Introduction

One of the most important services that our office provides is information. We take pride in the depth of our knowledge concerning such issues as mortgage financing, home inspection, renovation and home repair and general expectations. We like to share what we've learned from our many years of experience and our customer feedback.

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Prequalifying for a mortgage

It is important to know how much you can afford before you begin looking at homes. You should also talk with a lender and get pre-approved for a loan. This puts you in a stronger negotiating position with a seller.

An industry average has ones monthly housing costs not exceeding more than 28% of monthly pre-tax income, including the mortgage payment, real estate taxes, and insurance. If you have long-term debts (such as education loans or car payments) your monthly payments, including your housing costs, should be less than 36% of your pre-tax monthly income. Some loans, such as VA and FHA loans, are more flexible with these basic guidelines.

Depending on which type of mortgage you select, you can consider houses in various price ranges. An adjustable-rate mortgage will usually enable you to qualify for a higher loan amount. Your Realtor can help you make the basic calculations. And remember, buying at the top end of your price range gives you more time to outgrow your home, and can save you money in the long run.

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Selling your home

What should you do when a Realtor comes by your home accompanied by potential buyers? You should go for a walk on the beach, visit the mall, due some grocery shopping and in general, just make yourself scarce!

It is better for you to be out of the picture when your home is being shown, even though you know more about your house than anyone and may be afraid that the agent will overlook something important. Your presence will have an impact on the agent's ability to work with buyers. Prospective buyers need to feel comfortable about giving the agent feedback about your home, but this dialogue can be easily interrupted. Your presence during a showing may make you appear anxious to sell, giving the buyer the impression that he can buy the house for much less than your asking price.

Your most important contribution is to keep your home in prime showing condition so that the Realtor can maximize every showing opportunity.

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Renting your home

When you own an investment property, your goal is to get the highest monthly rental with the lowest vacancy rate and to keep quality tenants. Or if you are renting weekly or monthly (very common in our area) the liability of the tenant becomes even more of a concern because of the frequent turnover and wear and tear on your property. How can you pull it all together?

It pays to keep your property in good condition, not only while you are trying to rent it out, but after the tenants come and go. You obviously want the property to look its best while it is being shown, but if you work at keeping it in top condition when tenants are living there, they are likely to stay around for a while. When something needs to be repaired, be sure they know whom to call to get the job done. Arrange for periodic inspections of the property to check for leaking roofs or pipes, defective wiring or malfunctioning appliances. If you are an absentee landlord, it makes sense to hire professionals to keep a close eye on your investment for you. Water Street realtors can also can be of assistance in recommending property management resources.  Our Rental Agent Sandy King can help with all of the above.

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Getting your house ready to sell

We receive calls all the time from people who are asking for advice on what they should do to prepare their house in anticipation of putting on the market to sell.

Let's face it, after working all day, getting the kids organized and finding some time for yourself, the last thing you want to think about is another home improvement project.

If you are considering new windows, painting, updating the kitchen, repairing a deck, landscaping, or any other improvements that would increase your home's re-sale value, think about making those improvements while you are still there to enjoy them. Create your own dream kitchen or Jacuzzi, your garden deck, or restore your wood floors now.

Maintaining your property well will make your home more enjoyable, will help maintain the property values in your neighborhood, and will expedite the sale of your home when you are ready for a move. You never know when that time may come and the better prepared you are, the higher price you are likely to fetch.

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Reasons why houses don't sell

Experienced residential real estate agents will tell you there are three primary reasons why a home has not sold.

The Asking Price is Too High

The main reason houses and condos don't sell is they are too high priced. Prospective homebuyers become smart very fast. After a week or two of inspecting homes for sale, they almost instantly recognize a home that is overpriced (or under-priced). Experienced real estate agents won't even waste their prospective buyer's time inspecting over-priced homes. This fact greatly limits the number of prospective buyers for an over-priced home.

If a home doesn't sell in today's low interest rate market within 60 days, the home is probably over-priced. It's that simple.

Market values are set based on recent comparable home sale prices of nearby residences. That's why home sellers and their listing agents need to keep up-to-date on actual sales prices of comparable neighborhood homes.

When a home is listed for sale, the listing agent presented the seller with a CMA (comparable market analysis). This form shows sellers recent sales prices of comparable homes, asking prices of similar neighborhood homes and asking prices of recently expired similar listings. Only after reviewing a CMA carefully can a Seller make an intelligent decision on what price to list his home at.

Condition of the Residence

The majority of homebuyers want to purchase a house or condo in model home "tip-top move-in condition." For this reason, smart home sellers paint and spruce up their homes before exposing them to the market.

However, many home sellers don't want to fix up their homes. Elderly sellers are especially lax about fix-up work. These sellers unknowingly create incredible fix-up bargains for home purchasers willing to tackle upgrades.

Fresh inside and outside paint, serious cleaning and repairing, new carpeting and minor fix-ups such as new light fixtures and fresh landscaping are usually all that is required to upgrade a home from fixer-upper to a model move-in condition home which will attract droves of prospective buyers.

Use an "As Is" Sale for Incurable Defects

When a home has an incurable defect, fixing it up may be a waste of time and money. For example, a house located near a railroad track or a noisy highway has an incurable defect. Spending vast sums fixing up such a home is usually wasted money.

A better approach to selling an "incurable defect home" is to offer it for sale "as is" with a bargain asking price. "As is" means the home seller must disclose to buyers and known defects, such as leaky roof but the seller will not pay for repairs.

Bargain hunter homebuyers are often attracted by low asking prices, which consider the incurable defects such as a bad floor plan or location next to the city dump.

This information contains excerpts from an article in the Real Estate Notebook written by Robert J. Bruss, Tribune Media Services.

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Finding an attorney

If you remember one thing from visiting our web site, please let it be that you should have your OWN attorney whether you are selling or buying real estate. Some buyers feel that since a bank's attorney is involved, everything will go just fine. While this is likely true, we cannot overemphasize the value of legal representation (at a modest cost considering the transaction cost) when it comes to one of the largest and most complex transactions of your lifetime. And granted more and more people buy and sell homes more frequently today than ever before and it is not a once-in-a-lifetime event, however, the same rule should apply regardless of the number of times you have experienced the sell/buy process in the past. It is better to be safe than sorry.

We work with a handful of extremely reputable law firms in the region. Please ask our office for a referral list.

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Tax free exchanges

Considering the market over the last few years, if you are a homeowner expecting to have a capital gain on the sale of your home, thank Uncle Sam. The 1997 federal budget eliminated the traditional system of "rollover" deferrals of tax liability on home sale profits. The new rules are effective for principal residences sold after May 6, 1997.

If you are a married home-seller filing jointly, you will enjoy up to $500,000 in home sale gains tax-free, provided you have occupied the property as your principal residence during two of the last five years.

Taxpayers who file singly (and Domestic Partners) get a $250,000 capital gains exclusion. Home-sellers are eligible to exclude capital gains on the sale of a home as often as once every two years.

The new law allows capital gain exclusions whether you "buy up" to a more expensive home or "buy down" to a less expensive one. If you have a gain above the limit, it will be taxed at the new 20% capital gains rate, down from the current 28% rate. Beginning in 2001, the capital gains rate dropped to 18% for taxable gains on a principal residence that you have occupied for at least five years.

Consult your tax advisor for your particular circumstance.

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Getting pre-approved for a loan

Many lenders help prospective buyers get pre-approved for a mortgage loan before they begin a serious house-hunting effort. Give the loan officer all of the information about your assets, income, and debts so they can tell you how much money you will be able to get under the available loan options. The loan officer will do a credit check and work with the lender to straighten out any problems with your credit rating.

Pre-approval from a lender can make you more attractive to the seller when you find the home you want. Occasionally multiple offers come in on a house, and you find yourself competing with other buyers. In that case, it is helpful if you have included a letter from the lender with your offer stating that you have an approved loan and are, indeed, qualified to buy. This will also save you time by eliminating from consideration any homes that you would not be able to afford.

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Finding a mover

Whether you are moving across town or across the country, it is a good idea to shop around for a household mover. Local moving companies have always been very competitive. When interstate movers were more regulated by the Interstate Commerce Commission, they charged basically the same rates. Since that industry has been de-regulated, the rates are varied and even negotiable.

If you are in the market for a mover, get recommendations from friends or neighbors. Call several companies for estimates and ask how their rates are calculated. Find out what kind of insurance against damage or breakage is included in their charges and what additional coverage will cost you. The charges are usually broken down into two areas - packing, and loading and unloading. You can sometimes save a considerable amount of money by doing your own packing, but doing so may limit the mover's liability.

Good luck!

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Telephone: 508-758-9731