Tips for a Buyer of a Fixer-Upper

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Over the last few years weekend warriors have been delighted to find an abundance of television shows devoted to fixing up homes. More specifically, they show viewers how to take a fixer upper and turn it from an ugly duckling to a special property that they can call home. It sounds so easy but before you grab a sledge hammer and head out to buy that cheap bank-owned building on the corner, there are things to consider.
First and foremost, how handy are you really? Fixer-uppers can vary from cosmetic paint and carpet, maybe changing a countertop or fixtures; then there are fixers which have electrical problems and slab leaks. It’s important to understand what you are capable of handling –either yourself or supervisory level.
Tips for a Buyer of a Fixer-Upper
Do Your Research –Don’t assume anything. Check for local ordinances and zones to make sure the plans you have for the property are truly available to you.
Hire a Professional –Regardless of your level of “handiness” you need professional help. Start with a professional home inspection and understand the true condition of the home.
Know Your Limits –A great deal is only a deal if you can take on the project. Be honest with yourself. If you need to, hire a General Contractor to handle the renovation.
Fixer-uppers can be great investments. These properties can be converted to beautiful homes or flipped for quick profit, but either way, handled well these ugly ducklings will live up to the best episode of HGTV.

The Internet Can’t Replace Your Agent

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We live in the information age; the Internet offers advice on every topic and real estate is no exception. With more and more home buyers starting their home search online, they are bombarded with advice and information –it can be easy to think that you can learn everything you need to know just by reading articles online.

The truth is your real estate agent does much more than answer your questions and open doors with a special key. A professional real estate agent will be there every step of the way. They have the experience necessary to navigate the complicated home buying process and solve common hiccups that present themselves in every real estate transactions.

Your real estate agent is a local professional. They have a network of professionals who will work as a team to help you through the process. These include: lenders, title reps, escrow officers, transaction coordinators, home inspectors, contractors and handymen, among others.

Most importantly, your agent is your ally in the home buying process. They negotiate on your behalf –armed with experience and understanding of customary charges, costs and terms. They will ensure that the price you pay for the home is fair for the condition and neighborhood. They will negotiate repairs, if needed and make sure you are protected with the proper contingencies.

The Internet offers lots of great information, but the most important step you can take when buying a new home, is hiring a local professional real estate agent. Their knowledge and expertise can’t be found by reading an article or two online.

Wants vs Needs When Buying a Home – Learning the Difference

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One of the first questions that a real estate agent will ask new buyers is, “What do you want in your new home”? It might seem like an easy question to answer but identifying your “wants’ from your “needs” is an important aspect of home seeking.

Needs

A need is something that is truly essential to how you and your family live. For instance, if you have a family of four, you truly can’t live in a studio-style apartment; bedrooms become a real need in house hunting. By contrast, while having an acre of land would be nice, do you truly have to have that much space in your yard?

Make a List

One way to focus your thought is to create a list of features and amenities that you would like to have in a new home. Prioritize this list starting with the essential (need) first and work your way down to the aspects that would be nice to have (want). Remember that you might live in this home for a number of years, so consider how your family will grow over the next few years and what needs might change.

Think about elements outside the house itself as well. Do you have school aged children, or will you? The location of the home might be a need as well. Commute times, recreation and services must also be included in the list of priorities.

Home hunting is exciting; make sure you include your needs in your search so you don’t get distracted by a want instead.

What Is A Home Warranty?

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A home warranty plan is a service contract made with a third party repair company. There are many options when it comes to home warranties and your agent will guide you to make sure you get the right coverage. The purpose of the home warranty is to make sure that you are not met with unexpected repairs or system failures during the term of the policy.

A home warranty covers all the major systems of a home. They provide insurance against repairs or failures of electrical, plumbing, water heater, appliances, garbage disposal, heating, air conditioning and sometimes they include roof, pool/spa and even building code issues. The coverage depends on the policy itself and the price corresponds with the level of coverage.

So how does a home warranty work?

If there is a problem with a covered system, you will contact the home warranty company and place a claim. They will then send a repair person to your home to assess and correct the problem. Most warranties are about $500-700/year. It’s an insurance policy against unexpected repairs. A home warranty ensures you’re never caught with an expensive repair bill. It’s a very small price to pay for the peace of mind that a home warranty provides.

7 Things Buyers Notice As Soon As They Walk In!

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Buyers notice everything – good and bad. From the moment they walk in the front door, they are trying to determine if this is the right home for them and their family. If you have your home listed for sale, paying attention to what the buyers notice can mean the difference between an offer and a missed opportunity.

7 Things Buyers Notice as Soon as they Walk In

1. Light – A bright home is inviting. Make sure you fill your home with lots of natural light or a soft evening glow.

2. Smell – Nothing is less inviting than a strong odor. Even candles and air fresheners can be overwhelming. Less is more and make sure nothing unpleasant is lingering.

3. Space – Remove any unneeded furniture and offer a spacious home which flows.

4. Ceilings – Of course you can’t make your ceilings higher, but make sure they are free from water stains because buyers will look up.

5. Pictures and Personal Items – Remove personalization as much as possible so the buyers can imagine their family in the home.

6. Outdated Furnishings and Fixtures – If your home is filled with hand-me-downs, consider a professional stager. Old wall paper or outdated paint colors should be replaced as well.

7. Dirty, Grimy Rooms – Most important, clean everything thoroughly. Nothing is less appealing than a dirty home.

What Is A 1031 Exchange?

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One of the most common real estate investment transactions is the 1031 Exchange. Simply put, a 1031 Exchange (also called a “like-kind” exchange) is the swap of one investment asset for another which defers capital gains taxes on profits.

A like-kind asset refers to selling one class of investment for a similar type of asset. For example, an investor currently holds several multi-family properties, such as duplexes, and wishes to sell them all in order to purchase a larger multi-family property, such as an apartment complex. This would qualify as a like-kind exchange.

There are specific IRS rules which must be carefully adhered to in order to qualify for the deferred capital gains tax. The sale must take place through an intermediary. Title companies are one such option and when coupled with the use of a real estate agent, the easiest. The new asset must also be identified within 45 days of the sale of the current asset and the sale must conclude within 180 days. Finally, the asset must be held for over 1 year before it is eligible for use in a 1031 exchange.

Serious investors use the 1031 exchange to buy and sell assets as new opportunities present themselves, while shielding themselves from immediate capital gains liability.

Down Payment – How Much Do You Need?

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Gone are the days when anyone could buy a home with just a promise and signature. No documentation loans allowed virtually anyone to buy a house with no money down with just a simple credit check. After the mortgage melt down this all changed. Lenders tightened guidelines and down payments were back.  But how much do you actually need? Must you always find 20% down? The answer might surprise you; there are many ways to buy a home with less than 20% down payment.

 

0% Down – There are still two loan programs which allow one to buy a home for no down payment, the VA loan and the USDA loan. The VA loan requires the borrower to be a qualified service person or veteran and the USDA loan is for certain areas under the Department of Agriculture.

 

5% Down – Conventional loans with loan limits can allow one to buy a home with as little as 5% down. These loans do have PMI (Private Mortgage Insurance) which can be eliminated when the loan amount falls below the 20% threshold.

 

3½% Down – FHA offers first time home buyers a good home loan for only 3.5% down payment. Again these loans have loan limits and PMI but offer a faster entry into the housing market.

 

Buying a home doesn’t always mean 20% loan. If you’re considering buying a new home, talk to your lender about your options.

 

Top 7 New Year’s Resolutions for Sellers

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With the start of the New Year, thoughts naturally turn to change. If one of your New Year’s Resolutions is to sell your home, then making the right resolutions can help you sell your home quickly and for the best possible return.

Top 7 New Year’s Resolutions for Home Sellers

1. Move Up Spring Cleaning –Time to do your spring cleaning now. De-clutter, depersonalize and make the home look roomier.

2. Stage Your Home –Whether you hire someone or do it yourself, this is the time to rearrange your furniture to make your rooms look bigger and brighter.

3. Think it Through – Before you spend money on renovations and upgrades, think carefully and don’t overspend by guessing.

4. Take Care of Neglected Repairs – This is a great time to hire a handyman or break out the tool belt to take care of deferred maintenance and take care of minor repairs.

5. Interview Real Estate Agents – Hiring a real estate agent is critical to your success. Take the time to interview a number of agents and choose the right one for your needs.

6. Check out the Competition – Go see homes listed for sale in your area and adjust your timing, staging and pricing based on the market.

7. Prepare Mentally – Selling a home can be stressful. Be prepared for low offers, picky buyers, drop-by agents and odd terms. Prepare yourself now so you will take them in stride when you’re on the market.

Pre-Qualified VS Pre-Approved

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The Difference Between a Pre-Qualification vs. Pre-Approval
There are plenty of real estate terms used in transactions. Needless-to-say it can be confusing for both buyers and sellers trying to navigate the process. The home loan process might feel overwhelming and difficult to understand. Both buyers and sellers find terms like “Pre-Qualification” and “Pre-Approval” used interchangeably, it’s no wonder they find themselves wondering how to proceed.
The first step in obtaining a home loan is to meet with a lender to discuss your financial situation. The lender will gather information regarding income, job stability, debt and credit.  They will then issue a pre-qualification or pre-approval. 
Pre-Qualification
Once the lender has performed a basic review of the qualifications and run credit, they will issue a pre-qualification letter. This letter will identify the maximum sales price, down payment requirement and basic terms of the loan, such as interest rate. The pre-qualification letter is used to provide evidence that the buyer has been reviewed by a lender who is vouching for their ability to obtain a loan.
Pre-Approval
A pre-approval takes the process a bit further. After the lender collects all the necessary information and proof of eligibility he has it reviewed by the lender underwriter for approval. Once obtaining a pre-approval letter the only remaining piece of the puzzle is finding a property.
It is best to start this process before you begin your home search.  Your real estate agent should be able to point you in the right direction and recommend lenders if needed.