Resolutions

resolutions.jpgAfter spending the holidays with family and friends, this is a time of the year to start thinking about changes to make in our lives, both personal and in business. We wanted to share one of ours with you.

Our goal is to become your REALTOR® for life. We want you to think of us first when you need to buy or sell and that you’ll recommend us to your friends too. That kind of trust has to be earned and we’re committed to helping you be a better homeowner even when you’re not buying or selling.

The strategy is simple. A well-informed homeowner will make better decisions. We’ll periodically offer information through articles and social media on a wide variety of home-related topics like maintenance tips, tax law changes, financing suggestions, insurance, equity building strategies, and rental property investments.

Please contact us if you need a recommendation on a service provider. Our experience has built a list of reputable and reasonable contractors that you can rely upon. When you have any kind of home-related questions, I hope you’ll have the confidence to call us.

Happy New Year. We sincerely look forward to helping you or your friends.

New Homes sale rose in November – strongest pace in more than 2 years

New-home sales rose in November, recording their strongest pace in more than 2 years, another sign of improvement in the housing market.

The Census Bureau reported Thursday that sales of new homes rose to an annual rate of 377,000 in the month, up 4.4% from October, and up 15% from year-earlier levels. It was the highest rate of new-home sales since April 2010, when sales were inflated by a temporary $8,000 tax credit for home buyers.

The housing market is now showing numerous signs of improvement, including better existing home sales and home construction.

A combination of near record low mortgage rates, lower unemployment and a drop in foreclosures means there are more buyers interested in purchasing, and fewer available homes. That in turn has lifted home prices.

Related: Five signs to look for in housing

Those supply-and-demand dynamics are especially true in the new-home market.

There was only a 4.7 month supply of new homes on the market in November, the same tight inventory as has been the case in four of the previous six months. The last time there was a tighter supply of new homes available was in October 2005, near the height of the housing bubble.

The tight supply has lifted the median price of a new home sold in November to $246,200, up 14.9% from the comparable price a year earlier.

Anika Khan, senior economist with Wells Fargo Securities, said the report was stronger than expected, especially for what is traditionally a slow month for home sales. She said new-home sales and construction are becoming a more important driver of overall economic growth, which is even more important with the economy facing other headwinds such as a cutback on business investment and consumer worries about the fiscal cliff.

“New-home sales is a good story and it will continue to be a good story,” she said.

New-home sales can be more important to the economy than sales of previously owned homes since they require purchase of other goods, such as appliances, and because of the construction jobs needed to build the homes.

Related: 2013 housing outlook

The continued rebound in prices likely will be a positive for both purchases and construction in the year ahead. Higher prices give current homeowners an incentive to sell their homes and procure the down payment they need for their next home purchase. Potential home buyers, who may have been on the sidelines because of uncertainty about home prices, might also be lured into the market.

Home builders benefit from higher prices and increased demand. Leading home builders such as PulteGroup (PHM), Lennar (LEN), KB Home (KBH), D.R. Horton (DHI) and Toll Brothers (TOL) have all enjoyed at least a 50% rise in their stock price over the last

The Best Real Estate Advice Of 2012 on Realtor.com

 

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Dec 12, 2012

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By: Deidre Woollard

 

 
Best of Real Estate Advice from Realtor.com

 

What real estate questions were on your mind this year?

We saw thousands of questions come in on our Q&A section and noticed that people all around the country had a wide variety of questions. Below are some of the most frequently asked-about topics on Realtor.com with answers from the knowledgeable Realtors who helped buyers and sellers navigate the world of real estate.

Contignent Offers

This year many people searching Realtor.com were curious about what a contingent offer means on a home listing.

Matt Laricy of Americorp Realty in Chicago explained:  “It means that there is an accepted offer on the house. Meaning both parties (buyer and seller) have come to an agreement on price. Now that there is an executed contract, they will probably not show the house anymore. They will accept back up offers, but won’t negotiate with you unless this contract falls apart.”

Getting your heart set on a home with a contingency may not be the wisest choice. “It is often not productive to pursue those unless the contingency falls through and the buyer withdraws. If you express interest before that, the listing agent may well use it to pressure the buyer to remove the contingency or otherwise move toward the closing,” says Linda Walters with Sage Realty in Wayne, Pennsylvania.

But should this be your dream home don’t lose hope completely. “If you have your heart set on the house, keep an eye on it. You never know,” says Cathy Baumbusch with Re/Max Allegiance in Alexandra, Virginia.

Multiple Offers

Another thing we kept hearing about this year was multiple offers as buyers began to reenter the market only to find low inventory. One questioner in Troy, Michigan questioned how multiple offers are handled and what would happen if another buyer offered more money. Multiple offers are usually handled by reviewing all the offers on the table at the same time,” explained Adam Aguilar of Reliantra in West Toluca Lake, California. “This does not mean everyone or anyone will be counter-offered for different terms. A good negotiator should do so, but this does not mean that the particular person you are dealing will do so.

So your son may not have a chance to raise his bid. I recommend to my buyers to put in their best and highest offer, then use the investigatory period to review the property and lower the offer price to what is fair or cancel the agreement. This helps to get your offer accepted and use the contingency period to negotiate, rather than the other way around where you negotiate before acceptance of your offer.”

Buying With Bad Credit

With renewed interest in the housing market many people wanted to buy but weren’t sure how to begin.  The first step is often to start with the lender. “You should be in touch with a loan originator that you feel good about and they should be able to guide you through credit repair. They have the tools and know how to tell you specifically what must be done to increase your credit scores. It can take some time- months generally- but it usually can be done,” said Joan Flood of Homestead Real Estate in Cape May, New Jersey.

Recovering After Bankruptcy

Many people who weathered the financial turmoil that began in 2008 are recovering from bankruptcy and eager to start over and own a home again but not sure when they can move forward.

“If you filed bankruptcy and it has been two years since the discharge date, you need to contact your local lender or bank. It is best to meet with them and have them look at your bankruptcy papers and pull an updated credit report. The lender will then let you know what price of a home you can qualify for and if there is anything still on your credit report from the bankruptcy that needs to be removed,” advised Sandy Straley in Layton Utah.

Jackie Davis with American Realty in Inverness, Florida adds “In speaking with my favorite lender he states that, if NO home was involved than the time frame is two years from the date of filing. IF a home was involved than it’s three years. If you are close to the two year time limit and don’t want to lose a particular property, see if you can adjust the closing date to fall outside the two years and, if need be, ask for pre-closing occupancy wherein you pay a prorated rent, assume the utilities, complete your inspections and just await the closing date. See a lender first, get yourself pre-approved and submit this with your offer.”

Home Improvement: Floors Are Hot

Not everyone was looking to buy or sell in 2012, many owners were looking for advice on sprucing up their homes but with an eye toward resale value. We received many questions on the value of hardwood floors versus carpet including one from San Jose asking if it is better to have carpet or hardwood in the bedrooms and if it would add more resale value if hardwood was though out the house.

Hardwood floors appear to be the clear winner. “Hardwood floors enhance the chances of your house selling faster. Generally speaking, most buyers prefer the hard wood floors over the carpet. It may not get you a high return, in fact, it may sell for about the same price as with carpet but it may sell faster because it will compete better with the inventory of “like” properties,” said Maria Jeantet with Coldwell Banker C&C Properties in Redding, California.

“At this time, in the real estate market, wood floors in the bedroom add a little panache,” added Derek Sankey with Sankey Real Estate in North Attleboro, Massachusetts. “Buyers may not ask for wood floors in the bedrooms but if displayed with attractive area rugs, will definitely choose the bedrooms with wood floors over all carpeted bedrooms It tells the buyer that the seller did not hold back on spending more so that their home would be presented as a more custom look.”

But hardwood floors aren’t necessarily a must.  “Hardwood floors add a lot of value to a home and make hallways, dining rooms and living rooms, even kitchens, have a wonderful warm feeling, but I have seen more often though that the bedrooms are left with carpeting,” Joyce Mitchell with Mitchell & Associates Real Estate in Bigfork, Montana explains.  “I think you would achieve both the value and the enjoyment without needing to carpet your floors.”

“My experience would suggest that hardwood throughout is the best option. But if there is any area that can have carpet without seriously detracting from the value, it would be either a basement or an upper level bedroom. People understand that the noise and warmth benefits of carpet sometimes make installing it there worthwhile. If you do put in carpet, make sure it is neutral. No one wants blue or green carpeting,” advised Linda Walters of Sage Realty.

Home-price forecasts for 2013 are on the rise.

J.P. Morgan Chase & Co. expects U.S. home prices to rise 3.4% in its base-case estimate and up to 9.7% in its most bullish scenario of economic growth. Standard & Poor’s, which rates private-issue mortgage bonds, on Friday said it expects a 5% rise in 2013.

The J.P. Morgan analysts boosted their base-case estimate from 1.5% after a convincing rise in the “net demand” for housing this year has surpassed 2 million homes for the first time since 2006, said John Sim, a strategist at the investment bank. Net demand is the pace of existing home sales minus the inventory of homes available for sale.

“Net demand has picked up a lot in 2012,” said Mr. Sim. “Once you get north of the 2 million territory, you are in the positive growth area unless you get a lot of distressed inventory, which this year hit a low point” since at least 2008, he added. J.P. Morgan predicts that net demand to rise from 2.7 million next year from 2.3 million this year.

An expected increase in home prices in 2012 triggered a run into some of the riskiest real estate assets, such as subprime mortgage-backed securities from the real estate boom, and analysts including Mr. Sim expect that trend to continue. Rising home prices and the quest for yield has also given a tailwind to new mortgage bond issuance that has been mired in the fallout of the housing crisis and regulatory uncertainty for the past four years.

U.S. home prices nationwide increased on a year-over-year basis by 6.3% in October, the biggest increase since June 2006, according to CoreLogic. Investors zoning in on the increases bought subprime mortgage bonds, which have posted returns of more than 40% since December.

Home price increases could exceed J.P. Morgan’s base forecast if investors seeking yield push deeper into real estate, according to Mr. Sim’s home price report.

That may already be happening, considering recent comments by Luke Scolastico, a vice president at Credit Suisse, one of two issuers of mortgage bonds without government backing since the financial crisis. Credit Suisse is increasing its purchases of jumbo loans to meet demand for securities it sees from investors, he said on an American Securitization Forum panel this week.

“We’re buying loans, every day…and (on the month,) more than the month before,” Mr. Scolastico said. Part of the reason is because of home price appreciation, but also because of the “technical demand” for relatively higher yielding assets as Federal Reserve policies depress interest rates, he said.

New mortgage bond sales from other issuers, including investment banks, could boost issuance of private label bonds this year as high as $30 billion, Mr. Sim said. That’s up from almost $5 billion this year but paltry compared with annual volume above $1 trillion generated as the housing bubble neared its breaking point in 2006.

Mortgage bonds issued by Fannie Mae, Freddie Mac and Ginnie Mae still fund more than 90% of new home loans. Bank portfolios and other private lending make up the rest.

Considering risks, J.P. Morgan analysts conceded that the economy is “gloomy” and tight lending standards can stop a bullish homebuyer from proceeding with a purchase. On the supply side, the “shadow inventory” of more than four million homes near or stuck in foreclosure still looms, though that is dropping, the analysts said.

What’s more, just the uncertainty over whether politicians will be able to steer clear of the “fiscal cliff,” the scheduled tax increases and spending cuts next month, may hurt investor confidence, the J.P. Morgan analysts said.

If taxes rise, reduced income for the potential homebuyers will damp housing demand, they added.

But the expectations for higher home prices are still widespread. Nearly three-quarters of investors polled by J.P. Morgan expect home prices to rise 5% in 2013.

Avoiding Unexpected Expenses

It’s common for sellers to consider offering and buyers might find it an incentive, but a growing number of homeowners are purchasing the home warranties themselves to limit the unexpected expenses of repairs and replacements.protection.png

A home protection plan is a renewable service contract that covers the repair or replacement of many of the components in a home. Some homeowners especially like the convenience that it organizes a qualified service provider as well as the cost of the items.

There are a variety of companies that offer home warranties and the coverage may differ but the majority of things will include heating, air conditioning most built-in and some free-standing appliances, as well as other specific items. Additional specific coverage may be available for other things like pool and spa equipment.

Some investors are even placing this coverage on their rental properties to limit the amount of maintenance repairs during the year. It is a viable alternative to managing the financial risk and the stress dealing with unexpected expenses.

If you’re interested in home warranties, I’ll be happy to send you more information.

9 Tips for Choosing and Managing Contractors

If you catch me banging my head up against the wall it is likely because a contractor failed to show up on time or didn’t perform to our expectations. If you see me popping a bottle of champagne it’s probably because a contractor saved a project by providing a necessary service in the nick of time and for a great price. Fortunately for me I have done a lot more celebrating because we have worked with some great contractors.

In real estate investing there is a direct relationship between the quality of contractors and profit.  If nothing else – the connection between your contractor and your bottom line should be enough to make you, the investor, realize the importance of being able to choose and manage your contractors wisely.

If you are a real estate investor you have worked with contractors at some point, whether you are an experienced rehabber, or a second home landlord, good contractors are essential to running a successful business. While there are many great contractors out there, there are many that can only be described with words I shouldn’t use, so knowing how to work with contractors on each end of the spectrum and everywhere in between is an important skill to master.

Here are some tips for finding and managing quality contractors and creating rewarding relationships with them:

Get Multiple Quotes from Different Contractors:

It may seem obvious but so many people don’t do it. The disparities between quotes for the exact same job is sometimes mind numbing. If you are only getting one or two quotes you are potentially wasting money and marring your return on investment. On our very first rehab we had to deal with a fairly major foundation problem. The first quote was almost eight thousand dollars, which we initially thought was reasonable until we received additional quotes. The repairs were completed by a reputable company for half that, saving us money and boosting our returns.

Be Specific when Seeking Bids:

Just like other professions, there are contractors looking to take advantage of vulnerable people; don’t be vulnerable. To provide defense from predatory contractors be as specific as possible and leave no room for interpretation. Specificity will also demonstrate confidence, awareness, and knowledge, compelling shady contractors to look elsewhere.

Ink It – Get a Detailed, Written Scope of Work:

In a perfect world a handshake is all you need to ensure an agreement is upheld, but a handshake is not enough today. Once you have selected a contractor and agreed on a price, use a scope of work agreement to put EVERYTHING in writing. The scope of work should describe in detail the work to be performed and should be signed by both parties. This document will come in handy should any disagreements arise.

Go With Your Gut:

Instincts are very powerful and have saved a lot of people for potentially disastrous situations, so if you are not sure what to do, go with your gut. If you get that feeling that you are about to be ripped off, or that hunch that the person you are about to hire doesn’t know what he is doing, follow your instincts and move on to the next one. I have found that instincts are correct more often than not, so don’t be caught thinking “I knew I shouldn’t have done that” down the road.

Cover Your Butt – Hire a LICENSED Contractor:

While it may be cheaper to hire an unlicensed and uninsured handyman from Craigslist, you should consider the risks involved. There are inherent dangers in construction and rules and regulations vary by market. Make sure that you hire contractors with the proper credentials and understand local rules and regulations before starting a project. Failure to comply could bring your project to a standstill and cost you in fines. While ignorance may be bliss, it can also be expensive.

Try Them Out:

One of the best ways to get contractors to see things your way is to let them know it may not be a one time gig. Talk about your future endeavors as an investor and your need for reliable, trustworthy contractors. Many contractors will treat this as a try-out, trying to earn a spot on your team. Be careful for repeat contractors that creep the costs up on you after the first couple projects…some seem to think they are locked in for life.

Get a Warranty:

One of the best steps you can take to sell a property is to provide warranties to the buyer, especially on certain items like foundation repair. In fact, we try to convince the contractors to provide two-time transferable warranties so the buyer can also transfer it when they are ready to sell. Keep in mind a warranty is worth nothing if the company is not going to be around for long, so make sure you are dealing with reputable contractors.

The Golden Rule Applies:

As a paying customer you probably expect your contractors to show up on-time and follow through with agreements. It is important to practice what you preach. How can you expect a contractor (or anyone for that matter) to take you seriously if you are not conducting yourself in a professional manner? In essence, the golden rule applies.

Learn to Move On if Your Contractor Doesn’t Meet Expectations:

Let’s face it, sometimes things just don’t work out. Breaking up is always hard to do, but it can save you a lot of money and problems in the future. If a contractor is not meeting your expectations it is important that you let them know. Be professional but provide honest feedback. It seems that truthful feedback is becoming rare, but it is important in conducting business.

Ultimately you want to have a network of reliable and well-priced contractors, but getting to that stage is much more difficult than it seems. When you find contractors that exceed your expectations, do your best to keep working with them. If you are continuously getting burned by contractors you may need to look in the mirror and find out what it is you could do to better prepare yourself and manage those you work with…your business ultimately relies on it.

Find opportunity next year

By Carla Fried @MoneyDecember 3, 2012:

 
 

Opportunity has returned to the real estate market.

(Money Magazine)

In Money magazine’s Make More in 2013, you’ll learn what’s contributing to a rosier outlook for economic growth, how to get more investment income at a time of super-low rates, and how you can start exploring and how you can start exploring job opportunities again. This installment: Why, as a prospective home seller or buyer, you need to stop sitting on your hands.

                        After five years of tumult, order and opportunity are finally being restored to the housing market.                                         

                        Home prices are expected to rise a modest 1% from the fourth quarter of this year to the end of 2013, according to the real estate research firm Fiserv. David Stiff, Fiserv’s chief economist, notes that after some choppiness early on, prices should increase 3.4% from the second quarter of 2013 to the second quarter of 2014. In hotter regions out West, you can expect bigger gains.                                         

                        “Housing is finally turning the corner,” Stiff says. “There is no reason to be fearful of further large price declines.”                                         

                        This creates a new playing field for homeowners, who are finally able to sell, as well as would-be buyers who’ve been delaying a purchase in anticipation that prices would keep falling.                                         

                        The Mortgage Bankers Association forecasts that more and more house hunters will start coming off the sidelines, with new-home loans for purchases expected to jump 55%, based in dollars, in 2013.                                         

                        With that increased competition, “the days of buyers sticking it to sellers are over,” says Salt Lake City real estate agent Tracie Peay.                                         

                        Sellers: Don’t get too excited just yet. You don’t have a viselike grip on this market either. Indeed, for many, it still makes sense to wait to get better prices. This is especially true if you know that you won’t be able to break even on your investment by unloading your house now, once you factor in the sales commission and other costs.                                         

                        That said, don’t assume that prices will be off to the races again in a year or two.                                         

                        Fiserv forecasts that between now and 2017, homes will gain 3.3% a year in value. That’s hardly red-hot. But at least the market isn’t frozen anymore.                                         

THE ACTION PLAN

Sellers

The price still has to be right

                        Homes in many markets are selling in a matter of weeks, often attracting multiple bids — but only the ones that are properly priced. Take San Francisco. Although the city is one of the strongest sellers’ markets right now, the average home there goes for 103% of list price, not 120%.                                         

                        “Buyers aren’t going down the road that got so many people in trouble during the bubble,” says Dallas real estate agent Mary Beth Harrison.                                         

Focus on the appraisal

                        Whoever bids on your home will probably finance the purchase. That means any deal is still beholden to a third party.                                         

                        “You can take the highest offer, but at the end of the day the appraiser has the final say on the value of the home,” says David Howell, chief information officer at McEnearney Associates, a real estate agency in the D.C. metro area.                                         

Related: 25 Best Places to Retire

                        With so much riding on the appraisal — it can kill an agreement or require renegotiation — your agent should be present. Harrison has a tip for making sure this happens: “The minute we have an offer, we take the keys off the door to make sure the appraiser has to meet us to get in.”                                         

                        Your agent should also prep a package of pertinent information for the appraiser, says Chicago real estate agent Fran Bailey. That includes the latest comparable sales data and documents detailing any upgrades or renovations to help the seller’s cause. “It’s part of my job to make sure the appraiser has the correct information,” she says.                                         

Buyers

Be ready to deal

                        With competition heating up, casual house shopping isn’t going to cut it anymore. If you are serious about making a move, be prepared:                                         

Three months out. Despite housing’s green shoots, getting a mortgage remains incredibly tough. The average FICO credit score for recently denied applications on conventional purchase loans was 729. The score on approved mortgages was 762, with a 21% down payment, monthly payments equal to 21% of household income, and total debt that did not exceed 33% of income.