Real Estate is a popular investment vehicle for American investors. In fact, 89% of investors put their money into real estate, according to a report by Better Homes and Garden Real Estate. In a recent article published by Forbes, real estate experts provide reminders and warnings regarding real estate investments in order to help insure a profitable investment.
One real estate professional, Lee Kiser, reminds investors to study the real estate taxes of a property before making the purchase. Its important to understand what the upcoming tax liability may be down the road, and a real estate tax professional may be able to help an investor prepare accordingly.
Shelling out the money for a professional inspection and appraisal might not be top of the list for investors, but according to Angela Yaun of the Day Realty Group, it may help save more money for the investor later. The investor may be able to get items covered under a home warranty if they are proven to be functioning at the time of the inspection. It can also make the buyer aware of repair expenses they should plan for later. A professional appraisal will provide the most accurate square footage and appraised value, important facts to have on hand when the investor is looking to sell their property.
The article goes on to detail the importance of understanding Home Owners Association restrictions, obtaining a Master Land Use plan for the area surrounding the property, and getting accurate and professional estimates for repairs, holding costs and closing costs.
Read the entire article.
Photo Credit: Antonio Carlos Cascatrina
Low housing inventory coupled with low interest rates has helped encourage home owners to finally consider putting their home on the market. There are many considerations to take into account before listing a home. Being able to determine what home selling advice is based on fact versus myth is vital for a successful and profitable transaction. An article published in U.S. News and World Report, written by Teresa Mears, helps homeowners navigate the process by debunking some of the rumors and myths.
One home selling myth is that home owners should list the home at a price above what they actually expect to get for the home. According to Mears, “That’s because shoppers and their real estate agents often don’t even look at homes that are priced above market value.” Even if a homeowner lowers the price after a few weeks, the fact that it sat on the market for 3 weeks or more makes prospective buyers suspicious about issues with the home.
Sellers might often be tempted to sell a house on their own, without the use of a real estate professional, in order to save money. The value real estate professionals add to the process comes in the form of marketing to buyers and their agents, negotiating the sales price and sales contract and helping navigate any issues that come up after the inspection. When you hire and pay a real estate professional, you are able to take advantage of their experience and expertise from previous sales transactions.
Additional myths touched on include which home renovations home owners can expect to see a return on investment, and which renovations should not be done just to sell a home, whether open houses benefit the home owner and what your expectation for future market prices should be. Read the entire article.
If you have been waiting for the right time to sell your home, there are many reasons experts are saying that the time has come. In an article written by Devon Thorsby, published by U.S. News and World Report, the reasons that 2018 might prove to be a good time to sell a home are listed.
First and foremost, the past few years of low inventory of homes for sale has left prospective home buyers more than ready to scoop up the perfect house. Their frustration with available homes has led many house hunters to begin their search earlier than normal with the hopes of purchasing a home before other buyers make their offer.
Additionally, interest rates are still relatively low. They have been slowly creeping up and are expected increase to 5 percent in 2019. Many home buyers are motivated to purchase a home sooner rather than later in order to secure a lower interest rate.
Thorsby details additional rationale for putting that “For Sale” sign up this year. Read the entire article here.
One of the most important decisions a home owner who has decided to sell their home can make is what the list price of the home should be. Emotions, financial strains, and decisions based on inaccurate or misunderstood information can lead to a disappointing and frustrating sales process.
In an article published by Realtor.com, Cathie Ericson helps debunk home pricing myths that might have home sellers hung up on their list price. Reviewing these myths and understanding the truth about the pricing, listing and hopefully selling a home will help sellers start out on the right foot.
One myth sellers may believe that if a home is overpriced, it can just be lowered later without any negative effects. As Ericson points out, lowering a price is not a quick and easy fix. Many house hunters notice when a home has been on the market for a while and know when there have been numerous price reductions. As she states, “… buyers presume that something must be wrong with it. As such, they might still steer clear, or offer even less than the price you’re now asking.”
When deciding on a listing price, sellers may be turned off by the idea of pricing their home too low, assuming they will not make as much money in the sale. However, low priced homes might just attract more buyers and the increased interest in the home might result in a bidding war.
The article details the truth behind other myths such as recouping 100% of the cost of home renovations, the real estate agent’s stake in the pricing strategy and the whether all home owners make money on the sale of their home. Read the entire article.
The debate over why households choose renting over purchasing a home in the United States has been a hot topic lately. Analysts have indicated the young generation of millennials are not interested in being tied down to home ownership and prefer renting over buying. However, an article published by CNN by Daniel B. Kline, points out that it is not just millennials who are opting to rent instead of making a home purchase. Kline also notes that the decision to rent may not be a lifestyle choice, but a financially driven decision.
It is true that the number of households renting a home has increased over the past decade; almost by 10 million. It is also true that 65 percent of household headed by those 35 years old and younger rent their homes. However, it’s the heads of households aged 35-44 that made the biggest increase over the past decade. In this age group, “the percentage of renters jumped from 31% in 2006 to 41% in 2016”. Heads of households between 45-65 renting homes also increased over the past decade.
However, these households may not all be renting based on lifestyle choices. In fact, research indicates that many who rent homes would actually like to purchase a home someday. Further, surveys show that 65% of renters indicated that they are renting homes due to circumstances, not purely by choice. Circumstances such as increased home prices and tougher mortgage standards may be partially to blame.
Read the entire article.
Photo Credit: Mark Moz
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.
For the past four and a half years, the median prices of homes in the United States have been increasing year over year. This positive news, coupled with the fact that home owners are making the choice to own their properties longer, has helped more and more home owners become “equity rich”.
The findings from a report released by ATTOM Data Solutions revealed 23.4% of home owners are considered equity rich, meaning they have a loan-to-value of at least 50%. In fact, the number of homeowners with at least 50 percent loan to value ratio increased by 2.6 million from the third quarter of 2015 to the third quarter of 2016.
According to an article written by Kelsey Ramirez, published by HousingWire.com, the amount homeowners who fall into the category of “seriously underwater” is smaller than last year at this time. Specifically, the number of homeowners with a loan-to-value ratio of more than 125 percent decreased by 854,000.
Just as the real estate market varies in markets across the U.S., trends for homeowners’ equity or lack thereof vary based on geographical locations. More equity rich home owners are seen in locations such as San Jose and Los Angeles, as well as Honolulu and Pittsburgh. Conversely, in locations such as Las Vegas, Cleveland, Toledo, and Detroit, there is still a large percentage of home “seriously underwater”.
Read the entire article.
Photo Credit: Svilen Milev
The number of U.S. homeowners is at a 50 year low, many more households have decided to rent a home instead of purchase their own home. Although the reasons for this decision vary, many might assume renting is a more cost effective choice than making the commitment to purchase a home.
However, in a study performed by Trulia which compared the monthly expenses associated with renting and owning a home, it found that renting can be 37.7 percent more expensive than owning a home. The study included monthly expenses such as mortgage payments, taxes, home owners insurance and the cost of upkeep and repairs. The major factor influencing the affordability of buying a home is, of course, the low mortgage rates that are still available to buyers.
Even the possibility of a Federal rate increase won’t have much effect on the affordability of homes. According to the article written by Kendall Baer, published by DSNews, “…Rates would need to increase drastically in order to push the rent vs. buy decision toward renting.” In fact, in many areas of the U.S., home prices are increasing and it is that rise in home prices that will truly impact housing affordability.
Nevertheless, a number U.S. real estate markets have reported rental expenses that fall significantly below the monthly expenses of owning a home. To find out in which areas of the U.S. it makes more sense to buy a home and in which areas, renting may be a more cost effective option, read the entire article.
The Chicago-land real estate market has made a notable recovery since the housing crash in 2007. However, a closer look at the types and price point of homes that are in demand among home buyers reveals that smaller, lower priced homes have made the most significant turnaround.
On the other hand, the large homes that popped up at an explosive rate in the early 2000s, which came to be known as “McMansions”, have not recovered at nearly the same rate. In fact, many of the home owners looking to sell their homes, once valued at $2.5 million, are preparing to take a $600,000 loss on their investment. Further, these homes are on the market an average of 155 days before receiving an offer.
According to an article published by the Chicago Tribune by Gail MarksJarvis, the allure of these homes has faded. Many Generation X home owners lost money on the homes they purchased before the housing market crashed and are not financially able to purchase homes in the luxury price range, or are hesitant to make such a large investment in real estate. These large suburban, family-oriented homes do not appeal to a significant portion of millennials or baby boomer home buyers either. To add, home buyers who are in the market for luxury properties prefer to purchase new homes with the most up-to-date decor and amenities.
To read more about the luxury home market in Chicago-land, read the entire article.
Photo Credit: Ray Sawhill