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Fournier Law Blog

Intelligent legal insight from our team of experienced attorneys.

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Zillow Estimates Under Fire: Website Responds with a Contest

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Earlier this year, a Chicago-land home owner and real estate attorney filed a law suit against the website Zillow. She felt the home estimate quoted on the popular real estate website was significantly lower her home’s actual value.  Further, she argued, it was deterring buyers and irresponsible of the website to publish unreliable information.  “If it’s not reliable, you shouldn’t put it out there,” she stated in references to the website “Zestimates”.

Zillow emerged on the web about eleven years ago and has about 171 million virtual visitors a month, according to an article published in the New York Times, written by Nick Wingfield.  The market values quoted on the site are calculated using algorithms that factor in common appraisal data such as the home’s square footage, location, recent home sales and tax assessments.  According to the New York Times article, the site has an error rate of about five percent.  Although down from the earlier error rate of 14 percent in Zillow’s earlier years, the error rate is still not satisfactory for many home homeowners who feel it is affecting their ability to sell their home at its true value.

Zillow believes there is room for improvement as well.  Last week they announced that they are not only open to suggestions but willing to pay for the best idea.  The “Zillow Prize” is $1 million dollars and will be awarded to the party able to present Zillow with the most improved algorithm.

To read the entire article and get more info on how to get in on the competition for the million dollar Zillow Prize, click here.

 

 

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Options for Financing a Home Improvement Project

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Many homeowners have big ideas and dreams about home improvement projects.  Perhaps you have finally decided to move forward with a creating your chef’s kitchen or a spa-like master bathroom, or even upgrading your home’s siding or roof.  An important factor to consider before you begin the work or order any materials is how the project will be financed.

According to an article in RealtorMag published by realtor.com, “One-third of affluent homeowners—those who earn at least $100,000 a year—plan to use credit cards to pay for home renovation projects…”, according to a survey conducted by a division of Sun Trust Banks.  This option may be a perfect solution for a homeowner who has the means to pay off the balance as soon as it is due, while earning reward points offered by their credit card company.  However, many homeowners may not be able to pay off a large sum within that time frame and would, therefore, begin to be charged possibly double digit interest on their balance.

A home equity line of credit may be a wiser decision for some homeowner’s needing to finance their renovations.  Often, the interest rates are significantly lower and possibly tax-deductible.  Homeowners with home equity could consider a HELOC or even a cash-out refinance, “where borrowers refinance for more than what they owe on the property and then take the difference out in cash.” These options can come with refinance fees or closing costs which would need to be factored into any comparisons.   Nevertheless, it is advisable to fully investigate all financing options to ensure you are not paying more than you need to complete your home improvement project.

Read the entire article.

 

 

Photo Credit:  Mateusz Kapciak
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What to Consider When Purchasing Homeowner’s Insurance

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You have made the decision to purchase a home!  It is a major commitment and quite a financial investment.  It is important to protect that investment and homeowner’s insurance will provide coverage for a variety of different situations.  In an article published by Yahoo Finance, Jeanie Ahn reviews some basic guidelines for purchasing the correct insurance coverage for your home and belongings.

Obviously, it is important to purchase coverage that provides the funds to repair or rebuild a home that is damaged by disasters such as severe weather and fire.  However, depending on the location of your home, you may need to also consider additional coverage such as flood insurance or earthquake insurance.  It is vital that homeowners understand what types of situations are and are not covered by their homeowner’s insurance policy and secure the appropriate protection

Not only do you need to protect the structure of your home, you also need to have coverage for your personal belongings inside of the home such as furniture and clothing.  According to Ahn, “To estimate how much your policy will cover for your belongings, it’s typically 50-70% of what your home’s structure is insured for.”

Aha goes on to discuss two additional areas of homeowner’s insurance that should considered when purchasing a policy. Liability coverage protects a homeowner in a cases of personal injury that takes place on your property.  The last piece of the homeowner’s insurance policy provides financial assistance when homeowners are displaced from their home and is called Additional Living Expenses.

Read the entire article for more details.

 

 

Photo Credit: Pictures of Money

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Looking for a Bargain on a Home? How to Spot a Motivated Seller

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House hunters looking to purchase their first or next home are, undoubtedly, looking for a good deal on the home and a sales transaction void of big surprises or delays.  It can be exhausting to get into back and forth negotiations over price.  Not to mention potential discoveries in an inspection that need to be agreed upon before the sale moves forward.  It can appear, at times, that the home owner is not in any hurry to sell their home and is not willing to budge on their conditions.

In an article by Stephanie Booth, published by realtor.com, she provides seven signs that a homeowner is anxious to sell their home quickly and willing to work out a good deal with a prospective buyer.  For example, a home that is listed for sale by an estate might be a sign that the home can be purchased for a bargain price and be a candidate for a quick sale; the people who inherited the home might be out of town residents and/or looking to quickly liquidate the assets of the home.

Similarly, homes that appear to need some minor work such as landscaping and basic maintenance and are overall, just not spruced up to attract buyers, may indicate distress for the homeowner.  They may not have the means or resources to make minor repairs or updates to the home and are just looking to move on.  A home buyer might find an offer to be quickly accepted and be able to negotiate a quick close with a homeowner motivated to unload the burden of owning a home they can no longer afford to maintain.

Read the entire article for other signs that a home owner is desperate to sell their home.

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Chicagoland Real Estate: Which Area’s Home Sales are Most Improved?

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Some promising real estate sales information for Chicago and its surrounding suburb’s was released by Crain’s recently.   The analysis included the actual number of homes sold, the median price of the homes that sold and the average time to sell compared to those same statistics from quarter one of 2016.

Rising to the top of the list for single family homes sold in Chicago was the Irving Park neighborhood.  According to the article in Crain’s, written by Dennis Rodkin, “Irving Park’s volume of sales is up 6.6 percent, to 66 sales, and the median price sale price rose 8.6 percent, to $505,000. Houses sold 14 percent faster than a year ago, in an average of 102 days.”

Suburbs such as Glendale Heights, Oak Lawn and Joliet reported impressive increase in homes sales, significant rise in median price and a marked decrease in the time the homes spent on the market before receiving an offer.  Specifically, Glendale Heights’ sales increased 4.8 percent and the median price rose 9.4 percent compared to the first quarter of 2016.

Read the entire article to see sales data for other Chicago neighborhoods and suburbs showing growth and improvement from last year.

 

 

 

Photo Credit: Sheila Scarborough

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Homes Sales Data So Far This Spring: Good News for Sellers

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As the season of spring begins to bloom all around us, so it goes for the spring real estate market.  Many homeowners see spring as the perfect time to put their homes up for sale.  As prospective home buyers begin their search for their first or next home, they may find that homes aren’t sitting on the market nearly as long as they have been in the past several months.

A recent report provided by a national real estate firm, Redfin, indicates that despite the fact the number of homes for sale has dipped 13 percent from last year at this time, actual home sales has surged 9 percent.  Additionally, the number of days until the average home goes under contract has decreased by 11 days since last March, dropping to just 49 days.  Lower inventory and fast paced home sales has also driven up the prices of home an average of 7.5 percent.

A CNBC article written by Diana Olick, goes on to detail that not only homeowners are benefiting from a spring jump start.  Builders are also tracking a home sales increase of 6.7 percent from last year.  However, new home prices have remained virtually unchanged.  Olick suggests, this “…may indicate builders are trying to keep prices down in order to get more buyers in the door.”

Home buyers are looking to take advantage of the low mortgage rates and their desire to close the deal has resulted in some very favorable news for those looking to sell their homes.

Read the entire article.

 

 

Photo Credit:  Guy Kilroy

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Thinking of Flipping A House? Review These Helpful Tips

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The home improvement shows make it look so easy.  It appears that as long as you can find an old, run-down house, you can spend a few weeks renovating it and list it for a profit.  Many people realize, however, it is usually not that easy.  Nevertheless, there is a market for flipping renovated homes and flipping these home can be profitable.

It is important, though, to understand the ins and outs of purchasing an old, dilapidated home and attempting to fix it up for resale.  In an article published by Realtor.com, writer Lisa Gordon lists many of common mistakes made by first time home flippers.

For example, it might be tempting to purchase a home “as is” without getting a home inspection since the plan is to fix it up anyway.  However, the home inspection will not only help identify major issues that could turn your flip into a money pit; it might also provide some bargaining power on the purchase price.

Gordon goes on to list additional mistakes such as “Overestimating your renovation skills” and “Underestimating total costs”.  You may feel it will be easy enough to do all of the work on your own, in order to save money; yet, the article warns,  it might be well worth the extra cost to hire professionals for some of the plumbing or carpentry projects.

Read the entire article.

 

Photo Credit:  Bev Sykes

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Good News About Credit Reporting and Credit Scores

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Come this July, you may see a boost in your credit score.  The three major U.S. personal credit monitoring firms, Experian, TransUnion and Equifax, will be removing some borrowers’ civil judgement and tax lien information from their credit reports.

According to an article published by Fortune.com, written by Kevin Lui, since 2015, these credit reporting firms have been working to correct credit reporting mistakes and removing information unrelated to the borrower’s loan application by omitting information deemed unnecessary to lending.  In fact, according the article, “…in 2011 alone, 8 million complaints about wrong information in credit reports were received by the three major credit-reporting firms, according to the CFPB”.

This latest announcement could result in some borrower’s credit scores increasing by up to 20 points.  An increase in a credit score can increase the likelihood of securing a loan and is also helpful when applying to rent a home and even can affect future employment opportunities.

Read the entire article.

 

 

 

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Will the Fed Rate Increase Affect the Spring Housing Market?

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On Wednesday, the Federal Reserve governors decided to increase the interest rate by .25 percent.  According to an article written by Amber Tuaufen, published by inman.com, “The Federal Reserve sets the rate for the overnight exchange of money by banks; governors adjust the rate to help curb inflation or stimulate growth, depending on their assessment of what would be best for the economy.”

Despite the fact that this move does not directly affect the mortgage rates, it can have an impact on the rates for mortgages.  In fact, an increase in mortgage rates has been anticipated for quite some time now.  Many prospective home buyers have been advised that the historically low interest rates were coming to an end; however, rates continued remain low.  Many buyers may not have felt pressure to move forward with a home purchase, leading to sluggish sales.  It would appear, now, the rates are indeed going to begin to increase.

This potential increase of mortgage rates could have some negative impact on home sales.  Yet, some agents feel that the continued affordability of housing coupled with the steady increase of rates could put pressure on prospective home buyers to make a decision and not delay their home purchase any longer.

Read the entire article.

 

 

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Working From Home May Provide Tax Benefits

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Working from home a few days a week or even full time has become a more popular option and benefit offered by employers.  Not only does it allow for flexibility in the work day, it can help save money normally spent on commuting costs, eating out, and wardrobe purchases, to name a few.  Another cost saving measure can come in the form of a tax write off, the Home Office Tax Deduction.

According to an article written by Margaret Heidenry published by realtor.com, “the home office deduction allows you to write off part of your home expenses on your business tax return by separating out the costs associated with using your home for personal purposes (making pancakes) and business (answering work email).”  It is important to understand, however, if your work from home situation actually qualifies for a home office write off.

First off, the “home office” has to be an area of your home used solely for the purpose of conducting the work associated with the business.  It cannot be used for any other functions unrelated to the employee’s work and still qualify for the deduction.  It is also required that the work from home arrangement be in place in order to provide convenience to the employer, not simply a preference of the employee.  An example of this would be if the employer did not have a physical office space for the employee to work from.  If these qualifications are met, claiming the home office on your taxes can be completed via a couple different methods detailed by Heidenry’s article.

Read the entire article.

 

Photo Credit:  Louis Hall

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