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Feb 25

Ceiling fan provides relief in 2 ways

Posted by cindyt on February 25, 2013
Under Home Improvement
Tags: , , , , ,

 Varying blades’ rotation and speed can better distribute cool and warm air, lower energy costs

By Paul Bianchina

<a href="http://www.shutterstock.com/pic.mhtml?id=25092670" target="_blank">Ceiling fan</a> image via Shutterstock.Ceiling fan image via Shutterstock.

One of the basic things we all understand about heat is that it rises. As air molecules warm up, they expand and become lighter, and that causes them to head up toward the ceiling of a room, which isn’t necessarily where you want them.

This natural rising can create layers within a room, with cooler air down near the floor, and warmer air trapped up near the ceiling. That’s especially true if you have ceiling-mounted heat registers, where your heat is entering the room at a higher level to start with. And of course, the higher the ceilings, the more that heat can rise, and the warmer the temperatures will get up near the peak.

The same is going to be the case with cooler air. When summer finally gets here and we switch back to air conditioning, cooler air is going to want to fall and settle near the floor of a room, to the detriment of those spaces on the upper levels. And here again, if you have air conditioning ducts in the floor, the effect is going to be that much more pronounced.

Stirring things up

One possibility for getting that hot air down from the ceiling and back into the room when it can do some good is to install a ceiling fan. Ceiling fans utilize large, angled, rotating blades to push air down or pull air up, which creates currents that can stir things up and move stagnant air off the ceiling. They also help draw cool air up off the floor during the summer, as well as creating cooling breezes.

Sizing things up

When considering a ceiling fan, the first order of business is deciding on the size. Fans are sized by the overall diameter of the blades, such as 36-inch, and will have anywhere from three to five blades. For the most part, the more blades and the larger the diameter, the more air movement you’ll have, although some large-diameter, industrial-style fans move quite a bit of air with only three blades.

As a general rule of thumb, a fan with a diameter of 36 to 44 inches will handle a room up to about 225 square feet, and a fan with a 52 or 54 inch diameter will handle about 400 square feet. For rooms that have more square feet than that, simply use more fans.

Ideally, the fans should be installed with the blades about 7 to 10 inches from the ceiling. Any closer than that and you won’t get a good air movement to stir up the stagnant air along the ceiling. Also, the blades should be at least 18 inches away from the wall.

Most ceiling fans have the option of multiple speeds, so this is also a consideration when choosing a size. Larger blades have the capability of moving more air at a slower speed, so if you have relatively low ceilings, that can be a real advantage when you don’t want the fan to be blowing loose papers around!

So which way is up?

If you look at the fan blades from the end, you’ll see that they’re angled in relation to the floor, rather than being exactly parallel. It’s that angle that allows them to move air as they turn, like a horizontal airplane propeller. Most fans have a reversing switch, which allows the motor to run either clockwise or counterclockwise. In one direction, the angle of the blades will pull air up from the floor toward the ceiling; in the other direction, the blades will push the air down from the ceiling toward the floor.

If you have a very high ceiling, such as a room with a two story vault, you’d like to get the warm air that’s trapped up there pushed down, so the lower floors can take advantage of it. Typically, that means that the fan rotation should be such that the blades are pushing the air down. However, in homes with lower ceilings, that downward push of air, even though it’s pushing the heat down, may also create an unpleasant breeze that actually makes you feel cold.

In that case, reverse the motor so the blades are pulling the air up. That will create a convection current of air against the ceiling, and push the warm air that’s up there outward and down the exterior walls, which again stirs things up.

The bottom line is that getting things where you want it from a heat distribution standpoint may take a bit of trial and error, with a combination of both blade rotation and blade speed.

For cooling, things are usually a bit more straightforward. Most people prefer to have the fan rotation set so the blades are pushing the air down, which stirs up the air and creates a nice cooling breeze. Set the speed at whatever level you’re comfortable with, and you should find that you can save money by cutting back on how often you run your air conditioning.

Source: “Ceiling fan provides relief in 2 ways” by Paul Bianchina, Inman News, February 22, 2013

http://www.inman.com/buyers-sellers/columnists/paulbianchina/ceiling-fan-provides-relief-in-2-ways

Posted in Home Improvement | Tagged , , , , , | Leave a comment
Feb 22

Marketing words to avoid when selling your home

Posted by cindyt on February 22, 2013
Under Selling A Home
Tags: , , , , , , , , , , , ,

REThink Real Estate

By Tara-Nicholle Nelson

Q: I loved your article on powerful words to use when selling a home. How about an article on words not to use? –Tonya

A: Thanks for reading, Tonya. I have loads of thoughts on words not to use in a home’s marketing and listing description. As a general rule, the word bombs I suggested were driven by my belief that you should get as much descriptive power out of every single character space available to you, as online listings in particular put a tight lid on how many words you can use. The goal is to be using words that go a very long way in terms of describing the home in a way that entices buyers to go see it.

So, when understanding the words not to use, one approach is to do the opposite: Eliminate the fluffery. Buyers see textual fluff and ignore it, in the best-case scenario, or become suspicious of it, in the worst case.

In a market like today’s, where buyers’ standards have been boosted by the lovely homes they see on television and in magazines, and where many listing agents have gotten the art of listing a home down to a science, having your home’s description or listing ignored is a surefire way to end up with it lagging on the market far longer than it has to.

1. Don’t use: fluffery. Remember, in recommending what to say, I urged you to get specific, listing off brand names of upscale appliances and decor brands that describe the aesthetic style of the home, as well as the details of desirable finishes like polished cement, granite and stainless steel.

So it’s no surprise that when Steven Levitt and Stephen Dubner looked into it for their 2009 book “Freakonomics” they found that the five home listing terms that correlated to a lower sales price were very general terms, i.e., terms that just express a pleasantry but are devoid of any significantly useful information to a buyer:

Five terms correlated to a lower sales price:

  • Fantastic
  • Spacious
  • !
  • Charming
  • Great neighborhood

You see, buyers don’t just skim over these terms. They wonder what’s wrong with the place that the agent would have nothing more substantial to say about it, and they compare it to the hundreds of other competitive homes whose agents do say more substantial and compelling things in their descriptions. Guess which ones they go see.

2. Don’t use: obfuscation. Here’s another thing about buyers: In this day and age, they have finely tuned B.S. detectors. So don’t even waste your time or your character counts on words that are classic cover-ups for property weaknesses.

Describing your home as “cozy” or in an “up-and-coming” neighborhood has virtually the same impact as describing it as really small or as being located in a rough part of town. I suggest you get specific about describing the strong suits of your property, rather than wasting time trying to trick buyers into believing some strained characterization of its weaknesses.

And, in fact, the same goes for listing photos, neighborhood names and others: Don’t lie and don’t stretch the truth — or the pictures.

Though it seems obvious, one of the most frequent sources of buyer outrage is photos that have clearly been manipulated and stretched beyond all reason, and homes where the desirable neighborhood named in the listing turns out to be 10 blocks over and a mile to the left. The fact is, buyers will see the truth when they see the property. And some buyers who have been just as interested in the property without the embellishment will be turned off by what they see as fraud or fiction in the listing.

3. Don’t use: descriptors that run counter to the listing photos. If half of your home’s listing description is a rhapsodic depiction of your backyard, in which you have painstakingly replicated every specimen contained in the U.S. Botanic Garden, make sure you have images of the backyard in your listing. If you describe a gourmet chef’s kitchen with custom pot rack and a Viking range, show pictures of it, too.

Buyers and their brokers get extremely suspicious when listings don’t show any pictures to back up the claims made therein, or when the images that are included don’t look anything like the home described. Don’t trigger their B.S. detectors in this way, either; make sure your marketing copy lines right up with the pictures that your listing agent includes in your home’s online listing.

Source: “Marketing words to avoid when selling your home” by Tara-Nicholle Nelson, Inman News, February 21, 2013

http://www.inman.com/buyers-sellers/columnists/taranichollenelson/marketing-words-avoid-when-selling-your-home

Posted in Selling A Home | Tagged , , , , , , , , , , , , | Leave a comment
Feb 20

Demystifying the ‘Obamacare’ real estate tax

Posted by cindyt on February 20, 2013
Under Selling A Home
Tags: , , , , , , , , ,

REThink Real Estate

Q: When does the tax for “Obamacare” when selling a house go into effect? How will it be calculated? –P.

A: First things first: Always, when considering any real estate move, from buying to selling, refinancing or even planning to rent for a number of years, get your own tax professional on the horn, loop them into your plans, and get their advice.

<a href="http://www.shutterstock.com/pic.mhtml?id=91063214" target="_blank">Tax time</a> image via Shutterstock.Tax time image via Shutterstock.

I say this upfront because I commonly see people worry and fret about tax issues that are not likely to ever be an issue for them, and vice versa: people wandering right into tax dramas they could have avoided if they’d gotten professional advice upfront.

And this “Obamacare” home sale tax issue is no different. Many who are worried about it needn’t be at all. Many who are unaware of the tax should be mindful of it.

Unfortunately, the mechanics of this tax have been conflated with the conversation about whether or not it should have been imposed. The latter question is a discussion for a different time, place and bat station. The tax is real for this moment, though, so it behooves us to explore and understand how it works.

1. Threshold No. 1: adjusted gross income. On Jan. 1 of this year, a new set of taxes to fund the health care program known as “Obamacare” went into effect. One of these taxes is a 3.8 percent tax on investment income, applicable only to singles with adjusted gross incomes greater than $200,000 and couples with adjusted gross incomes greater than $250,000. So, this is the first threshold for which people should be mindful of this new tax: For the 95 percent of Americans who make less than this threshold, the tax doesn’t apply.

2. Threshold No. 2: Capital gains exceed the exclusion. On your primary residence, the tax code currently allows homeowners to realize $250,000 (singles) or $500,000 (married couples) in capital gains, or profits, on the sale of their home before taxing them. Keep in mind that this amount refers to profits above and beyond the purchase price and investments that have been made in the home during the time it was owned.

When a primary residence is being sold, the “Obamacare” tax applies only in situations where (a) the adjusted gross income falls into the high-income bracket stated above, and (b) the capital gains being realized on the home sale exceed the $250,000/$500,000 guideline.

On today’s market, very few people fall into this income range and are experiencing this level of profit on the sale of their home.

That said, I believe the larger impact of this tax is on investment and second-home owners who decide to sell. The capital gains exclusion guideline does not appear to apply for investment properties (including commercial real estate) and second or third homes, though taxpayers owning these sorts of properties still much meet the high-income guideline to incur this new tax.

3. Calculating this tax is relatively simple — and revealing. If you do happen to be one of the chosen few to whom this new tax applies, the way the tax is calculated will depend on whether you are selling your personal residence or not. If you are selling your personal residence, the tax is 3.8 percent of your taxable capital gains. So, you are going to be taxed only on the amount above the $250,000/$500,000 exclusion.

If you are selling an investment property or a second or third home, again, assuming your income exceeds the $200,000 limit for singles and the $250,000 limit for marrieds, the 3.8 percent tax is applied to your investment profits, not the total proceeds of sale.

And that brings up one more implication for investment and vacation-home owners: It is possible that this 3.8 percent tax will now apply to your investment property income throughout the year, so long as you fall into the high-income category. This is just one more reason to connect with your tax professional and determine whether you should realistically expect to be impacted by this new tax.

That said, let’s put this all in perspective. The independent Tax Policy Center actually ran the math and projected that only 0.2 percent of homes that bring in cash income between $100,000 and $200,000 will actually pay any extra tax under this law, and the grand total of what they will pay is, on average, $235, considering all their sources of investment and nonwage income, not just home sale income.

Source: “Demystifying the ‘Obamacare’ real estate tax” by Tara-Nicholle Nelson, Inman News, February 14, 2013

http://www.inman.com/buyers-sellers/columnists/taranichollenelson/demystifying-obamacare-real-estate-tax

Posted in Selling A Home | Tagged , , , , , , , , , | Leave a comment
Feb 14

Obama calls for expanded refinancing

Posted by cindyt on February 14, 2013
Under Mortgages, Uncategorized
Tags: , , , , , , , , , , ,



Backers say bill would cut costs for homeowners, boost economy

By Inman News

 

<a href="http://www.shutterstock.com/pic.mhtml?id=52945699" target="_blank">Low mortgage rates</a> image via Shutterstock.Low mortgage rates image via Shutterstock.
 

President Barack Obama urged Congress last night in his State of the Union to pass a bill that would expand and streamline homeowners’ ability to refinance at today’s low rates.

“Today, our housing market is finally healing from the collapse of 2007. Home prices are rising at the fastest pace in six years, home purchases are up nearly 50 percent, and construction is expanding again,” Obama said.

“But even with mortgage rates near a 50-year low, too many families with solid credit who want to buy a home are being rejected. Too many families who have never missed a payment and want to refinance are being told no. That’s holding our entire economy back, and we need to fix it.”

The interest rate for a 30-year fixed-rate mortgage averaged 3.53 percent at the end of last week — near historic lows.

“Right now, there’s a bill in this Congress that would give every responsible homeowner in America the chance to save $3,000 a year by refinancing at today’s rates,” Obama said.

“Democrats and Republicans have supported it before. What are we waiting for? Take a vote, and send me that bill. Right now, overlapping regulations keep responsible young families from buying their first home. What’s holding us back? Let’s streamline the process, and help our economy grow.”

The bill, S. 249, The Responsible Homeowner Refinancing Act of 2013, is currently awaiting action by the Senate Committee on Banking, Housing and Urban Affairs after being reintroduced last week by Sen. Robert Menendez, D-N.J., and Sen. Barbara Boxer, D-Calif.

“Congress should heed the president’s call and immediately pass our refinancing bill to put $3,000 a year into the pockets of middle-class families before interest rates go up and it’s too late. We need to bring much-needed relief now to hard-working, responsible homeowners who are struggling to keep up with their high-interest-rate loans — including thousands in New Jersey whom I have heard from,” said Sen. Menendez in a statement.

“It’s time that Congress finally put families first and give homeowners who have played by the rules a fair chance to refinance at today’s low rates. Not only will this bill help put thousands of dollars back into the pockets of New Jersey families who are trying to pay their bills and keep their homes, but it does so at no cost to taxpayers and will expand our economy.”

The bill would streamline refinancing for borrowers who are making their payments on mortgages held by Fannie Mae and Freddie Mac regardless of whether they are underwater; increase competition between lenders in order to reduce costs for borrowers; forbid Fannie and Freddie from charging upfront fees to refinance any loan they already guarantee; eliminate appraisal costs for all borrowers; eliminate employment and income verification requirements to refinance; and extend the Home Affordable Refinance Program (HARP) an additional year to the end of 2014. The program is currently set to expire on Dec. 31.

“This bill is a win-win-win,” Sen. Boxer said in a statement. ”Homeowners will have more money in their pockets, Fannie and Freddie will see fewer foreclosures, and the housing market and economy will continue building momentum. That’s why the Menendez-Boxer bill has such broad support from industry and consumer groups.”

Boxer cited more than three dozen industry and consumer groups in favor of the bill, including the National Association of Realtors, the Mortgage Bankers Association, the National Association of Home Builders, the Center for Responsible Lending, and the Consumer Federation of America.

The bill differs from Obama’s State of the Union proposal in one crucial way, however: The bill applies only to borrowers with loans held by Fannie Mae and Freddie Mac, not borrowers with private loans.

One year ago, the Obama administration proposed the Federal Housing Administration (FHA) back mortgage refinancings for those without government-guaranteed loans, but that effort didn’t go anywhere when it became clear the FHA’s reserves were at risk of collapse, the Wall Street Journal reported.

Nonetheless, the administration may soon introduce a program that would allow Fannie and Freddie to purchase newly refinanced private mortgages, the Journal said.

The Obama administration has said it wants to see the government gradually reduce its role in mortgage lending to make way for the return of private capital. To that end and to shore up FHA reserves, the agency has tightened its underwriting requirements and raised mortgage insurance premiums three times in the past two years.

At the end of January, the government announced it would shut down FHA’s standard fixed-rate reverse mortgage program, reverse a policy that automatically canceled required premium payments after loans reached 78 percent of their original value, require manual underwriting of loans for borrowers with FICO credit scores below 620 and a total debt-to-income ratio of more than 43 percent, and increase the minimum down payment on jumbo mortgages to 5 percent, among other changes.

Source: “Obama calls for expanded refinancing” by Inman News, February 13, 2013

http://www.inman.com/news/2013/02/13/obama-calls-expanded-refinancing

Posted in Mortgages, Uncategorized | Tagged , , , , , , , , , , , | Leave a comment
Jan 24

Educate your clients before they buy or sell land

Posted by cindyt on January 24, 2013
Under Realtors
Tags: , , , , , ,

3 places to look for hidden deal breakers

By Alisha Alway Braatz

Acquiring land and building houses, barns and businesses used to be a lot easier. Take the land runs of the 1890s. All a person really needed was a fast horse and hammer.

Nowadays, there are endless hoops to jump through, it takes a lot of money, and there are 12,862 rules. Helping a client buy or sell vacant land isn’t as easy as you might think. And you better think.

<a href="http://www.shutterstock.com/pic.mhtml?id=32578711" target="_blank">Developer</a> image via Shutterstock.Developer image via Shutterstock.

Buying land and building on it isn’t straightforward. Neither is selling bare land (simple as it may sound).

Thus, “Buyer beware!” is a phrase lazy Realtors repeat in their minds as they overlook three essential and elemental areas in which to educate their client: covenants, conditions and restrictions (CC&Rs); architectural review committees (ARCs); and development costs.

CC&R deal breakers

If you don’t do it already, start reading the CC&Rs of the neighborhoods in which you sell. You will learn invaluable information.

CC&Rs don’t just cover whether or not a trailer can be parked in a driveway — they can specify just about anything.

A few interesting ones I’ve run into include a ban on wood and wire fencing; no above-ground swimming pools or hot tubs allowed; and a rule against leaving your garage door open ever. Like, ever.

There are also age restrictions in some neighborhoods, leasing and rental guidelines, and a whole litany of fines, should any of the rules be broken. Navigating your clients through the treacherous CC&R deal breakers is a must. Yes, they should be reading all the material themselves — but you are also getting paid a pretty penny to help them finish a successful transaction.

Dramatic ARC

I love and hate ARCs, equally.

I love that a good architectural review committee can protect me from a purple home with neon yellow gutters, but I am irritated at having to turn in notification that I plan on staining my fence.

For the most part, ARCs are good things — unless you are building a new home in a new subdivision. Then, urrrghhh. What a headache. Especially if it is a private gated community.

Even if your job as Realtor officially ends with your clients’ purchase of a lot, it’s simply good form to prepare them for the impending and inevitable drama. But maybe they are the kind of people who like a good community barn-raising!? One can only hope.

Put a house on it

Finally, development costs. I know, I know — this is kindergarten stuff, right? Exactly. It’s the simple stuff that always gets overlooked because “Doesn’t everybody know it?” Hardly.

Assume that your buyers (and sellers) know nothing. Even if they claim to be real estate connoisseurs, write everything down, keeping a log of conversations and having your clients sign off on, well, everything.

But back to those pesky development costs. When dealing with bare land, be super-duper sure of its zoning. Check on the long-range land use plans if it is near the city center or on the edge of town. Is it in a flood plain? What about utilities? And a land survey? Or a soil sample?

I’m not saying you have to become a developer yourself, but you need to sit down with the buyers and discuss access, easements and building envelopes especially if the bare dirt doesn’t have utility access already.

Once they own the land, then they gotta put a house on top of it (usually). Add it all up, and is it really realistic?

I’ve seen too many deals gone bad simply due to the kindergarten stuff. So collect your blunt-tip scissors, Elmer’s Glue and the grape smelling Magic Marker, and get down to business.

Not only will you learn a little bit yourself, but you’ll be reinforcing why you are a professional Realtor and not just a part-time chauffeur.

Source: “Educate your clients before they buy or sell land” by Alisha Alway Braatz, Inman News, January 23, 2013

http://www.inman.com/buyers-sellers/columnists/alishabraatzinmancom/educate-your-clients-they-buy-or-sell-land

Posted in Realtors | Tagged , , , , , , | Leave a comment
Jan 21

First impressions are made at the front door

Posted by cindyt on January 21, 2013
Under Home Improvement
Tags: , , , , , , ,

Home’s entrance is seldom high on remodeling priorities

By Arrol Gellner

Front door of a <a href="http://www.shutterstock.com/pic.mhtml?id=75275389" target="_blank">Georgian era townhouse</a> in Salisbury, England image via Shutterstock.Front door of a Georgian era townhouse in Salisbury, England image via Shutterstock.

Have you ever been to a house where you had to skirt the gas meter or sidle around garbage cans to get to the front door? Or one where there was such a bewildering array of doors, you weren’t sure which one to knock at?

The front entrance is seldom high on people’s remodeling priorities. Yet, just like that old saw about first impressions, it’s your home’s entrance that people notice first. It’s practically impossible to rectify a bad impression made at the front door.

Tract-home builders have known this for years; even in the cheapest house, they’ll never cut corners on the front door. They know that a strong impression of quality here subtly colors a visitor’s perception of the whole house.

For much of architectural history, front entrances have been a focal point of a home’s design. In colonial New England, for example, the front door was often flanked by sidelights and topped by a pediment, setting it apart from an otherwise austere facade.

The entrance should also be clearly apparent from the street. That doesn’t mean it has to be glaringly exposed to view — just that its location should be easily deduced by an unfamiliar passerby. Architects call this principle “demarcation.”

There are lots of subtle ways to demarcate a front entrance. The most common is to surround the door with an architectural form such as a pediment or other type of trim. Another traditional strategy places the door in a recess, on a projection, or under a roofed porch. You can find a well-known example of the latter on the back of a $20 bill.

Here are some thoughts for planning your own grand entrance:

  • Don’t place an unsheltered entrance door flush with the front wall of the house; it’ll create an unwelcoming “side door” or trailer-door effect.
  • Don’t bring the path to the front door past utilities such as gas or electric meters, or past unsightly storage areas for trash or the like. Keep these kinds of features out of the visitor’s line of sight.
  • Don’t force visitors to walk on a driveway to get to your front door. Provide a separate walking path, or at least set aside a portion of the driveway paving using a different color or texture so it’s clearly meant just for those on foot.
  • If you plan to provide a covered entrance porch, make it at least 6 feet wide — enough for a person to stretch out both arms without touching either wall. Anything less will feel cramped and uncomfortable. Also, make the porch at least 4 feet deep (6 feet is better), or it’ll feel cramped when more than one person is waiting outside the front door. A cheaper alternative to building a projecting porch is simply to recess the front door. Again, make the recess at least 6 feet wide, and not less than 2 feet deep.
  • Lastly, if your house has several doors facing the street, make sure your front approach aims your visitors toward the main entrance. Your front door may seem obvious to you, but, hey, you live there.

Source: “First impressions are made at the front door” by Arrol Gellner, Inman News, January 11, 2013

http://www.inman.com/buyers-sellers/columnists/arrolgellner/first-impressions-are-made-front-door

Posted in Home Improvement | Tagged , , , , , , , | Leave a comment
Jan 19

Homebuyers don’t always do what they say they will

Posted by cindyt on January 19, 2013
Under Buying A Home
Tags: , , , , ,

Studies reveal buyers adjust their dreams to better fit their budget or lifestyle

By David Fletcher

<a href="http://www.shutterstock.com/pic.mhtml?id=107762783">Dreams of the future</a> image via Shutterstock.Dreams of the future image via Shutterstock.

Today — perhaps for the first time ever — here is a quantified sample of what home shoppers say they are going to do, and what they actually did to become a homebuyer.

What follows is a small sample based on two major studies comparing what 984 home shoppers said they were going to do to what 8,501 homebuyers actually did.

This is such an unusual report that an explanation of the methodology used should prove helpful.

In July 2012, the National Association of Realtors mailed a 120-question survey to a random sample of 93,502 recent homebuyers. The respondents had to have purchased a home between July 2011 and June 2012. The tailored survey design method was used to survey the sample, which includes a pre-postcard mailing, the survey, a follow-up letter, and a re-mailing of the survey. Using this method, a total of 8,501 responses were received. 

Consumer names and addresses were obtained from Experian, a firm that maintains an extensive database of recent homebuyers derived from county records.

In June 2012, Builder Homesite Inc. (BHI) — a consortium of 32 of the largest U.S. production homebuilders in the United States — undertook a confidential marketing study for its members.

Between June 7 and June 20, 2012, 984 potential homebuyers from 25 major markets responded to a 20-minute online questionnaire provided by BHI. Respondents were 25 or older, with household incomes of $50,000 or more, and likely to purchase a resale or new home priced from $150,000 to $500,000 within the next 12 months

Sixty percent of this group planned to purchase within six months and had taken one or more of the following actions:

  • Met, spoken with or hired a Realtor.
  • Sought preapproval for a home loan.
  • Visited a model home in a new-home community.
  • Visited an existing home with a Realtor.
  • Bid on a property.
  • Attended a homebuying seminar.
  • Placed home on the market for sale.

Forty percent rated their likelihood to purchase in 12 months and were classified as “considering” a home purchase if they had taken one of the above steps, or one of the following:

  • Regularly looked at home listings online or in the paper.
  • Visited a Realtor and/or homebuilder website.
  • Calculated living costs as a result of a new home purchase.
  • Attended an open house.
  • Watched a TV show about local homes and real estate for sale.
  • Driven around neighborhoods looking for homes for sale.

In a perfect world, both studies would come from the same group over a period of time. Since this is not a perfect world, the topics to be compared were selected by me, with the hopes that the results would be of interest to both real estate agents and homebuilders.

Since the questions are not identical in both studies, license was taken to group relative answers to the most likely questions. Some were easier than others, such as the following two:

Use a Realtor

  • BHI: Intend to use a Realtor — 84%
  • NAR: Used a Realtor — 87%

Shop on Internet

  • BHI: 90%*
  • NAR: 87%

Relating to “looks like it applies here” data was difficult especially when the BHI results and NAR results were so far apart, such as:

“Why do you plan to use a Realtor?”

  • BHI: Negotiate terms/price — 70%
  • NAR: Realtor helped most with negotiations — 12%
  • BHI: Find home with your specifications — 68%
  • NAR: Helped me find the right home — 50%
  • BHI: Draft offers and contracts — 65%
  • NAR: Helped me with paperwork — 7%
  • BHI: Determine what comparable homes sell for — 61%
  • NAR: Tell me how much comparable homes are selling for — 8%

My opinion is in italics, such as the copy below.

One reason for the large differences in expectations and reality when it comes to using a Realtor may be the lack of knowledge and evolving appreciation for the services rendered by the Realtor as the shopping process evolves into the actual purchase.

Focus groups might help determine a clearer, stronger message for using a Realtor, especially when it comes to working with first-time homebuyers.

How long they search

  • BHI: Almost two-thirds are unsure or expect to shop for up to nine months.
  • NAR: Shopped 12 weeks, viewed 10 homes.

Many shoppers spend weeks and months before contacting a Realtor. Many of them have done their research and are ready to move forward, thus reducing the time they shopped before the purchase.

Home search resources 

BHI asked: Which sources do you intend to use in your search for a home? Check all that apply.

Top nine sources

  • Local real estate listing websites — 61%
  • National real estate websites — 55%
  • Online search engines — 49%
  • Friends/family — 37%
  • Local websites — 36%
  • Model home visits — 35%
  • New-home websites — 29%
  • Builder websites — 25%
  • Newspapers/news articles — 23%

NAR asked: Where buyer found the home they purchased.

Top nine sources

  • Internet — 42%
  • Real estate agent — 34%
  • Yard sign/open house sign — 10%
  • Friend, relative or neighbor — 6%
  • Homebuilder or their agent — 5%
  • Direct from seller/knew seller — 2%
  • Print newspaper advertisement — 1%
  • Home book or magazine — not rated
  • Other — not rated

Print newspaper advertisement only 1 percent for buyers, 23 percent for shoppers! Homebuiders, which are you going to believe?

 What they said they would buy

  • BHI: Will purchase a new home — 19%
  • NAR: Purchased a “new” home — 16%

What we really need to know is what percent of all homes sold in a market sold at the price point of the new homes. If new homes in your market start at $250,000, for example, you need to know what all homes from $250,000 and up are resales vs new.

Resales

  • BHI: Insisted on resale — 48%
  • NAR: Purchased a resale — 84%

BHI study says that an additional 35 percent are “indifferent,” meaning they will purchase a resale or a new home. Are you qualifying the “indifferent” for both resale and new?

Factors influencing neighborhood choice (in order of preference)

  • BHI: Quality of construction, neighborhood safety, better floor plans. BHI study said whether resale or new home, buyers were about equal concerning construction quality and safety.
  • NAR: Quality of neighborhood, convenience of job, affordability of homes.

Location preference

Suburban area/close To urban area 

  • BHI: 54%
  • NAR: 51%

Outlying suburban area

  • BHI: 20%
  • NAR not listed. A guess: a portion of the 51% above.

Heavily populated urban area

  • BHI: 13%
  • NAR: 17%

Small town

  • BHI: Prospect — 5%
  • NAR: Buyer — 18%

Rural

  • BHI: Prospect — 5%
  • NAR: Buyer — 12%

First-time homebuyers were more likely than repeat buyers to purchase a home in an urban or central city area. Buyers of new homes were most likely to purchase in a suburb. The highest percent of repeat buyers, 26 percent, both purchased a home and sold a home in a suburban area,” according to the NAR study.

To summarize, as shoppers start to actually see, touch and feel homes they thought they wanted, they are no different than the rest of us. They adjust their dreams to better fit their budget or lifestyle. 

Studies that show what home shoppers say they want vs. what they actually purchase help us better understand the process, and, therefore, be better real estate agents.

Source: “Homebuyers don’t always do what they say they will” by David Fletcher, Inman News, January 16, 2013

http://www.inman.com/buyers-sellers/columnists/davidfletcherinmancom/homebuyers-dont-always-do-what-they-say-they-will

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Jan 10

6 tips for buying a fixer-upper

Posted by cindyt on January 10, 2013
Under Buying A Home
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How to determine when and where purchase makes most sense

By Dian Hymer 

<a href="http://www.shutterstock.com/pic.mhtml?id=2882778" target="_blank">Fixer-upper</a> image via Shutterstock.Fixer-upper image via Shutterstock.

Several years ago, when the housing market was mired in the worst recession since the Great Depression, buyers shied away from houses that needed work. The buyers who weren’t put off from buying completely were interested only in turnkey homes that were in move-in condition.

It was too risky for most buyers to buy a house that needed work. But, now that the housing market appears to be recovering, buying a home to fix up seems more reasonable, but is not without risk.

It was too risky for most buyers to buy a house that needed work. But, now that the housing market appears to be recovering, buying a home to fix up seems more reasonable, but is not without risk.

There are basically two types of “fixer” buyers. One is the flipper who buys a home, spruces it up quickly and sells it at a profit. The goal is not to hold the property as an investment, but to find a buyer as soon as possible after the redo is complete.

 Flippers should avoid buying homes that have major problems to remedy, which will eat into profits. A way to maximize profit and minimize carrying costs during the rehab period is to buy at a low price with all cash. Buy in areas where employment and transportation are good so that you will have a pool of buyers for your product when it’s ready to sell.

Select the neighborhood carefully. Is it conveniently located? Are homes selling quickly? What is the average “days on market” from list date to sale date? This information is critical to knowing how fast you can turn the property over to a new buyer.

For the last couple of years, institutional investors bought hundreds of devalued properties at a time, many of them foreclosures. First-time buyers who needed to qualify for a mortgage in order to buy were muscled out. A sole-practitioner flipper should look for buying opportunities in smaller neighborhoods in good locations, near jobs and transportation.

The other type of fixer buyers are those who buy for their own use. They do not intend to flip the property, but want to increase the value of the property over time while providing a roof over their heads. This type of buyer may be able to pay more for a property than the flipper, but the price paid and the amount spent on improvements should always be well researched before making a purchase.

HOUSE HUNTING TIP: Don’t pay a Cadillac price for a home that needs a lot of work if you want to make a profit on a fixer-upper. Find out the sale price of recently sold homes in the neighborhood that were similar to the one you’re considering, but in much better condition. Be sure to overestimate how much the renovations will cost. There will always be unanticipated costs, so there’s no point in skimping on your estimate to make the numbers work.

Keep a close eye on the costs of your renovations while you’re working on the project. There’s always the temptation to improve more than you had intended once you see how good the improvements you have made look. Even though you’re improving the house for yourself, remember that you will be selling someday and you want to make a profit on the time and money you invested.

It’s a great time to buy at prices that were not possible at the peak of the market. Just make sure you know values for the neighborhood and don’t overpay for a property that needs work. Fixer buyers who paid high prices at the peak of the last market cycle not only didn’t make a profit, but some lost the homes in foreclosure.

The housing market picked up in 2012 and will hopefully continue to move in a positive direction. However, the home sale market is continually changing and varies from one location to the next.

THE CLOSING: A well-informed, level-headed approach is the best bet.

Source: “6 tips for buying a fixer-upper” by Dian Hymer, Inman News, January 7, 2013

http://www.inman.com/buyers-sellers/columnists/dianhymer/6-tips-buying-a-fixer-upper

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Jan 7

Fiscal cliff bill extends real estate tax breaks

Posted by cindyt on January 7, 2013
Under Mortgages
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Real Estate Tax Talk

By Stephen Fishman

The tax law passed by Congress this week to avert the “fiscal cliff” turned out pretty well for the real estate industry.

First, the Mortgage Forgiveness Debt Relief Act of 2007, which was scheduled to expire on Dec. 31, 2012, has been extended through the end of 2013.

This means that homeowners who experience a debt reduction through mortgage principal forgiveness or a short sale of their principal residence during 2013 may exclude up to $2 million of forgiven debt from their taxable income.

Had this law not been extended, income tax would have had to be paid on such forgiven debt — making short sales and loan modifications less attractive to some distressed homeowners than foreclosure and bankruptcy.

Second, the fiscal cliff deal brings back from the dead the deduction for mortgage insurance premiums. This deduction expired at the end of 2011, but has now been retroactively extended for all of 2012 as well as 2013.

Taxpayers with adjusted gross incomes (AGI) of less than $100,000 per year can deduct as an itemized deduction all of their mortgage insurance premiums.

The deduction is phased out ratably by 10 percent for each $1,000 by which the taxpayer’s AGI exceeds $100,000. Thus, the deduction is unavailable for taxpayers with AGIs over $110,000.

The deduction applies to private mortgage insurance premiums as well as mortgage insurance provided by the FHA, the Department of Veterans Affairs, and the Rural Housing Service.

Third, the home mortgage interest deduction (the “MID”) was left largely untouched — for the moment, at least. Some had feared that the MID might be substantially reduced, an option that remains on the table as lawmakers prepare for a broader debate over the shape of the tax code that will take place in coming months.

Although the MID is intact for now, many high-income taxpayers will see some reduction in the value of their itemized deductions, including the MID. That’s because the fiscal cliff bill brings back the “Pease limitation,” which had expired in 2009. This provision reduces a taxpayer’s itemized deductions by 3 percent of the amount his or her AGI exceeds a threshold amount.

Under the new law, the Pease thresholds are $300,000 for married taxpayers filing jointly, and $250,000 for single taxpayers.

So a married couple with an AGI of $400,000 and $50,000 in itemized deductions (including home mortgage interest), would be $100,000 over the threshold. Because 3 percent of $100,000 equals $3,000, the couple’s itemized deductions would be reduced from $50,000 to $47,000. The couple end up with $3,000 more in taxable income, which at their income level is taxed at a 33 percent rate. They end up paying $999 in extra taxes.

No matter how high a taxpayer’s AGI, the Pease reduction cannot exceed 80 percent of the amount of itemized deductions otherwise allowable for the year.

But this still means that a very high-income homeowner could still lose up to 80 percent of his or her itemized deductions for home mortgage interest, state and local income and property taxes, and charitable contributions.

Finally, in a boon to all homeowners, the $500 credit for various energy-saving improvements to a principal residence has been reinstated — it had expired at the end of 2011. The fiscal cliff law brings it back for 2012 and 2013.

Source: “Fiscal cliff bill extends real estate tax breaks” by Stephen Fishman, Inman News, January 4, 2013

http://www.inman.com/buyers-sellers/columnists/stephen-fishman/fiscal-cliff-bill-extends-real-estate-tax-breaks#

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Jan 2

Don’t lower your standards just because homes are scarce

Posted by cindyt on January 2, 2013
Under Buying A Home
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Desperate approach can lead to buyer’s remorse

By Dian Hymer

In low-inventory markets that are now common in many areas of the country, buyers might be prone to jump at a listing they wouldn’t even consider if there were a lot of homes for sale.

This desperate approach to homebuying could cause you problems down the line when you need to sell and you realize you paid too much, overlooked property problems or bought in the wrong location.

A listing that has been on the market for a long time could indicate a problem. Is the listing not selling because it’s priced too high and the seller is stuck unreasonably at a high price?

Does the property have problems that can’t be remedied for a reasonable price? Or is the deferred maintenance so widespread that buyers are turned off, particularly if the listing is priced too high for the market and the amount of work that’s required?

In some areas, it could be none of the above. The reason the listing hasn’t sold could have to do with a slow market where it takes a long time for listings to sell, particularly if they are at the high end of the market.

HOUSE HUNTING TIPS: Before taking the leap and writing an offer on a listing that has been on the market awhile, find out why it hasn’t been selling. Ask the listing agent if the seller has received offers and why they didn’t end in a ratified contract.

The seller’s agent may be reluctant to have this discussion. In that case, let your agent know what price you’d be willing to offer. Ask your agent to find out if the seller’s agent thinks it’s worthwhile to make an offer.

Listing agents usually want to take a low offer to the seller in writing. So you may have to go through this process to even find out if there’s a chance of buying the listing for a reasonable price.

The seller could flatly turn the offer down. But if the listing doesn’t sell for several more months, the seller might soften her stance.

A listing that is difficult to get in to see is another red flag. Does the seller really want to sell? If not, you could waste a lot of time trying to buy a home you’d love to own, but end up with nothing but frustration.

Another type of listing to be wary of is one that is on and off the market repeatedly. This is typical behavior of a seller who wants to sell only for a certain price that is too high for the market. It is also characteristic of homeowners who want to sell only if they have a place to move to and they can’t afford to buy another home until they’ve sold their current home.

These are maybe sellers who can also waste a lot of your time and emotional energy. Some sellers try to sell contingent on finding a replacement home. If you go into contract to buy a home with this contingency, you should also have a contingency in the contract that lets you out of the contract if you find another home to buy before the sellers find a replacement home. You should also get a break on the price to compensate for the uncertainty.

A listing that has been back on the market (BOM) over and over could signify a problem. Find out the reason why the deals didn’t stay together. Was the seller unrealistic about negotiating on defects discovered during inspections? Was there a problem with the buyer’s financing? Did the appraisal come in low? Or was it just the seller’s bad luck.

THE CLOSING: For peace of mind, investigate carefully before you buy.

Source: “Don’t lower your standards just because homes are scarce” by Dian Hymer, Inman News, January 2, 2013

http://www.inman.com/buyers-sellers/columnists/dianhymer/dont-lower-your-standards-just-because-homes-are-scarce

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