Real Estate 406 MT by Luci Edwards
Monday, May 18, 2015
10 Money-Saving Tips
1. You’ve probably heard this since you were a kid, but really…turn off all lights when you leave a room. Train your kids—usually the worst offenders—to do the same.
2. Have an honest conversation with yourself: If you haven’t used your gym membership in more than six months, cancel it. You can always rejoin and probably take advantage of a better deal when you do. Some gyms will even offer to “freeze” your membership, allowing you to pick back up after a certain period of time.
3. Save Starbucks and the like for a special treat. If you buy a $4 coffee five days per week, that’s $80 per month. Record your coffee-buying expenses for a month and see what your own personal damage is…then adjust accordingly!
4. Ditto for lunch. Even grabbing a burger at a fast-food chain adds up. Start packing your lunch instead. An easy way to accomplish this is by cooking extra at dinner or on the weekends, then packing lunch-sized portions in advance. If you’re banking on making lunch during the morning rush, odds are you’ll run out of time and end up buying lunch instead.
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Building a Basement Garden
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Sunday, May 17, 2015
Money Matters: Financial Commitments Extend Beyond Price of Home
In order to make sure you’ve accounted for everything, it’s important for buyers to make a list of all the expenses associated with purchasing a home and prepare themselves ahead of time for the money that is required once a new home is purchased.
When it comes to buying a house, there’s a lot more to worry about than just the price of the home. In addition to the mortgage and the interest that comes with it, buyers need to be ready for everything from taxes to insurance to the cost of maintaining the yard.
When preparing a list of financial commitments, you should always begin with taxes. Property taxes can add hundreds of dollars to your monthly mortgage payment and can increase depending on school and town budgets. A home is normally taxed on its assessed value, an amount equal to a fraction of its appraised value.
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Looking for a Green Home?
The first important tip -- check the home's heating and cooling system. Depending on the climate, a radiant floor heating system is more efficient because it pumps heated water through tubing under the floor surface, rather than traditional hot air or water units. Radiant heating allows for more even heating and may even result in cleaner air due to less dust moving.
Having an on-demand water-heating unit also helps with efficiency since it only heats water as needed instead of keeping it hot all hours of the day. Also, make sure to only use "Energy Star"-rated appliances.
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Tuesday, May 27, 2014
Record Improvements Now
On the other hand, capital improvements to a home will increase the basis and affect the gain when you sell which may save taxes.
Additions to a home or other improvements that have a useful life of more than one year may be considered an increase to basis or cost of the home. Other increases to basis may include special assessments for local improvements like sidewalks or streets and amounts spent after a casualty loss to restore damage that was not covered by insurance.
Unlike repairs, improvements add to the value of a home, prolong its useful life or adapt it to new uses.
You can read more about improvements and see examples beginning on the bottom of page 8 of IRS Publication 523. For a form to keep track of money you spend, print this Improvement Register.
Tuesday, May 20, 2014
Cut Your Housing Costs in Half
Serious shoppers wait for a 50% off sale to make the decision because of the bargain factor. Renters who are serious about lowering their monthly cost of housing should consider buying with today’s low mortgage rates. For an example, let’s assume a person buys a $200,000 home with 3.5% down payment on a 4.5% FHA mortgage for 30 years.
The total house payment would be approximately $1,508 per month. However, once you consider the equity build-up due to normal amortization, a monthly appreciation estimated at 2% annually for this example, the tax savings and paying maintenance that a tenant wouldn’t be required to do, the net cost of housing is $772 a month. This is almost half of the full mortgage payment.
If this person was paying $1,750 a month for rent, it would cost him almost $978 more to rent than to own. In the first year alone, it would accumulate to over $11,000 which is more than the down payment required of $7,000.
Owning a home is the largest investment that most people make and the down payment of $7,000 to purchase this home would grow to $58,837 in equity by estimating a 2% appreciation and normal amortization.
To check out what your real housing costs might look like, go to Rent vs. Own or contact your real estate professional.
Tuesday, May 13, 2014
Who Saves the Commission?
One of the most common reasons buyers want to deal directly with the seller is because they feel they can save the commission. It’s a valid consideration but interestingly, it’s the same reason the seller isn’t employing an agent; they feel they can save the commission.
Both parties cannot save the commission. The buyer feels they have earned it because they’ve had to find the home, determine its value and negotiate with the seller. They had to arrange their own financing, title and inspections.
The seller equally feels that they have earned the commission because they have incurred all of the marketing expenses and have invested hours upon hours to be available to show the property, hold open houses and answer inquiries. They have had to research value, financing, title work and make decisions.
There is certainly value in all of the things that buyers and sellers are willing to do to save the commission but only one person can save the commission only if the buyer and seller can reach a written agreement.
There is value to having a third party advocate helping each party to the transaction.
The Profile of Home Buyers and Sellers (Exhibit 8-1) reports that 14% of sales were For-Sale-by-Owners in 2004 compared to just 9% in 2013. The trend shows that agent-assisted sales rose to 88% in 2013 from 82% in 2004.
The three most difficult tasks identified by for-sale-by-owners is attracting potential buyers, getting the price right and understanding and performing the paperwork. When surveyed, sellers most value the home selling in an anticipated time frame and for an expected amount.
The reality is that both parties cannot save the commission. It is earned by providing specific services that are essential to the transaction. The capital asset of a home represents the largest investment that most people make. An investment that important certainly deserves the consideration of a professional trained and experienced to handle the complexities involved.