Saturday, May 21, 2011

hmmm... sell it or rent it out?

Considerations For Renting or Selling a Home 


Renting vs selling a home

Suddenly out of the blue you have found out that a new position has opened up within your company and they are asking you to relocate your family to the other side of the country. The job opportunity is too good to pass up so you decide to take the position. You realize with an impending move you are going to need to either sell or rent your home.

Considerations for renting or selling a home

Anyone who is considering selling a home in 2011 and has bought in the last six or seven years faces the real possibility that they will be losing money on the sale. The thought of losing money is never pleasant but unfortunately is part of today’s Real Estate reality. In my experience the immediate thought process of most home owners is to rent the home and not sell for a loss. This is kind of similar to the stock investor who hangs on for dear life with their losing picks but sells their winners instead.

In many cases they will ride the loser for an extended period of time until they realize it will take a very long time for that stock to come back to where it once was when purchased. Anyone who has ever invested in stocks including myself has been guilty of this. It is hard to give up on a loser because there is always the thought that it will come roaring back. So is renting the home really the best move or should you unload this asset that is working against you?

Where is the local Real Estate market headed?

One of the considerations of whether to sell or rent your home is to find out from a local Real Estate expert where they feel market values are  headed both in the near term, as well as longer down the road. A knowledgeable Realtor that has been in the business for a while should be able to help you determine the trend of where the market is headed at least in the short term.  Crystal balls are a hard thing to come by in Real Estate. Those that are lucky enough to have one are often times millionaires. Unfortunately knowing exactly when the Real Estate market will turn around requires one.

Most economists believe that once Real Estate markets do hit bottom the climb back up will be a slow and steady one. The opinions of most are that yearly appreciation will return to more normal historic levels of  3%-4%. Of course this is an average and states, cities and neighborhoods that are desirable could rise at a slightly higher clip.

As a home owner what you should be trying to figure out is how long will it take you to get back to a break even point or even something you can financially stomach. You should also be asking yourself is the time it takes to get back to break even worth it to you?

For example, lets say you bought your home for $500,000 and it has dropped in value by 25% and is now worth $375,000.  Lets further assume that the Real Estate market beats the economists predictions and rises by 5% yearly. Do you realize it would take seven years to get back to break even?

If you have equity in the home you need to figure out if you would be better off taking the loss and putting your equity somewhere that could potentially earn you more money. If you don’t have any equity you would need to figure out if you have the necessary funds to bring to the closing table or would need to explore other alternatives like a short sale.

What is the local home rental market like?

Should I sell or rent my current home

Again you should consult with a local Realtor to determine how well the rental market is performing. Has the rental market done as poorly as the Real Estate market or is there demand for rental housing? Some areas rental markets have done very well.

There is a good possibility there are folks who would like to rent a nice home rather than commit to purchasing if they feel they could be transferred in a short time period or feel market values are still sliding and don’t want the risk.

The rental home becomes an investment property

Relocating home owners need to remember that a rental home becomes an investment property. Owning a home as an investment property has the potential to help or hurt you tax wise. This is definitely something you would want to consult a tax professional for guidance.

Although you will be taking in rent you need to remember that you will still have principal, interest, taxes and insurance to pay. If the property is a condo you would more than likely also be paying the condominium fees as well. As a landlord you will also be required to maintain the property and fix any necessary issues that come up.

Many landlords that have relocated out of state will also consider hiring a property manager. The typical charge for management services runs around 8-12% of the rent. So if you are charging $2000 a month for rent you can expect to pay a manager in the neighborhood of around $200 a month. There are some excellent tax deductions for rental property that could play a factor in your decision making.

Taking on landlord responsibilities

As a landlord one of the 1st steps is going to be choosing the right tenant. Over the years I have seen a few occasions where the renter did not treat the home the same way an owner would. The owner was left with paying to replace carpets and do quite a bit of painting. These kind of costs can add up fast. Picking a responsible tenant becomes critical.

There are also considerations such as handling tenant complaints, maintenance issues or even legal issues such as eviction. In the end there is a lot to think about when deciding whether selling or renting your home makes the best fiscal and practical sense.

Tuesday, April 19, 2011

Are you in the DOG house?

Are you in the DOG house?

Does your listing smell like D-O-G? If so, it may be the reason it hasn’t sold.


I recently stopped into an Open House to check out a home that’s been on the market for nearly a year.
It has gone through numerous price reductions and at least 2 Realtors that I’m aware of. When I walked in the door, I was assaulted by an overpowering “sting” of chemical cover-up which, in my case, means an instant headache, watery eyes and a frantic urge to get out as fast as possible.

Not to mention the intense annoyance of having to breathe toxic air because someone is trying to hide s-t-i-n-k!! GACK!

What I discovered during my “tour” was a wall full of dog leashes, pet food bowls and a “turtle room” – an entire bedroom being used to house turtle aquariums and heat lamps. Hello? What part of getting a house ready to sell doesn’t this agent understand?

The “apple pie”candles, sickeningly sweet incense and “gag-me” air fresheners were obviously being used to try to cover up dog odor and pet stink.

My personal reaction? What else are they trying to hide?
Sadly, this house will probably still be on the market in a year from now.
What would I do? The first thing I’d do is tell the sellers the truth.

The dog odor and turtle room have to GO. No one is going to buy a bedroom they can’t see and no one is going to buy a house that smells like a kennel…unless the price is so compelling that they can afford to do what the sellers need to do:

1. Replace all carpet (steam cleaning actually brings the dog smell up to the surface and makes it more intense)
2. Have the duct work professionally cleaned and ozone treated
3. Clean all cupboards inside and out
4. Paint all wall surfaces
5. If tile is present, have it professionally cleaned

Moral of the story? Buyers want to see and smell clean. They don’t want to see a zoo or smell “Eau de dog cover-up.” Never try to disguise pet odor with chemical deodorizers. Give the house a bath and make sure it scrubs behind it’s ears!

Call me today and find out how I can help you buy or sell your home smoothly and efficiently.

Thursday, March 31, 2011

Cash for Keys

Cash For Key's Program

The cash for keys program has been around for many years but kept quiet by the banks until the sub-prime mortgage meltdown in 2007 forced many banks to initiate the cash for keys policy as standard procedure.
Two big problems banks face when taking a home in a foreclosure or short sale are, the condition of the home after it's occupants vacate, and getting the occupants to leave in a timely manner after the home sells. By giving cash for keys the homeowners are more likely to vacate in a timely manor and leave the property in better condition. By offering this incentive it encourages homeowners to do a short sale which ends up benefiting the bank as well as the homeowners.

The amount of cash the bank gives varies. However, It's usually between $2,500 and $3,500 but the average cash for keys is $2,500. I realize in the grand scheme of things that $2,500 bucks is not that much especially since just a few year ago your home was worth so much more.
A few things to keep in mind:
  • By doing a short sale the bank cannot go after you on a 1st mortgage (federal law)
  • If you qualify for HAFA the bank cannot go after you on a 2nd mortgage
  • Short Sale = $2,500. Foreclosure = a big fat ZERO!!
  • With a Foreclosure the bank can go after you for the entire amount owed
As you can see the cash for keys program and doing a Short Sale is a much better option then a Foreclosure.

For more information -- contact me!!

Courtesy of 
Terry Bear

The Bear Team of Performance Realty
Broker/Owner/ABR
14 Brian Ct, - Watertown, WI 53094

Office: 920-261-2327
Fax: 920-262-2327
Mobile:(920) 285-5840

http://www.performancerealtycompany.com
http://terrybearteamofperformancerealty.blogspot.com
http://twitter.com/#!/TerryBearTeam
http://www.linkedin.com/pub/terry-bear/29/71a/963
http://activerain.com/blogs/terrybear
http://www.google.com/profiles/terryabear

MLS SEARCH -
http://www.performancerealtycompany.com/Community newspaper: http://www.wdtimes.com/
Watertown Chamber of Commerce:
http://www.watertownchamber.com/Watertown Schools: http://www.watertown.k12.wi.us/

Tuesday, March 8, 2011

The 10 Most Important, Cost-Effective, Easy Fixes When Selling Your Home !

1. Master bedrooms and baths should appeal to both sexes - if yours is gender specific, balance it with some masculine/ feminine accessories - pillows, art, greenery, a well placed throw and use neutral bedding - your grandmother's homemade quilt isn't going to cut it!  

2.  Walk through each room as if you were a buyer  - can you move freely about? If not, open up the space by eliminating excess furniture to create easy traffic flow. when selling - less is always more!

3. If possible rent a small local storage space to put excess furniture, personal items, knickknacks - anything that clutters the home and causes distractions - after all, you're selling your home, not your lifestyle. (This also eliminates a lot of stress down the road when the buyer is ready to move.)

4. Assess the color palate of your home --make sure it's uniform throughout and stick to neutral or modern colors - this creates continuity. Add pops of color using accessories like pillows, art and a throw.

 5. Think upscale hotels - clutter free, updated and designed to appeal to the masses. If you have dated  boarders or wall paper take it down - this is one of the biggest turnoff to buyers and they often move on. (I've heard of homes for sale labeled as the "wallpaper" home and it's not a compliment! 


6. Don't assume buyers won't look in cabinets, closets, basements and attics. 
Storage is key for buyers and they want to see if the home has enough space to accommodate their stuff. Organize, or better yet store it- this demonstrates to buyers that indeed their things will fit and is a big selling advantage.

7. Clean, Clean, clean - It's the easiest, no cost, effective fix and this can't be emphasized enough - nothing turns a buyer off more than a messy, dirty or smelly home - this will send buyers running for the door - trust me on this one!

8. Open all blinds, eliminate heavy window treatments and let the natural light shine in - this cheers up and brightens the home, making it feel airy and more spacious - and, it's so easy! If you have dated vertical blinds, it best to take them down

9. Fix leaky faucets, broken screens, door hinges, door bells or running toilets - Yes, I'm going to beat a dead horse, but these are big turnoffs and don't invoke any confidence in the buyer that your home is well taken care of - you know the kind of homes we all want to buy!


10. Make sure your MLS photos are GREAT - 80% of buyers shop online before ever stepping out the door with their Realtor!

Okay, so I lied,  #11 - drum roll please... 

My list wouldn't be complete without strongly suggesting hiring a professional stager who is trained to prepare your home for the market, using proven techniques to enhance, highlight and showcase your home it its best possible light and appeal to the most buyers


Home and Curb Appeal LLC-  Lisa Bear  - (262)893-5555

When you're looking to sell quickly and for top dollar,  Home and Curb Appeal LLC - Lisa Bear knows how to get the job done right. We will use proven techniques to create warm, inviting, updated spaces that will appeal to the masses. In today's competitive market, every home can use an edge and that's what  Home and Curb Appeal is all about.

Courtesy of 
Terry Bear

The Bear Team of Performance Realty
Broker/Owner/ABR
14 Brian Ct, - Watertown, WI 53094

Office: 920-261-2327
Fax: 920-262-2327
Mobile:(920) 285-5840

http://www.performancerealtycompany.com
http://terrybearteamofperformancerealty.blogspot.com
http://twitter.com/#!/TerryBearTeam
http://www.linkedin.com/pub/terry-bear/29/71a/963
http://activerain.com/blogs/terrybear
http://www.google.com/profiles/terryabear

MLS SEARCH -
http://www.performancerealtycompany.com/Community newspaper: http://www.wdtimes.com/
Watertown Chamber of Commerce:
http://www.watertownchamber.com/Watertown Schools: http://www.watertown.k12.wi.us/

Thursday, February 17, 2011

Surprising Insider Secrets for the 5 Stages of Buying Your First Home

Buying a home is not a discrete event; it's a process - a sequence of events that happens over time, sometimes over as long as several months or even years!  While general guides to buying a home are a dime a dozen, I'm excited to share with you some insider secrets you may not have heard elsewhere - one for each stage involved in buying a home. Here's to helping you make the best decisions at every phase of your home buying process!

Stage One: Deciding Whether It's The Right Time to Buy. 

Insider Secret: The market is the least important factor you should consider when deciding whether and when to buy a home.

Why: Everyone knows affordability is at an all-time high.  Home prices are low, and so are interest rates. But trying to time the market is a fool's errand; many who get caught up in that game of trying to make sure they buy at the absolute bottom will end up losing out on very, very favorable conditions.

Beyond that, the most important considerations when deciding whether and when you should buy a home are personal, not market driven. On today's market, it only makes sense to buy a place if it's going to be sustainable and work for you for at least the next 4-5 years [if your town's real estate market has been fairly recession-proof] or 7-10 years [if the housing/foreclosure crisis has hit your area pretty hard].

Against this "smart holding period" backdrop, smart buyers decide to buy when it makes sense for:
  • their life plans (i.e., they are comfortable making the commitment to live in the same town, and the commitment to )
  • their family plans (i.e., whether they plan to get married, have children or empty their nest in the time they plan to own the home - and the implications of these plans on their space needs and location priorities)
  • their career plans (including, but not limited to: whether they have job or income security, whether they feel they will be working in the same area for the foreseeable future, and whether they want to work less or start their own business in the months or years to come)
  • their financial plans (including foreseeable changes in income and expenses, e.g., kids going to college or making partner at the firm).

Stage Two: Getting Pre-Approved.

Insider Secret: Working with a mortgage broker referred by your real estate broker or agent may save you money.

Why: Bolstered by the real-life stories of a couple of bad apples, TV pundits and some consumer advocates have spun the tale of a real estate industry cartel, whereby sinister agents hook unsuspecting buyers up with shady mortgage brokers, who place them in crappy loans and kick back some bucks to the agent. I'm here to tell you, in my experience, the opposite is true the vast majority of the time. 

When you work with a mortgage broker who has a strong track record of helping your real estate agent's clients out, you end up in a best of all worlds situation, nine times out of ten. First off, your agent will take you much more seriously once a mortgage broker they know and trust has run your credit, checked your income and approved you for a loan, as well as communicated with your real estate pro about your qualifications and what you can afford.  Secondly, your agent can help you communicate with your mortgage broker, sometimes helping get past appraisal glitches or facilitating other workarounds, as they come up. Third, you get the assurance of working with a mortgage pro who has been vetted and vouched for by someone you not only trust, but someone who can verify that the mortgage broker has the ability to get transactions closed in the timely manner required of today's real estate sales contract.  Otherwise, you may end up working with a competent mortgage broker who has a great track record when it comes to refinancing, but can't keep up with the pace and common obstacles to getting a home financed in the context of a sale.

On top of that, sometimes the relationship can help you negotiate out of a couple of line item loan fees (if your particular mortgage rep has the power to get them down at all), if push comes to shove and cash is tight to close the deal.  Assuming you are working with a real estate pro you really trust, working with a mortgage broker they trust can save you, rather than cost you, money.


Stage Three: House Hunting

Insider Secret: "Distressed" doesn't always equal "discounted" - in some cases, a "regular" sale can be a deeper deal.

Why: Short sales and foreclosures have grown to comprise roughly 30 percent of the homes sold on today's market, even higher in some areas. The average sale price of foreclosed homes was 32% lower than the average sale price of non-foreclosed homes, at last count. However, it's not always the case that foreclosed homes or short sales - homes which are being sold for less than what the seller owes on their mortgage(s) - offer the buyer a fabulous discount. 

Mortgage servicers and asset managers who make decisions about distressed properties are on the hook to their investors to recoup as close as possible to the current fair market value of every home they sell. Some banks even have a general rule of rejecting offers more than 10 percent or so below the home's list price, preferring instead to reduce the price by that amount and put the home back on the open market to see if any new buyers are activated by the price reduction to make an offer better than the lowball offer that was initially put on the table.  On short sales, the bank is trying to get as close as possible to recovering what the seller owes - and may or may not be concerned with what the fair market value of the home is. (Nine times out of ten, there will be a big gap between fair market value and the seller's outstanding mortgage balance. If there wasn't, the seller wouldn't need to do a short sale!)

With so many distressed properties and homes with depressed values on the market, in many areas, the individual, non-distressed home sellers who are putting their homes up for sale right now are those who are very motivated to sell. Further, they are more likely to be flexible with you on everything that is negotiable, from contingency and escrow periods, to price, to repairs and included items.

Also, individual sellers can be emotionally motivated to sell to move on with their lives, get into their bigger (or smaller) house, or move on to their next job; banks, on the other hand, aren't people (!), so lack that emotional sense of urgency to get the properties sold, no matter how urgently you may think they should be trying to get rid of the foreclosed properties they own. (If you've heard the old advice that banks don't want to be in the home-owning business, I can tell you this. That is true, in a very general sense, but now they are and will be - for a long time to come. They have no emotions, have no urgent need to sell or move, and are not willing to give houses away at pennies on the dollar to get out of it, no matter what those infomercial folks say.) 

Long story short: you can sometimes negotiate a better deal with an individual seller on a "regular" sale than with a bank on a distressed home sale. So, don't limit your house hunt to foreclosures and short sales, if you're looking for a good deal on your home.

Stage Four: Negotiations

Insider Secret: Your family and friends can cause you to lose your dream home.

Why: With so much information on the web and the news every day about the recession and the buyer's market, everyone seems to be an armchair economist/real estate savant.  But much of that news is national and based on medians, averages and trends.  That is, it might not necessarily apply to every home on the market in every city, and more importantly, it might have nothing to do with "your" particular home.

When I was a little girl, my best friend's grandfather would very carefully hand each of us a quarter, always doling it out with the sage admonition: "Don't spend it all in one place." We'd always smile, look at each other, then go ask our Moms for ten bucks apiece.  In the same vein, people who are not currently in the market for a home have no idea what an individual home should "go for." If you tell your parents, church pals, or colleagues at work the blow-by-blow details of your offer, counteroffers, etc., you should expect to hear things like, "Oh, you're paying way too much!", "I think you should push them down another $10K," or "You know, you're in a better bargaining position than that." And sometimes, taking that sort of advice will end up blowing your deal.  Work with your trusty real estate broker or agent to develop a smart strategy - with their experience in your local market - about what price and terms to offer.  Then keep working with them to manage and maintain realistic expectations as you proceed through negotiating the contract to buy your home.
Stage Five: Escrow, Inspections and Underwriting

Insider Secret: It's critical that you attend your home inspections.

Why: When it comes to inspections, many first-time buyers expect that a home will either pass or fail.  Except in a few jurisdictions where the government imposes certain condition requirements for a home to be sold, the home inspection is more about educating you, the buyer, as to the details and nuances of the home's condition than about seeing if the place hits a particular target for "good" or "bad" condition. 

Home inspectors don't just look for things that need fixing, they also look to understand the home's systems and features, as well as to point out areas that will require your ongoing maintenance, highlight emergency shutoffs and other need-to-knows, and indicating where you should have specialists further inspect items of concern. Many home inspectors create vivid, detailed electronic reports - some, complete with color photos. But that's not enough!

If you're physically onsite at the home during the inspections, the inspector can physically show you the shutoffs for water, gas and electric - and how to use them.  They can also point out, in person, any things that need repair, and give you some tips for maintaining the place in tip-top shape.  Also, in many states, the general home inspector is legally prohibited (vs. the pest, roof or other "specialty" inspectors) from issuing a written quote or bid for repairs, to avoid a conflict of interest where they'd try to fabricate flaws in the home to get the repair job. However, the repair costs are one of the most important things a smart buyer wants to know!

If you show up, many inspectors will give you a rough range it would cost you to do various repairs, or otherwise indicate to you whether the needed repairs are "big deal" or "$10 home improvement store" fixes; some will even give you a few references to contractors they trust. 

All around, you'll get much more of the detailed information you need to know whether and how to move forward with the transaction if you should up in person to the home inspections, rather than just waiting for a copy of the report to come to your email. 

To make sure your home purchase is handled professionally – hire TERRY BEAR - The Bear Team of Performance Realty, a trained professional. In the long run, you will wind-up with more money in your pocket and have less challenges with the move. 






Courtesy of Terry Bear - The Bear Team of Performance Realty

Wednesday, February 16, 2011

ASSESSED VALUE versus APPRAISED VALUE - Do you know the difference?


All to often there is misunderstanding between the difference...

ASSESSED value is the dollar value assigned to property for purposes of assessing taxes.

APPRAISED value is the unbiased value of the property after a qualified person who is generally employed by an appraisal company, real estate company, lending institute or a bank, has completed an inspection on the property. 


 
Courtesy of Terry Bear 
THE BEAR TEAM of Performance Realty

Surf the MLS for properties at: http://www.performancerealtycompany.com/


If you or anyone you know is looking to buy or sell.... I'd love the REFERRAL!!

"HELPING YOU MOVE IN THE RIGHT DIRECTION" 
 
 

Wednesday, January 19, 2011

The Basics of Credit Scoring

Today, we are going to be centering on the basics of an increasingly important portion of a buyer’s mortgage application – the credit score. 


The 3 major national credit bureaus are: Experian (XP), Transunion (TU), and Equifax (EF)….  but better terms to describe their function are:

Repository – they are huge “holders” of data; information about you and millions of other people.

Credit Reporting Agency (CRA) – these “repositories” get their data when creditors and courthouses “report” to them; and when you pull someone’s credit report, they in turn “report” that data to the entity that requested the information.

Credit Scores (in general)

What is a Credit Score? It’s a number that, at a glance, helps lenders determine how likely you are to make your proposed payments on time.

How is it generated? A score is only created when you pull someone’s credit file, and all the data retrieved is fed through a complex mathematical formula. As a person’s data at the repositories changes, their score would change also….positively or negatively.

Why are scores different? Fair Isaac Corporation (FICO) created the mathematical formulas that generate the score, BUT….There are different score formulas depending on what you are applying for….a mortgage, credit card, auto loan, insurance, or even if you are not applying for anything at all and get a “consumer” score directly from one of many websites that advertise “scores” these days.


The 3 bureaus typically don’t have the exact same data on a consumer. So, if the data is different or has changed, the scores will also be different.

The FICO score on your mortgage credit report – The score range is 300-850.

What makes up the score? (The info below is from www.myfico.com).

1. 35% of the score is based on Payment History

a. Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.)

b. Presence of adverse public records (bankruptcy, foreclosure, judgments, suits, liens, wage attachments, etc.) collection items, and/or delinquency (past due items).

c. Severity of delinquency (how long past due).

d. Amount past due on delinquent accounts or collection items.

e. Time since (recentness of) past due items (delinquency), adverse public records (if any).

f. Number of past due items on file.

g. Number of accounts paid as agreed

2. 30% of the score is based on the Amounts Owed


a. Amount owing on accounts.

b. Amount owing on specific types of accounts.

c. Lack of a specific type of balance, in some cases.

d. Number of accounts with balances.

e. Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts), often referred to a Percentage of Usage.

f. Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans).

3. 15% of the score is based on the Length of Credit History

a. Time since accounts opened.

b. Time since accounts opened, by specific type of account.

c. Time since account activity.

4. 10% of the score is based New Credit and Inquiries


a. Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account.

b. Number of recent credit inquiries.

c. Time since recent account opening(s), by type of account.

d. Time since credit inquiry(s).

e. Re-establishment of positive credit history following past payment problems.

5. 10% of the score is based on the Types of Credit Used


a. Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.).

Special Note About Inquiries

This is always a hot topic because borrowers think they will hurt their score because their credit report is pulled. But as explained above, New Credit only accounts for 10% of a person’s score, and of that, inquiries is only a part.
Also, keep in mind what an inquiry represents – application for additional credit. If your credit report and score shows that you are a responsible borrower, then applying for more credit will have a minimal affect on your score. But if you appear to be an irresponsible borrower, then the inquiry may drop your score a few points, or several points.


Note what Fair Isaac itself says about inquiries at www.myfico.com:

“For many people, one additional credit inquiry (voluntary and initiated by an application for credit) may not affect their FICO score at all. For most people, a credit inquiry will only decrease their FICO score by a few points.”

“Looking for a mortgage or an auto loan may cause multiple lenders to request your credit report, even though you’re only looking for one loan. To compensate for this, the score ignores all mortgage and auto inquiries made in the 30 days prior to scoring. So if you find a loan within 30 days, the inquiries won’t affect your score while you’re rate shopping.”


 
 
Article wrttten by KCM Blog