Protect Your Home-Buying Budget

Protect Your Home-Buying Budget

You know you love house hunting, and shopping for the perfect home is a fun pastime, but to move from being an open house and model home butterfly requires that big initial financial outlay … the dreaded downpayment. In fact, sticker shock sometimes deters potential homeowners from making the decision to buy at all.

To get from where you are to where you want to be, you don’t need a windfall (although that would be awesome), you need to create a budget allows you to live today AND save for that downpayment—and don’t forget those closing costs. Then, once you’ve created a budget … you need to protect it from the temptation to dip in now and again along your way to homeownership.

Here are some savings tips AND some budget-busters to navigate around:

Strategies for saving:

  • Open a savings account. This might seem like a no-brainer, but many people don’t have one savings account, let alone more than one. If you already have one, open another one specifically for your downpayment. Having an account earmarked explicitly for your downpayment might make you think twice about raiding it for other expenses that crop up.
  • Use a separate bank. There are two main options for options for your savings account: use the same institution you use for your checking account OR use a different institution. Some people advocate opening up the savings account at the same bank as your checking account for the convenience of transferring money. BUT, if you’re already having trouble saving up that downpayment, you want to make it a bit harder to get at, so consider opening up a credit union account or a savings account in a different bank.
  • Use direct deposit. If your employer’s payroll system allows it, have the savings portion of your paycheck sent directly to your savings account. That way, you’ll have less immediate access to it, won’t see it in your checking account and may be less likely to spend it.

Establish a budget:

Once you have a mechanism for saving in place, establish a budget around your remaining income. You can find many online programs to help you create and keep track of your budget. Many are free to use, but some offer the opportunity to consult with a financial planner for a fee. Here are is a short list to get your started:

Budget busters:

Many people resist living on a budget because it seems so restrictive. That idea, that a budget ties you down like a parent looking over your shoulder, keeps many young people from reaching even simple financial goals. The challenge is that many of us see spending money as a reward, but money is really just a tool to help get you what you truly want. If you REALLY want to own a home, watch out for these budget-busters that will keep you from getting there:

  • Overpriced vacations. Whether it’s the dog days of summer, or wanting to escape the winter blues, the lure of travel is everywhere in every season. Cheap flights with hotel, rental car and tour or show ticket add-ons seem like the perfect solution, but before you pull out that credit/debit card, think about what you really want: a new home or a temporary break. That doesn’t mean you don’t take vacations, just that you think twice (or three times) before paying too much and being sorry later.
  • Overpriced coffee. Well … not just coffee, but if your coffee/tea/cola/energy drink habit adds up to more than $10 a day you’re probably busting your budget. If you saved just half of that ten dollars a day, you’d have $1825 in your savings account by the end of the year. If two or more members of your household curb their caffeine habit, by year’s end you could have $3600 to $4500 saved up.
  • Dining out. Much like your caffeine fix, dining out can break a budget real fast. According to The Simple Dollar, the average American spends $232 each month eating out. You don’t have to give up eating out, but like your caffeine fix, if you just cut that in half, you’ll have an extra $116 a month—a whopping $1392 a year—to add to your savings.
  • Expensive clothes. These days, many offices allow casual dress, but if you work in a highly professional environment that requires a more put-together look, you still don’t need to break the budget. Purchase just the key pieces you need—those that can do double duty—and change up with accessories.

Added together, these savings of about $5800 (or more) can be enough to qualify you for the downpayment on a $100k home using an FHA loan. If you add to that all, or even part of any extra money you get through out the year (birthdays, holidays, bonuses, rebates) your downpayment account can grow significantly in just one year.

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Fascinating Home Technology — Run Your House on a Battery

Fascinating Home TechnologyThe biggest challenge to solar energy is the inability to both capture it and store it in any meaningful way. In fact, while efficiency in capturing solar power has increased from about 15 percent of most solar panel models to 35 percent efficiency in the higher ends, even when captured the energy grid is unable to store and regulate its flow throughout the day.

Enter the Tesla Powerwall

Elon Musk, CEO of electric carmaker Tesla Motors, announced earlier this year that Tesla’s new Powerwall for the home and Powerpack for commercial use already garnered 38,000 preorders. The Tesla Powerwall offers 92 percent efficiency in DC round-trip power.

Here are the basics:

The Powerwall home battery charges via electricity generated by solar panels. As solar energy wanes throughout the evening or on a cloudy day, the battery supplies energy back to your home instead of pushing it into the public power grid. The Powerwall also offers energy during a power outage, so homeowners in storm-prone areas or country homes with unreliable utility service can access emergency power.

The Powerwall utilizes a lithium ion battery with technology similar to that in Tesla automobiles and installs on the wall of your garage, basement or even outdoors. For larger homes, or those with higher power consumption requirements, multiple batteries can be installed together with up to 90 kWh total available power. Each battery in its weather resistant enclosure is just 51.2 inches by 33.9 inches and only 7.1 inches deep.

The system uses rooftop solar panels connected to the Powerwall and an inverter that directs current from both the solar panels and the Powerwall battery into your home’s alternating current power system.

For an example of how much energy your home uses in the day, consider that your refrigerator consumption is commonly 4.8 kWh/day (kilowatt hour per day) while your washer and dryer together equal about 5.6 kWh/day. Add to that your lights, laptop, flat screen television or stereo and you’re looking at about 2.5 kWh/day additional consumption.

Of course, the first question that comes to mind for a cutting –edge home technology like this is the cost. According to Tesla Motors specifications, the home-sized batteries cost just $3000 for the 7-kWh model and $3500 for the 10-kWh version. Each comes with a 10-year warranty.

If you’re looking for an energy efficient home that conforms to the requirements for solar panels, let your real estate professional know. We can optimize your search so that you find the home that is just right for you and your power needs.

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Capturing Clutter

clutterWhether you’re preparing your home to sell, or your packing up to move to your new home … clutter can be your worst enemy.

But, getting chaos under control isn’t always easy.

The problem isn’t that you lack resources.

In fact, a whole industry sprang up to help folks tackle the problem of clutter: from simple lists and organizational tools to crews of “clutter police” to tackle your disarray for you, and even reality TV shows. You can find YouTube videos like this one to help you organize your linen cabinets and this one for your socks and underwear.

The abundance of resources might just seem like more clutter. For some people, even the thought of trying to de-clutter can seem overwhelming. And looking at pictures of the perfectly organized closets, cupboards and garages of organization gurus makes them feel like failures.

If clutter is messing with your home sale or move, don’t try to become the perfectly organized maven right now. Just get the basics down so that you can move on:

  • Take small bites: Remember the old adage, ” How do you eat an elephant? One bite at a time!” Don’t try to tackle the whole house at once. If you have children, consider starting with their toys. Look for ones they’ve outgrown and no longer play with. You don’t need to get rid of them just yet; try putting them in a clearly marked box out of sight. If your biggest challenge is your closet, pull out the clothes from the season farthest away (winter if it’s spring or summer if it’s fall) and put them in clear storage bins. That way, you can see them, but they aren’t taking up the space that your current wardrobe needs.
  • Time yourself: give yourself just one hour (or less) at a time to declutter one space. Tackle the junk drawer in the kitchen (yes, we all have one) and get rid of the odd paperclips, rubber bands, loose screws and broken pencils. Once you’re done with that one task, just get on with life … don’t think you have to do it all in one day.
  • Use the doubling rule: if you think it’s going to take one day to organize—plan for two. If you think you can do it in two weeks, plan for four. That way, if you get done in less time you’ll be energized rather than being disappointed that it took longer.
  • Use simple strategies: When organizing a room, use one box for KEEP, one for GIVE, one for DISCARD and one for SAVE. The KEEP box is for items that need to go back into that room, so it is a temporary resting place while you sort. The GIVE box is for anything you plan to give to friends, family or charity. Use the SAVE box for items that belong in a different location or that need to be in long-term storage. As you move from room to room, you’ll resort this box and return items to their proper room. The final box—DISCARD—may be the hardest one of all. Use it for anything broken, torn, damaged or otherwise unusable: just get rid of it. One caveat: if you plan to have a garage sale, add one more box called SELL for those items. If you don’t sell the items at your garage sale, move them to the GIVE box.

If you need to know which items to declutter for your home sale, talk to your real estate professionals. They know what types can turn off a buyer or make your home sale take longer … so tackle those items first.

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Can My Real Estate Agent Offer to Buy My Home If There are No Offers?

Can My Real Estate Agent Offer to Buy My Home If There are No Offers?The short answer is “yes,” but know what you’re signing up for.

In a seller’s market it seems like most homes should sell — given enough time and exposure on the market. But there are some situations where a home MUST sell: the owners need to move for work or because of a job loss; or, the home was left in a will and proceeds need to be split among the inheritors; the sellers are experiencing divorce, or any number of other reasons a home needs to sell quickly.

With a quick sale required, sellers may be temped to go for an agent’s offer that sounds too good to be true: The agent will “buy your home if it doesn’t sell!”

According to Angie’s List, such offers are not scams. They are, in fact, marketing tactics that might work for you in your situation — a win-win — or, might be a really bad deal. Before signing on the bottom line, make certain you know what you’re agreeing to.

Home sale guarantees

Real estate professionals may offer a variety of types of guarantees. Each has its own value to both the agent and the seller:

  • “If I don’t sell your home, I’ll buy it” — Often, this type of guarantee offer comes from agents that work with investors. An investor wants to buy a home either to rent or to sell at a profit. In this scenario, you should plan to part with a chunk of your equity. This program may work for you if you need to sell quickly but don’t need top dollar from your home, if you need to sell to settle an estate, or if you’ve found a new home at a substantial discount and just can’t afford the two mortgages at once. Just know that you will see less return on this type of sale. If your agent only sells under this program and not to the general public, you’ll end up with less in your pocket.
  • “If I don’t sell your home in X months, I’ll buy it” — When a program has time stipulations, it usually also has price stipulations. You’ll most likely be agreeing to a schedule of markdowns (monthly, bi-weekly or weekly) so that by the “I’ll buy it” date it reaches the price the agent will pay for it.
  • “We guarantee you X% of the value” — In this approach, the agent offers a specific discounted price if your home doesn’t sell. Often, this is about 90% of its fair market value, plus fees and commissions.

The bottom line

Before you agree to any home sale guarantee plan, know that if the agent does not sell your home outright and the plan goes into effect you’ll be accepting far less for your home than on the open market. While this seems like a lose-lose for the typical home seller, it can be a win-win if the sale is urgent or the sellers have extenuating circumstances.

The best scenario

When selling your home, the best scenario is to work with a real estate professional that knows the home’s market, can advise you on the best way to prepare your home and create curb appeal, and offers all marketing resources (online, offline, print, local, signage, MLS, etc.).

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Disappointing Appraisal?

Disappointing Appraisal

You’ve found the perfect home at the perfect price and made an offer that the sellers accepted. But, the appraisal came back lower than your offer.

BUMMER!

What do you do now?

Any home financed through a bank or mortgage lender requires an appraisal to protect them against originating a loan is upside-down (the loan is greater than the collateral).

There are many reasons that an appraisal comes back lower than the home price. The comparable houses used in the appraisal may not actually apply to the property you’re hoping to buy. For example, if the home you’ve put an offer on is semi-rural or rural, the comparable homes may not have as much land, or may have land but not as much house, or fewer outbuildings. In residential neighborhoods, the home you wish to buy may have upgrades that none of its neighbors currently have. Often, there are no other recent sales in the same neighborhood to compare to, so the comparables are from other neighborhoods that may not have the same quality of life or amenities as the neighborhood you’re hoping to buy into. Sometimes, the home is subject to a bidding war that drives the price higher than its actual market or appraised value.

Traditional banks and mortgage lenders offer mortgages for a percentage of the appraised value, not the sales price or the offer you’ve made. If the appraisal is less than the agreed upon offer you may need to come up with more cash, but sometimes there are other options:

Get a second appraisal. Yes, you can ask for a second appraisal from another qualified appraiser. Of course, you’ll have to pay for it, but it’s a small price to pay for getting the house of your dreams. Just know that the lender doesn’t have to accept the second appraisal … it’s value may be in appealing the first appraisal.

Appeal the appraisal. On the other hand, you can appeal the appraisal with the original appraiser. Review the appraisal carefully. Sometimes things get missed. Sometimes the comparables don’t really compare. Sometimes the appraiser doesn’t have all the information. Give as much information to the appraiser as you can. In recent markets, short sales and foreclosures of similar properties might skew the comparable data too.

Review the appraisal contingency clause. A contingency clause means that if the appraisal comes in lower than expected, you can renegotiate with the seller. Of course, they are not obligated to use the appraised value, but they may be willing to cover closing costs or other expenses so that you make the purchase. Sometimes the real estate agent(s) will take a lower commission to compensate for the difference.

You can agree to pay the difference, but you are betting on the price of real estate increasing, so you really wouldn’t want to do this unless this is your absolute dream home.

The best way not to have a disappointing appraisal is to work with a real estate professional that knows the market well and can advise you of fair market values ahead of your making an offer.

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Backyard July 4th Celebration!

Backyard July 4th Celebration!

Celebrate your new home with a backyard barbecue!

Nothing speaks independence like owning your own home. If you’ve rented for most of your adult life, the freedom to paint walls, barbecue on the patio or hang party lights in trees is a special feeling. As July 4 rolls around, here are some ideas to celebrate you new home:

BYOM cookout

If you’ve just bought your home, you may be a little cash poor. That doesn’t mean you can’t celebrate with your friends and family. Just invite all guests to a potluck and have them bring their own meat (BYOM) to barbecue and a side dish or dessert to share. Everyone loves to share a favorite recipe and no one will mind helping foot the bill. Just make sure you have hot coals or a big enough gas grill for everyone to cook on.

Plan a few extras that won’t break the bank like watermelon wedges and iced drinks.

Decorate the yard

Get your kids in on the action too! Let them decorate with hanging lanterns, flags or pendants or red, white and blue streamers. Create table centerpieces from citronella candles (to keep those pesky mosquitos away), small buckets with flowers or patriotic wreaths, hang bunting swags on the fence or porch rails

If you haven’t done your landscaping yet, choose red, white and blue flowers to put in pots, hanging baskets or your flowerbeds for the big day. Add garden décor such as pinwheels and flags, and stars and stripes of any sort.

If your area allows fireworks, plan sparklers for the kids (under supervision, or course) and fireworks for the whole family.

Most of all, celebrate your freedom

Owning your own home is special and it’s part of the American Dream, so celebrate that you’ve stepped into what President Obama called “the most tangible cornerstone that lies at the heart of the American Dream, at the heart of middle-class life.”

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Relocating Made Simple

Relocating Made SimpleOkay, there’s really not a simple way to relocate … after all, you’re uprooting yourself, moving away from friends or family or both, leaving your comfort zone and launching out into the world. But, there are some things you can do to make it less stressful for yourself and your family. Each year, nearly 20 percent of the American population makes a move, so there is lots of tried and true advice for relieving some of the anxiety about your move.

Moving

The best advice you can receive when relocating is to be as organized as possible. Organizing may seem like a hassle when you’re in a rush to move, but arriving at the other end and starting a new job, new schools for the kids and setting up a home can be extra stressful when you can’t find your shoes or belt, don’t know which box has the coffee-maker or where your kids’ backpacks are. Lots of online sites are devoted to various organizational methods—some more complex than others—but finding one that works for your style should be one of the first things you do.

Create a checklist so that you don’t forget to move your satellite service, turn of the utilities or forget to pick up your kids’ school records. Utilize your smart phone or tablet to document which boxes contain which items. Number them or color-code them so that movers can deposit them in the correct rooms as they unload your belongings on the other end.

Selling

If you own a home and need to sell it before you can relocate, you’ll need to consider the best way to sell quickly. Managing a home sale from out of the area is possible, but can add lots of stress to your new situation … and having a home three states away that isn’t selling can cause tremendous financial burdens as well. Regardless of how quickly you need to make the move, in order to sell your home quickly and relieve you of having to think about it while you’re preparing to move, you must price your home correctly for the market. Your real estate professional knows the area, knows the market and can help you set the right price.

If you need to move soon, follow your agent’s advice on the most important upgrades, fixes or staging your home needs to be most appealing to buyers. This is not the time to consider major remodels, but you do want everything fresh and sparkling clean, with attractive and well trimmed landscaping.

If your home doesn’t sell

If your home doesn’t sell before you need to move, you have a few options available to you. Your agent could sell the home for you in your absence. Or, you can let your home become a rental. Before you think about becoming a landlord, however, let your real estate agent introduce you to a property manager. In fact, many real estate agencies and brokerages have property management divisions. You want someone handling the paperwork, marketing your home to potential renters, receiving payments of deposits and rent, and taking care of repairs and other requests from your renters.

Buying

You may already know the area of town you want to live in your new city, so by all means, work with your real estate agent to find the perfect property for you … but if you just aren’t sure, take the time to lease in the area you think you might like to live. Leasing temporary housing for three to six months while you test the waters in an area can save you from making a purchase you may be sorry for later. It also gives your real estate professional more time to find just what meets your needs. Often, your real estate agent can help you find a place to lease so that you can get settled while you look for the perfect home.

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Marketing Your Home Out-of-Town, Out-of-State, Out-of-Country

Marketing Your Home Out-of-Town, Out-of-State, Out-of-CountryIn a tough sellers’ market, homeowners looking for the best possible sale sometimes consider marketing to out-of-town, out-of-state and even out-of-country buyers. So, how do you attract buyers from out of your area?

Relocation Services

Statistically, homes most often sell to local buyers. But if you are in a prime growth area with new industry to attract jobseekers willing to relocate, you may want to market your home toward the newcomers to your community. Or, if your employer moves you to a new city, a relocation service can help you sell your old home. Working with agents familiar with employer relocation services (relo for short) can market your home directly through the company to those employees. In recent years, as many as 1.5 million sellers utilized employer-assisted relocation services to sell their homes.

Retirement

If your home happens to be in a prime retirement area, your agent will know that best options for promoting your home to retirees. Before you consider marketing directly to seniors, however, you may need to retrofit your home to meet their needs as they age. Consider widening doorways to 36 inches to accommodate wheelchairs, walkers and other medical aids. One useful option is to change out a tub for a step-in shower enclosure that can accommodate a medical shower stool and add grab bars to showers and near toilets. When possible, create a master suite on the main floor. If your home has steps into the entryway, look for options to make the entry easier to maneuver. Simple changes such as rocker switches in place of toggle switches, and lever handles on doors in place of knobs make simple daily tasks easier for people suffering from arthritis and other age-related afflictions.

Investment

Marketing your home to investors is another option. Of course, investors always look for the best deal, so don’t expect to get top dollar, but if your home is located in a prime area, marketing to investors may get your home sold more quickly. When considering this option, know that your buyer is looking for the best break-even home price. That means between the monthly mortgage, upgrades required, taxes and insurance, the buyer can rent the home and still break even, or better yet, make a profit.

Foreign Buyers

International buyers on the lookout for vacation or investment property in the United States probably won’t just respond to an MLS listing. Your online exposure is the biggest tool you have to attract foreign buyers. They want to see lots of high quality images and well-done video of the home, neighborhood and community. They need lots of extra information because they’re not easily able to visit your home in person.

Some agent specialize in promoting your property to foreign buyers while others align themselves with real estate groups that have international reach. Often, international buyers cluster in areas so that they have familiar shopping, dining and worship centers nearby. When your area already hosts international residents, promoting your property to that nationality can give your property great exposure.

If you’re interested in promoting your home to out-of-town, senior, relocating or international buyers, make sure your agent or broker knows so that he can pursue the best marketing plan for you.

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