.investopedia.com/terms/t/twenty-eight-thirty-six-rule.asp
  4. Money Talks News – https://www.moneytalksnews.com/20-clues-youre-buying-home-the-right-neighborhood/
   
Posted in Buying a Home
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July 31, 2017

Curious About Local Real Estate?

Receive the Latest Local Market Stats

Curious about local real estate? So are we! Every month we review trends in our real estate market and consider the number of homes on the market in each price tier, the amount of time particular homes have been listed for sale, specific neighborhood trends, the median price and square footage of each home sold and so much more. We’d love to invite you to do the same!

Get Local Market Reports Sent Directly to You

You can sign up here to receive your own market report, delivered as often as you like! It contains current information on pending, active and just sold properties so you can see actual homes in your neighborhood. You can review your area on a larger scale, as well, by refining your search to include properties across the city or county. As you notice price and size trends, please contact us for clarification or to have any questions answered.

We can definitely fill you in on details that are not listed on the report and help you determine the best home for you. If you are wondering if now is the time to sell, please try out our INSTANT home value tool. You’ll get an estimate on the value of your property in today’s market. Either way, we hope to hear from you soon as you get to know our neighborhoods and local real estate market better.

Posted in Market Updates
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