Most Non-Owners Claim They Can’t Afford A Home. Could They Be Wrong?

Many potential homeowners think purchasing property is out of their reach. According to the National Association of Realtor’s 2018 Aspiring Home Buyers Profile, 56% of non-owners claim an inability to afford a home as the reason they don’t currently own property.

But in today’s market, is that assumption wrong? And are people who are able to afford a home throwing their money away on renting?

In most cases, yes.

According to a recent study by Zillow, renting is actually more expensive than owning in most metro markets across the United States—by a long shot. According to the study, rent eats up nearly twice as much household income as owning, with renters paying an average of 29.1% of their income in rent, while homeowners only pay an average of 15.4% towards their mortgages.

The Takeaway

If you’re holding off on buying a property because you don’t think you can afford it, it’s time to rethink that assumption. Owning a home may be more affordable than you think. And with rental prices shooting up across the country, you may spend less on your mortgage than you are now. Plus, you’ll be building your wealth in the process, unlike with renting.

 

3 Ways Real Estate Agents Actually SAVE You Money During Your Home Sale

One of the main gripes that people have with real estate agents is their commission. Many homeowners (mistakenly) think, “Why should I pay a real estate agent to do something I’m perfectly capable of doing myself?”

The reason people avoid working with agents is because they think it’s going to cost them money. But in reality, working with a qualified real estate agent is worth far more than what you’ll pay in commission. In fact, working with a real estate agent can actually make the process of selling your home less stressful, less time consuming, and less expensive.

Here are three ways real estate agents more than earn their commission — and can actually save you money — during your home sale:

1. They know the right people

As the old real estate saying goes, when it comes to selling your home, it takes a village. And if you don’t have the right villagers in your corner, the process of selling your home can get expensive, fast.

During your home sale, there’s all sorts of vendors you’ll need to work with: contractors, landscapers, inspectors, tradesmen, professional stagers, movers… depending on your needs, the list can be lengthy.

Finding all of those vendors on your own will take a lot of time — and there’s no way to ensure you’re getting a good deal when you hire them. But when you work with an agent, they have professional contacts across the board and can recommend the right vendors at the right price.

Having access to your agent’s network is a huge time and money saver during the sale of your home.

2. They know exactly how to price your home

Pricing your home is tricky business. If you don’t price it high enough, you’ll be kicking yourself when you get less than what you believe your home is worth. But price it too high and you won’t get any offers, leaving your house on the market — possibly stigmatized as “having something wrong with it” — and costing you money in the process.

When you try to sell your home on your own, pricing your property can feel like a guessing game. But when you work with a qualified real estate agent, their deep market knowledge will help you price your home in a way that works for both you and potential buyers.

It’s an agent’s job to know what’s going on in your market. They know how much homes are selling for, how long homes are sitting on the market, and exactly how you need to price your home if you want it to sell quickly and profitably. This information will significantly speed up the process of selling your home AND help you fetch a higher price — both of which put money right back into your pocket.

3. They give you your time back

Many sellers who try to manage their home sale on their own start the process thinking that it’s going to require a minimal time investment. They think posting a few ads on home listing sites, hosting an open house or two, and signing a contract are all it takes to get a house sold.

But unfortunately, that’s not the case.

Selling a home is a full-time job. That’s why there’s an entire industry built around it! Homeowners who go the sale-by-owner route in an attempt to save money often find their time, and lives, completely monopolized by the process.

And, as they say, time is money.

If you’re spending all of your time trying to get your house sold, it’s taking you away from your life — your family, your job, your hobbies. And there’s no price tag for what that’s worth.

Working with a real estate agent takes all that time burden off of you. Selling your home is their full-time job, and they can devote the time and attention necessary to get it done quickly. The amount of time and hassle this will save you is invaluable.

Not working with a real estate agent to save money on commission fees makes sense… in theory. But in practice, working with a real estate agent saves you immeasurable time, energy, and cash. Any good real estate agent will more than earn their commission — and then some — before the time comes to sign the closing papers.

Think Owning A Home Is Out Of Your Reach? Think Again

In the current economic climate, a lot of renters thinking homeownership is out of their reach. But if you think buying a home is out of reach, you might want to think again.

According to the National Association of Realtors’ Realtors Confidence® Index, first-time buyers accounted for 29% of all home sales from late 2016 to late 2017. That’s nearly one-third of all home sales! And there’s a reason so many people are making the transition from renting to owning…

Rents are rising. According to a recent Zillow study, the median US rent is taking up 29.1% of household income, and costing tenants a whopping $2,000 more per year.

Data Source: Zillow

As renting becomes less economical, more and more tenants are exploring homeownership. And thanks to low down payment mortgage options (61% of first-time buyers made a down payment between 0 and 6%, according to the National Association of Realtors’ Realtors Confidence® Index), homeownership is more accessible for first-time buyers than ever, making it the ideal time to make a move.

The Takeaway

If you’re currently throwing a large chunk of your paycheck towards your rent, now’s the time to make a move and buy your first home. Not only is homeownership one of the best investments you can make in your future, but thanks to rising rents, you may also find yourself saving money in the short-term.

 

Welcome Home! A First Timer’s Checklist For Buying A Home

Buying a first home is one of the most exciting times in a person’s life. But it’s also a huge decision and it can be overwhelming for potential homeowners who don’t know the steps to take to get them from “thinking about buying a first home” to “time to move in”.

Here’s a first timer’s checklist for purchasing property to help homeowners manage the buying process for the first time:

Finances

Before homeowners start thinking about purchasing a home, it’s important to take a look at finances.

Pay Down Debt

The first thing that potential homeowners will want to do before looking for homes is to pay down any outstanding debt, especially credit card debt. Credit card debt typically has a high interest rate and paying down large balances can be a drain on finances. Credit card debt also has a big impact on credit scores, which will directly affect the interest rates homeowners will secure on their home loans.

It can be a challenge, but paying down high-interest debt before purchasing a home is the best long-term strategy for potential homeowners.

Know The Numbers and Gather Documentation

It’s also important for homeowners to have a solid understanding of their financial history before they apply for loans and looking for homes.

It’s important that homeowners know their credit score, and the credit score of their spouse, partner or co-purchaser. They should also plan to review their credit reports to look for any errors or discrepancies; even minor dings on a credit report can cause higher interest rates on a mortgage.

Potential buyers will also want to gather the documentation they’ll need when applying for a mortgage. This includes copies of credit reports, paycheck stubs, copies of federal tax returns and documentation outlining any student loan or credit card debt.

Rework Budgets

There’s no way around it – owning a home is an expensive endeavor. In order to purchase a home that won’t put them under financial strain, homeowners need to take a close look at their budgets and figure out how much house they can afford.

Homeowners should track their expenses, see where they can cut expenses and then figure out a realistic and comfortable home budget. It’s also important to factor in all home-related expenses when creating a budget. Obviously, there will be a mortgage payment, but homeowners should also factor in things like property tax, any HOA fees and utilities.

Determine Mortgage

Once a budget has been decided, it’s time to determine what type of mortgage will be the best fit. Most homeowners elect for a 30-year mortgage, but there are shorter term mortgages available (like 15-year mortgages), which typically carry lower interest rates.

Homeowners should also determine whether they’ll be applying for a fixed rate or an adjustable rate mortgage. While adjustable rate mortgages can save money on the front end, they can cause higher payments down the line should interest rates increased. Fixed rate mortgages guarantee a fixed interest rate throughout the life of the loan, which offers homeowners security in knowing their mortgage payment won’t change.

Homeowners should speak with a mortgage specialist to determine the best fit for them and get pre-approved for a mortgage before beginning the home buying process.

Choose An Agent

Choosing the right agent is essential for first time home buyers. The process of purchasing a home can be overwhelming, and having the right agent can help homeowners navigate through this new territory relatively stress-free and find the home of their dreams.

When choosing an agent, homeowners should consider:

Does this agent have experience working with first time buyers?

Ideally, potential homeowners will want to work with an agent who has experience working with first time buyers. First timers typically have a lot of questions and, having never been through it before, need additional support, guidance and reassurance throughout the buying process.

A real estate agent who has worked with several first time buyers will expect these additional questions and concerns and will make room in their schedule to accommodate it.

Does this agent specialize in the desired market?

First time and seasoned buyers alike should always work with an agent who specializes in their desired market. Every area is different and working with an agent who understands the ins and outs of an area gives buyers an advantage over the competition.

Start Looking At Properties

Once an agent is in place, the fun can begin: it’s time to look at properties. Before homeowners look at properties, they should set clear expectations with their agent about what they’re looking for, share their “must haves” and their “nice to haves” and let the agent know any potential deal breakers.

Many first timers wonder how many properties they should view before making a decision. And again, there’s no magic number. Some homeowners may jump on the first property they see, and some may view 100 before finding a home that feels true to what they’re looking for.

When viewing homes, homeowners should consider whether the property is a place they could see themselves comfortably and happily living for the foreseeable future. Other considerations include:

• How much work will need to be done on the home before it’s move in ready?
• What will be the cost of necessary repairs and renovations?
• How is the neighborhood? Does it feel safe?
• If children will be living in the home, how is the school system?
• Is the area noisy?
• Does the property feel private? If not, is that something that’s manageable?

There’s no formula to follow for finding the right house as a first time home buyer. But following this checklist will get homeowners a few steps closer to finding their dream home.

4 Reasons Why We’re Not Headed For Another Housing Crash

With home prices rising in many areas of the country, many people are worried that we’re headed for a housing crash like the one we suffered in 2008.

But here’s the thing: it’s just not true. While it’s understandable that people would look at the current market, consider it a “housing bubble,” and assume it’s going to pop, the truth of the matter is the market today couldn’t be any more different than they were before the crash of 2008.

Let’s take a look at four reasons why we’re not headed for another housing crash:

1. Banks have tightened their lending practices

The biggest contributor to the crash of 2008 was risky lending practices. Financial institutions had extremely loose standards in terms of who they’d lend to; they were giving out mortgages to people with low incomes, bad credit, and who were unlikely to be able to pay their mortgage once their interest rates increased. Getting a mortgage was easy, regardless of your financial situation. While this made homeownership possible for people who previously would have needed to rent due to lack of income or bad credit, it also led to serious problems when millions of people began defaulting on their loans, leading to the housing crash and the ensuing economic crisis.

Today, those predatory and unethical lending practices have been completely overhauled. Mortgage standards are much more strict, and lenders are much more cautious in who they grant loans to and the terms of those loans. This has led to greater stability in the market and will prevent another crash like the one we experienced in 2008.

2. Fixed rate mortgages are the norm

As mentioned, a huge part of the housing crisis of 2008 was subprime mortgages. The mortgages given to the riskiest borrowers were adjustable rate mortgages. Once the introductory period was over, borrowers saw their interest rates skyrocket and their mortgage payments quickly double or triple in size, making them completely unaffordable and leading to mass defaults on loans across the country.

But today, while adjustable rate mortgages still exist, they’re significantly less common. Fixed rate mortgages are the norm. When people borrow, they know exactly how much their mortgage payment is going to be for the life of their loan. This allows them to assess their budget and only borrow as much as they can afford, making it much less likely they’ll default on their loans in the future.

3. Today’s rising prices are a supply and demand issue, not the makings of a bubble

In 2008, prices rose rapidly because everyone wanted to buy property. Real estate experts called it a “mania” because so many people who weren’t able to buy property suddenly had the ability to do so. Purchasing a home in the US accelerated to a frenzied pace, which drove up prices.

But today, prices aren’t rising because there’s a flood of frenzied buyers in the market. Instead, it’s a supply and demand issue. People are staying in their homes longer, which means there’s less inventory available in competitive markets. When there’s less inventory, there are more people vying for the limited homes available, which drives up property prices. This kind of price increase is just a normal part of a competitive market, not a reason to worry we’re headed for another housing bubble.

4. There’s economic growth to support rising prices

Perhaps the biggest reason you don’t need to worry about the US heading for another housing crisis, is the fact there’s economic growth to support rising prices.

The reason the most competitive markets in the country (like Silicon Valley or Seattle, WA) are rapidly growing and showing historic price increases is due to economic growth. The most competitive housing markets in the US are the markets with the most opportunity. People are flocking to areas where there are jobs, stable economic growth, and opportunities for the future. Potential homebuyers want to purchase property in a place they know will offer them plenty of career and economic opportunities.

When there’s economic growth to support growing prices like there are in today’s hottest cities, it makes for a much more stable market—and a market unlikely to head towards a housing crash.

If you’re worried that rising housing prices are an indicator another housing crash is on the horizon, take a deep breath. The conditions in the market today are completely different from the conditions in 2008, and thanks to the changes made in lending practices after the crash and our booming economy, you can rest assured we won’t see a housing crash anytime soon.

184 Things REALTORs® Do To Earn Their Commission

Listed here are 184 typical actions, research steps, procedures, processes and review stages in a successful residential real estate transaction that are normally provided by full service real estate brokerages in return for their sales commission. Depending on the transaction, some may take minutes, hours, or even days to complete, while some may not be needed.

More importantly, they reflect the level of skill, knowledge and attention to detail required in today’s real estate transaction, underscoring the importance of having help and guidance from someone who fully understands the process – a REALTOR®.

Pre-Listing Activities

• Make appointment with seller for listing presentation
• Send seller a written or e-mail confirmation of listing appointment and call to confirm
• Review pre-appointment questions
• Research all comparable currently listed properties
• Research sales activity for past 18 months from MLS and public records databases
• Research “Average Days on Market” for this property of this type, price range and location
• Download and review property tax roll information
• Prepare “Comparable Market Analysis” (CMA) to establish fair market value
• Obtain copy of subdivision plat/complex lay-out
• Research property’s ownership & deed type
• Research property’s public record information for lot size & dimensions
• Research and verify legal description
• Research property’s land use coding and deed restrictions
• Research property’s current use and zoning
• Verify legal names of owner(s) in county’s public property records
• Prepare listing presentation package with above materials
• Perform exterior “Curb Appeal Assessment” of subject property
• Compile and assemble formal file on property
• Confirm current public schools and explain impact of schools on market value
• Review listing appointment checklist to ensure all steps and actions have been completed

 

Listing Appointment Presentation

• Give seller an overview of current market conditions and projections
• Review agent’s and company’s credentials and accomplishments in the market
• Present company’s profile and position or “niche” in the marketplace
• Present CMA Results To Seller, including Comparables, Solds, Current Listings & Expireds
• Offer pricing strategy based on professional judgment and interpretation of current market conditions
• Discuss Goals With Seller To Market Effectively
• Explain market power and benefits of Multiple Listing Service
• Explain market power of web marketing, IDX and REALTOR.com
• Explain the work the brokerage and agent do “behind the scenes” and agent’s availability on weekends
• Explain agent’s role in taking calls to screen for qualified buyers and protect seller from curiosity seekers
• Present and discuss strategic master marketing plan
• Explain different agency relationships and determine seller’s preference
• Review and explain all clauses in Listing Contract & Addendum and obtain seller’s signature Once Property is Under Listing Agreement
• Review current title information
• Measure overall and heated square footage
• Measure interior room sizes
• Confirm lot size via owner’s copy of certified survey, if available
• Note any and all unrecorded property lines, agreements, easements
• Obtain house plans, if applicable and available
• Review house plans and make copy
• Order plat map for retention in property’s listing file
• Prepare showing instructions for buyers’ agents and agree on showing time window with seller
• Obtain current mortgage loan(s) information: companies and & loan account numbers
• Verify current loan information with lender(s)
• Check assumability of loan(s) and any special requirements
• Discuss possible buyer financing alternatives and options with seller
• Review current appraisal if available
• Identify Home Owner Association manager if applicable
• Verify Home Owner Association Fees with manager – mandatory or optional and current annual fee
• Order copy of Homeowner Association bylaws, if applicable
• Research electricity availability and supplier’s name and phone number
• Calculate average utility usage from last 12 months of bills
• Research and verify city sewer/septic tank system
• Water System: Calculate average water fees or rates from last 12 months of bills )
• Well Water: Confirm well status, depth and output from Well Report
• Natural Gas: Research/verify availability and supplier’s name and phone number
• Verify security system, current term of service and whether owned or leased
• Verify if seller has transferable Termite Bond
• Ascertain need for lead-based paint disclosure
• Prepare detailed list of property amenities and assess market impact
• Prepare detailed list of property’s “Inclusions & Conveyances with Sale”
• Compile list of completed repairs and maintenance items
• Send “Vacancy Checklist” to seller if property is vacant
• Explain benefits of Home Owner Warranty to seller
• Assist sellers with completion and submission of Home Owner Warranty Application
• When received, place Home Owner Warranty in property file for conveyance at time of sale
• Have extra key made for lockbox
• Verify if property has rental units involved. And if so:
• * Make copies of all leases for retention in listing file
• * Verify all rents & deposits
• * Inform tenants of listing and discuss how showings will be handled
• Arrange for installation of yard sign
• Assist seller with completion of Seller’s Disclosure form
• “New Listing Checklist” Completed
• Review results of Curb Appeal Assessment with seller and provide suggestions to improve salability
• Review results of Interior Décor Assessment and suggest changes to shorten time on market
• Load listing into transaction management software program

 

Entering Property in Multiple Listing Service Database

• Prepare MLS Profile Sheet — Agents is responsible for “quality control” and accuracy of listing data
• Enter property data from Profile Sheet into MLS Listing Database
• Proofread MLS database listing for accuracy – including proper placement in mapping function
• Add property to company’s Active Listings list
• Provide seller with signed copies of Listing Agreement and MLS Profile Sheet Data Form within 48 hours
• Take additional photos for upload into MLS and use in flyers. Discuss efficacy of panoramic photography

 

Marketing The Listing

• Create print and Internet ads with seller’s input
• Coordinate showings with owners, tenants, and other Realtors®. Return all calls – weekends included
• Install electronic lock box if authorized by owner. Program with agreed-upon showing time windows
• Prepare mailing and contact list
• Generate mail-merge letters to contact list
• Order “Just Listed” labels & reports
• Prepare flyers & feedback faxes
• Review comparable MLS listings regularly to ensure property remains competitive in price, terms, conditions and availability
• Prepare property marketing brochure for seller’s review
• Arrange for printing or copying of supply of marketing brochures or fliers
• Place marketing brochures in all company agent mail boxes
• Upload listing to company and agent Internet site, if applicable
• Mail Out “Just Listed” notice to all neighborhood residents
• Advise Network Referral Program of listing
• Provide marketing data to buyers coming through international relocation networks
• Provide marketing data to buyers coming from referral network
• Provide “Special Feature” cards for marketing, if applicable
• Submit ads to company’s participating Internet real estate sites
• Price changes conveyed promptly to all Internet groups
• Reprint/supply brochures promptly as needed
• Loan information reviewed and updated in MLS as required
• Feedback e-mails/faxes sent to buyers’ agents after showings
• Review weekly Market Study
• Discuss feedback from showing agents with seller to determine if changes will accelerate the sale
• Place regular weekly update calls to seller to discuss marketing & pricing
• Promptly enter price changes in MLS listing database

 

The Offer and Contract

• Receive and review all Offer to Purchase contracts submitted by buyers or buyers’ agents.
• Evaluate offer(s) and prepare a “net sheet” on each for the owner for comparison purposes
• Counsel seller on offers. Explain merits and weakness of each component of each offer
• Contact buyers’ agents to review buyer’s qualifications and discuss offer
• Fax/deliver Seller’s Disclosure to buyer’s agent or buyer upon request and prior to offer if possible
• Confirm buyer is pre-qualified by calling Loan Officer
• Obtain pre-qualification letter on buyer from Loan Officer
• Negotiate all offers on seller’s behalf, setting time limit for loan approval and closing date
• Prepare and convey any counteroffers, acceptance or amendments to buyer’s agent
• Fax copies of contract and all addendums to closing attorney or title company
• When Offer to Purchase Contract is accepted and signed by seller, deliver to buyer’s agent
• Record and promptly deposit buyer’s earnest money in escrow account.
• Disseminate “Under-Contract Showing Restrictions” as seller requests
• Deliver copies of fully signed Offer to Purchase contract to seller
• Fax/deliver copies of Offer to Purchase contract to Selling Agent
• Fax copies of Offer to Purchase contract to lender
• Provide copies of signed Offer to Purchase contract for office file
• Advise seller in handling additional offers to purchase submitted between contract and closing
• Change status in MLS to “Sale Pending”
• Update transaction management program show “Sale Pending”
• Review buyer’s credit report results — Advise seller of worst and best case scenarios
• Provide credit report information to seller if property will be seller-financed
• Assist buyer with obtaining financing, if applicable and follow-up as necessary
• Coordinate with lender on Discount Points being locked in with dates
• Deliver unrecorded property information to buyer
• Order septic system inspection, if applicable
• Receive and review septic system report and assess any possible impact on sale
• Deliver copy of septic system inspection report lender & buyer
• Deliver Well Flow Test Report copies to lender & buyer and property listing file
• Verify termite inspection ordered
• Verify mold inspection ordered, if required

 

Tracking the Loan Process

• Confirm Verifications Of Deposit & Buyer’s Employment Have Been Returned
• Follow Loan Processing Through To The Underwriter
• Add lender and other vendors to your management program so agents, buyer and seller can track progress of sale
• Contact lender weekly to ensure processing is on track
• Relay final approval of buyer’s loan application to seller

 

Home Inspection

• Coordinate buyer’s professional home inspection with seller
• Review home inspector’s report
• Enter completion into transaction management tracking software program
• Explain seller’s responsibilities with respect to loan limits and interpret any clauses in the contract
• Ensure seller’s compliance with Home Inspection Clause requirements
• Recommend or assist seller with identifying and negotiating with trustworthy contractors to perform any required repairs
• Negotiate payment and oversee completion of all required repairs on seller’s behalf, if needed

 

The Appraisal

• Schedule Appraisal
• Provide comparable sales used in market pricing to Appraiser
• Follow-Up On Appraisal
• Enter completion into transaction management program
• Assist seller in questioning appraisal report if it seems too low

 

Closing Preparations and Duties

• Contract Is Signed By All Parties
• Coordinate closing process with buyer’s agent and lender
• Update closing forms & files
• Ensure all parties have all forms and information needed to close the sale
• Select location where closing will be held
• Confirm closing date and time and notify all parties
• Assist in solving any title problems (boundary disputes, easements, etc) or in obtaining Death Certificates
• Work with buyer’s agent in scheduling and conducting buyer’s Final Walk-Thru prior to closing
• Research all tax, HOA, utility and other applicable prorations
• Request final closing figures from closing agent (attorney or title company)
• Receive & carefully review closing figures to ensure accuracy of preparation
• Forward verified closing figures to buyer’s agent
• Request copy of closing documents from closing agent
• Confirm buyer and buyer’s agent have received title insurance commitment
• Provide “Home Owners Warranty” for availability at closing
• Reviews all closing documents carefully for errors
• Forward closing documents to absentee seller as requested
• Review documents with closing agent (attorney)
• Provide earnest money deposit check from escrow account to closing agent
• Coordinate this closing with seller’s next purchase and resolve any timing problems
• Have a “no surprises” closing so that seller receives a net proceeds check at closing
• Refer sellers to one of the best agents at their destination, if applicable
• Change MLS status to Sold. Enter sale date, price, selling broker and agent’s ID numbers, etc.
• Close out listing in your management program

 

Follow Up After Closing

• Answer questions about filing claims with Home Owner Warranty company if requested
• Attempt to clarify and resolve any conflicts about repairs if buyer is not satisfied
• Respond to any follow-on calls and provide any additional information required from office files.

 

Whew! That’s a long list!

Did you realize REALTORS® did so many things?

Why Was This List Prepared?

Surveys show that many homeowners and homebuyers are not aware of the true value a REALTOR® provides during the course of a real estate transaction.

The list here is just a baseline since the services may vary within each brokerage and each market. Many REALTORS® routinely provide a wide variety of additional services that are as varied as the nature of each transaction.

By the same token, some transactions may not require some of these steps to be equally successful. However, most would agree that given the unexpected complications that can arise, it’s far better to know about a step and make an intelligent, informed decision to skip it, than to not know the possibility even existed.

 

4 Hidden Costs Of Not Owning A Home

There’s no arguing there’s costs associated with owning a home. But the adverse is also true; there are also definite costs associated with NOT owning a home.

The benefits of buying vs. renting has always been a hotly debated topic, with most people believing that — at least in the short term — renting is more cost effective. But most people don’t consider the hidden costs of not owning a home and sinking all of your money into your rental.

Here are four sneaky ways that not owning a home will cost you:

1. Your pricing is never guaranteed

When you own a home, there are no surprises when it comes to your monthly housing costs. Once you lock in your mortgage, your payment will remain constant throughout the length of your loan (unless you decide to refinance in the future). The stability of having a mortgage gives you the peace of mind of knowing what to expect each month — and not having to worry about unpleasant surprises that completely throw off your budget.

When you don’t own a home, it’s different. You’re at the mercy of your landlord; they can (and often will) change the price of your rent often to keep up with market prices.

So what does that mean for you? Well, it means the price you agreed to rent the house or apartment for is not necessarily the price if will rent for in the near future, which leaves you with two options: agree to a higher price or find a new place to live (which is an expensive endeavor itself).

2. Investing in home improvement is a lost cause

Everyone wants to feel comfortable in the place they call home — whether they own or rent. And that means different things to different people; maybe it’s cosmetic changes (like painting walls or hanging art) or more practical changes (like installing insulated windows to moderate the temperature).

When you own a home, making the improvements necessary to make your home feel comfortable makes sense. Whatever you do to improve your home will only increase the value, making it a sound investment choice.

But when you don’t own your home, making improvements to your home is like throwing money away. If you paint your walls or hang too much art on the walls, you’ll likely have the cost of getting the property repainted deducted from your security deposit when you move out. You can spend the money to install the insulated windows, but they’re not coming with you (and the only person that investment makes sense for is your landlord). Some landlords might not even allow you to make any improvements or changes at all.

Everyone wants to improve the place they live. But if you don’t own a home, making those improvements just isn’t a sound investment.

3. You can’t always get what you want

When you own a home, you get to choose the services and amenities you enjoy. You can choose between satellite and cable television. You can choose which service providers you want to work with. You can install solar panels if you want to save money on energy costs.

When you don’t own a home? Not so much.

When you rent a home, you’re locking into the services and amenities that are tied to that property. Your landlord gives you a list of approved vendors you have no choice but to work with – and often times, those vendors aren’t the most cost-efficient.

If you live in an apartment community, you’ll also have to pay for the amenities of that apartment community, like a pool, gym, or resident’s lounge – even if you don’t want them or don’t use them.

And all of those costs can quickly add up.

When you own a home, you make the choices on what you want to pay for, which can save you a lot of cash.

4. You’re not building any wealth

Perhaps the biggest cost of not owning a home is the fact that you’re not building any wealth.

When you rent a home, you’re giving your money to someone else; you’re paying for the right to live there for a predetermined period of time. When that predetermined period of time is over, you walk away with nothing; all of that money is gone.

When you own your home, every time you make a mortgage payment, you’re paying down your loan and building equity in your home. This is one of the fastest and most efficient ways to build wealth — and is a significantly better investment than throwing your money away on rent every month.

You already know that buying a home is a better investment. But when you factor in all the hidden costs of not owning a home, it might be the less expensive one as well.

Who Pays The Buyer’s Agent When You Buy A Home? You Might Be Surprised…

Do you ever wonder if you need to pay your real estate agent when you buy a home?

If not, then how do they make money?

Or, do you know they get paid somehow…but just aren’t sure how?

Well, you’re not alone. Lots of people aren’t sure how that all works.

The short answer

To answer the question as plainly as possible…

When you buy a house, you (usually) don’t have to pay your buyer’s agent. At least not in the sense of you writing out a check to the real estate agent or their company.

However, he or she will get paid.

The thorough answer

It’s kind of confusing, right? If you’re not paying your agent, who is?

The seller is…kind of.

(We’ll elaborate more on this later).

So the question becomes: Why would they work with you, for you, and with your best interests in mind, if you aren’t paying them?

Because that’s their responsibility.

It wasn’t always that way, though. It used to be that all agents were essentially working for the seller, trying to get the highest price they could for the house.

That’s changed…actually quite a while back. But the way agents get paid has not.

The seller still pays the commissions, even though the buyer’s agent is representing the buyer’s interest, not theirs.

So that sounds just as weird for a seller, right? Not really. It actually makes sense (and if not, it should in a minute).

The money comes from the equity

In order to sell a house, the owner needs to have equity. In other words, they have enough money to sell the house for a certain price, pay off any existing loans, and other costs (like real estate commissions), and still walk away with money in their pocket.

(Yes, they can sell even without equity, but we’re not getting into that here. Those are short sales. And, yes, even then the buyer’s agent gets paid by the seller, even though there’s no equity.)

It’s the buyer’s responsibility to come up with a down-payment. It would be tough for most buyers to also have to pay a buyer’s agent out-of-pocket.

So, it makes sense that even though buyers’ agents represent the buyers’ interests, that the commission still comes out of the equity of the house.

Look at it this way…

You are actually paying your buyer’s agent. If you, and your down-payment, and loan did not pay the seller the agreed upon amount, the seller wouldn’t have the money to pay the agents.

It’s your money, too, even though it looks and feels like the money is being paid by the seller.

Bottom line? Do your homework

A lot of home buyers don’t give an awful lot of thought to the agent they choose to help them buy a house. Perhaps it’s because there often isn’t a single moment of “hiring” the agent.

Maybe it’s because of the confusion and concern about committing to a buyer’s agent must mean you’d have to agree to pay them directly.

Whatever the reason is, many people just sort of bounce around to open houses, or go see houses with any old agent they come across, or go directly to the listing agent.

Don’t do any of that.

Seek out, find, and hire the best real estate agent you can find, because whomever you choose will get paid the commission offered by the seller.

So, choose well. You’re paying for that agent, as much as the seller is…just not directly by writing out a check to the agent.

4 Reasons NOW Is The Time To Buy A Home

If you’re considering buying a home, ask any real estate agent worth their salt and they’ll tell you: NOW is the time to do it.

The real estate market is seemingly changing by the day, and if you want to get a great home for a great price, making a move now is in your best interest; conditions a year from now (or even six months from now) aren’t likely to be as hospitable.

And why is that? Why shouldn’t you, if you’re interested in buying a home, wait? Why is NOW the time to make a move?

1. Interest rates won’t stay this low

The first reason you should buy a home now is that interest rates are extremely competitive. While they aren’t at the near-historic lows homeowners enjoyed in 2016, they’re still hovering in the high 3%’s for 30-year fixed mortgages and the low 3%’s for 15-year loans.

But that’s going to change.

Mortgage rates are scheduled to rise at least 3 times in 2018, with many experts predicting the interest rate for a 30-year fixed mortgage to reach 5% by the end of 2018.

But what does that mean for you as a potential homeowner?

Let’s say your mortgage principal is $200,000. If you secured your mortgage with a 3.87% interest rate, the total interest you would pay over the course of the loan would be $138,571 (360 monthly payments of $940, for a total of $338,571).

Now, if you secured a mortgage with a 5% interest rate, the total interest you would pay over the course of the loan jumps to $186,152, a difference of $43,581 (if you’re interested in how changing interest rates affect the total cost of a mortgage, you can check out this interest rate calculator tool).

Locking in a lower interest rate on your mortgage will save you tens of thousands of dollars over the course of your loan, which is why securing a loan now is in your best interest.

2. Competition is getting fierce

Another reason now is a good time to purchase a home is that housing markets are growing more competitive every day.

Now that much of the country has recovered from the recession, more and more people are in the position to purchase real estate. And the more people there are on the market, the more competition there is for homes.

Competition is getting fierce in markets across the country. Homes are sold almost immediately, often at above asking price, and sellers are often dealing with multiple offers.

The competition in most real estate markets is still manageable and deals are still to be found, but as the economy continues to improve, the competition will heat up even more – making finding and buying the home of your dreams significantly more challenging (not to mention expensive).

3. Homes are getting more expensive by the day…

Speaking of expensive, homes are (literally) getting more expensive every day. In fact, as of June 2017, home prices have been rising every single month for well over 5 years.

And that trend shows no sign of slowing. Experts predict home prices will jump up to 5% more in 2017 and another 3.5% in 2018 (with hot markets, like the Pacific Northwest, seeing even greater increases). Which means that if you purchase a home at the end of 2018, you can expect to pay an average of 8.5% more than you would pay today.

Combine the rising interest rates with the rising home prices and you’ve got a recipe for paying a lot more for a home a year from now than you would pay today.

4. … And there are fewer to choose from

One of the factors in rising home costs is low inventory. When there are too many people who want to buy homes and not enough homes for them to buy, it drives up prices and competition in the market.

We have a huge problem with low inventory now, but unfortunately, that problem doesn’t have a simple solution. As interest rates rise, people are less likely to put their homes on the market in an effort to preserve the lower interest rates on their mortgages.

The moral of the story is: there’s low inventory now, but there’s likely to be lower inventory in the future, which means prices will soar even higher. It’s better to buy now then it is to wait for the problem to get worse.

Buying a home is a big decision. But if it’s a decision you’re considering, now’s the time to make a move. You’ll enjoy lower interest rates and an overall less expensive (and less stressful!) experience today than you will if you wait. So get out there and find your dream home!

When And Why You Should Refer A Real Estate Agent

You probably know a real estate agent or two.

Are you constantly thinking about them?

Are you constantly on the lookout for people you can refer to them, who are buying, selling, or renting real estate?

Are you keeping your ears peeled to hear even the slightest hint of someone making a move?

You’re probably not.

But the real estate agents you know wish you were.

Not everyone is a “connector”

Some people are natural “connectors”, and are always ready to recommend this person or that person to someone looking for some sort of help.

But many people are not.

It’s not like most people are walking around thinking about a real estate agent’s business and needs 24/7. Most people are busy enough with their own days and lives.

It isn’t like you wouldn’t recommend an agent…if the moment came up. It just isn’t the first thing on your mind.

After all, what’s in it for you? (W.I.I.F.Y as it is often referred to…)

It’s totally human and OK to feel that way.

And, given real agents can’t legally compensate you what is in it for you?

Why should you refer an agent?

Four reasons:

1) To look out for your friends, family, and acquaintances

There’s a lot of real estate agents in the field. But not all of them are created equal. Some are better than others.

So, when you know a good real estate agent, make sure to refer your friends, family, and anyone you meet, to that agent.

You’ll save the people you know a lot of time, money, and aggravation.

2) To look out for yourself

It’s hard to understand this until you’ve done it (so just try it and see for yourself), but people really do appreciate a person who hooks them up with a great real estate agent.

Referring a great agent to someone simply makes you look good. It makes you look smart, and in the know. It makes you seem “connected” and hooked up with someone that your friends and family will feel fortunate to have been hooked up with.

Who doesn’t like to look good in the eyes of their friends, family, and peers?

3) To look out for the real estate agent

Real estate is a tough business to succeed in. There’s only so much business to go around, and there’s always a whole lot of agents trying to get enough business to survive, let alone thrive.

Sure, it’s on the agent to prospect, market, and dig up enough business on their own.

But, a huge part of doing that needs to come from people referring them. So, they are probably reaching out to you and reminding you that they are in the business and there for you (and anyone you know) when you buy, sell, or rent real estate.

They aren’t trying to be a pest. They are trying to survive. And ideally, thrive.

Help the agent you know. They want and need it.

4) To look out for the good of the industry

Too many subpar agents exist and flood the field.

When you know a good, trustworthy, honest, and dependable person who is a real estate agent, refer him or her.

It’s for the good of the industry. And, a better real estate industry benefits you, the consumer, in the long run.

Real estate agents and the industry as a whole suffer from a less than stellar perception in the public’s eye. You can help improve and change that by referring the great agent you know, and make it harder for those who are not doing the best job for people to exist.

When should you refer an agent?

Five scenarios:

1) If you have a friend, family member, or coworker moving locally

This is the no-brainer. You know a local agent, and you know someone moving locally…refer them. No need to explain further.

2) If you have a friend, family member, or coworker moving out of area

This one isn’t something you might think to do…

But, if you know a real estate agent you trust, and hear about someone moving outside of the area they specialize in, you should still refer your friend, family member, or acquaintance to that agent.

The agent will then refer the person you know to the best agent in the area they are moving to. Look at this as “birds of a feather”. If you know and trust an agent locally, they’re going to have the resources and be able to refer an agent out of area who does business in a similar manner as they do.

3) Anyone you even hear breathe a word about buying, selling, or renting real estate

It might be in line at Starbucks, or the grocery store. It could be at a cookout, or a wedding. Maybe even a funeral…

The point is, wherever and whenever you hear someone chatting about real estate, make sure to mention the agent you know to whoever is thinking of buying or selling.

(Bonus points if you’re carrying their business card around and can hand one to the person.)

4) You know someone who is trying to “FSBO”

If you know someone trying to “for sale by owner”, and it just isn’t going well, let them know about the agent you trust.

The owner is likely being bombarded by agents calling and knocking, and would probably appreciate having someone just give them the name of a trustworthy agent.

5) You know someone who just needs some real estate advice

Real estate agents give their time, thought, and advice freely. Literally…it’s free. Until and unless a person buys or sells a house through them.

And it’s something most great agents do without hesitation. Without pressure or obligation. A great real estate agent wants to help anyone you know if they have any real estate related questions or concerns — even if they aren’t buying, selling, or renting in the immediate future.

This is a good time for an agent to meet someone and build a long-term relationship, and help someone who needs it.

So, keep your eyes open, and your ears peeled…and refer away. It’ll be appreciated by the agent you know and trust!