Real Estate Sellers

How To Use Home Equity To Your Advantage

Photocredit: Getty

By Tara Mastroeni, Contributor, Forbes

If you're a homeowner or aiming to be one someday soon, you probably know that having home equity is a good thing. However, beyond that, many people start to lose track. That's why we've taken it upon ourselves to solve the mystery of home equity once and for all. Read on to learn what it is, how it works, and how you can use it to your advantage.

What is home equity?

Put simply, home equity is the percentage of your home that you own outright. While you're always considered to be the owner of your home, if you took out a mortgage to buy it, the fact is that your lender also has an interest in the property. Over time, as you pay down your mortgage, the lender's interest in your home shrinks and your home equity grows.

However, you can also grow your home equity in another way. You can do it by increasing the overall value of your home. This can happen by either living in an area with rising property values or by making substantial improvements to the property that will increase its resale value.

How to use your home equity

The good news is that, once you build it up, you can use your home equity to your advantage. When people talk about real estate being an asset, they mean that building home equity is a way to leverage wealth. Here are a few things that you can do with it.

Home equity loan

Home equity loans are often referred to as second mortgages because the two loans function very similarly. A home loan disburses the funds from the loan in one lump sum, much like what happened when you bought your home in the first place. From there, you'll be responsible for making regular, monthly payments to pay back the money you borrowed.

With a home equity loan, you're borrowing against the equity you've built up in your home so the amount that you're allowed to borrow may be limited by how much progress you've made in paying down your mortgage. Typically, lenders will insist that you maintain at least a 15%-20% ownership stake in your home at all times.

One benefit of borrowing against your home equity is that you can often do so at a much lower interest rate than credit cards or personal loans. That's why many people use this option to pay for big-ticket expenses like home remodels, paying off medical debt, or financing a child's college education.

Home equity line of credit

Home equity lines of credit are similar to home equity loans in that you're still borrowing against the equity in your home. However, the disbursement and fee structure couldn't be more different. With home equity lines of credit, the loan is divided into two distinct pay periods: the draw period and the repayment period.

During the draw period, your home equity line of credit acts a lot like a credit card. You can draw on the equity in your home whenever you see fit. During this time, you'll likely only have to make payments on the interest accrued by your purchases.

After a specified amount of time, you'll enter the repayment period. During the repayment period, you'll no longer be able to draw funds from your home equity. You'll also have to start making payments on both the principal and interest of what you've borrowed.

Cash-out refinance

Traditionally, with a refinance, you take out a new loan - usually one with better terms - to pay off and replace your old one. With a cash-out refinance, things work a little differently. In this case, you borrow more than what you owe and receive the difference in funds, which can be used as you see fit.

Here, the amount that you can borrow above what you currently owe is determined by how much equity you have in your home. Usually, you can borrow up to 85% or 90% of your home's value.

Move into something bigger

The most traditional way to use added home equity is to sell your house to buy something bigger. When you sell your home, you'll most likely use some of the proceeds from the sale to pay off the remainder of your mortgage. However, if there is any difference between the sale price on your home and the amount you still owe, it comes to you as profit. That profit can then be used to buy a bigger home and leverage your home equity even further.

How to figure out how much equity you have

Figuring out how much equity you've built up in your home is easy. All you need to know is what your home is worth and what you owe on your mortgage. You can find out exactly how much your home is worth by having an appraisal done or you can get an approximate figure by having a real estate agent prepare a comparative market analysis. Online valuation tools are also an option, but they may not always be accurate.

Once you have that information in hand, subtract the amount that you owe on your mortgage from the value of your home. The remainder is your home equity.

 

8 Ways to Make a Space Feel Larger

Feeling cramped at home? These tips can help open up a room without knocking down a wall.

  • Accentuate the vertical. Draw the eye upward so a room looks more spacious. Add a bookshelf that reaches to the ceiling. Install vertical shiplap or wallpaper with vertical stripes. Hang a pendant light fixture.

  • Consider “see-through” furniture. Choose chairs and sofas with visible legs instead of furniture with skirts that reach the floor. This allows you to see under and around pieces so they appear to float in the room rather than dominate it. Glass coffee tables are a good choice, too.

  • Lighten up surroundings. We all know white walls reflect light and makes a room look bigger. But why stop there? HouseLogic recommends painting walls, ceilings, and trim the same shade of white to present a soaring, bright space.

  • Go big with accents. Many people think small when designing a small room. Instead, add a couple of oversized accessories, like a big piece of art or a single large chair. A lot of little objects make a room appear cluttered while one or two big ones make it feel more spacious.

  • Get away from the wall. Create a central layout instead of pushing a sofa up against the wall. When there’s a wall right next to a piece of furniture, your eyes are drawn to the wall, which can make the room seem more cramped.

  • Simplify the color scheme. Use a monochromatic color scheme for walls, furniture, and accessories. When objects are a similar color, your eye doesn’t dwell on each one but rather sees them in a unified, uncomplicated form.

  • Skip the curtains. Curtains block natural light and the view to the outdoors, making a room feel smaller and darker.

  • Bring nature indoors. Add plants and use natural textures in furniture to tie indoor decor to the outdoor view that’s visible through the windows that aren’t blocked by curtains.

 

Sources: Denise Balassi, Spaces Of Distinction; Laura Britt, Britt Design Group; Melissa Grove, Laura U Interior Design; HouseLogic.com

 

Closing on a House: The Common Problems to Spot in a Final Walk-Through

Both buyers and sellers should be aware of the issues that can arise during a final home walk-through. The final walk-through typically takes place mere hours before the closing itself. It’s one last opportunity for the buyer, along with his or her agent, to inspect the home and make sure there aren’t any last-minute problems.

 

 

By Deanna Haas, Contributor for U.S. News and World Report

For homebuyers and sellers alike, the final walk-through can be one of the most significant steps in the real estate process. It may also be one of the most nerve-wracking.

Hopefully, your final walk-through will be smooth sailing. Every now and again, though, issues do arise – and they can go as far as to derail the entire home sale.

Here are the most common final walk-through discoveries that can potentially throw a wrench into the transaction:

  • The home isn't empty.

  • The house is a mess.

  • The negotiated repairs haven't been completed. 

  • Included personal property has gone missing.

  • The lawn hasn't been cared for.

  • The utilities have been shut off.

  • The appliances aren't working.

  • There's major damage to the walls or ceilings.

  • The HVAC systems aren't working.

  • The home was damaged in the moving process.

  • Garage door openers don't work.

  • Toilets don't flush properly.

  • Garbage disposal and exhaust fans don't run right.

  • Open and close window/doors to make sure they're in check.

 

The Home Isn’t Empty

Unless otherwise agreed upon, the sellers should be totally moved out of the house by the time of the final walk-through. Now, if they left behind a can of paint or a couple bags of trash, that’s probably not the end of the world. But if they left behind much more, the buyer may have to request they come by and clean up.

The House Is a Mess

The typical agreement is that the seller leave the property in broom-clean condition. This is a somewhat nebulous term, and it may mean different things to different people. The house doesn’t necessarily have to be spotless, but neither should it be a disaster area. Ideally, the house should appear move-in ready for the new homeowners.

The Negotiated Repairs Haven’t Been Completed

When buyer and seller negotiate on repairs or renovations, it’s expected that they all be finished by the time of the final walk-through. If the seller needs a little additional time due to unforeseen circumstances, this should be communicated to the buyer well in advance of the closing.

Included Personal Property Has Gone Missing

Did the seller take items they said they would leave for you? Light fixtures? Window treatments? A piece of furniture you wanted to buy along with the house? That’s definitely something that can stall the closing or lead to some tumult.

The Lawn Hasn’t Been Cared For

Generally speaking, real estate contracts stipulate that the seller will keep the lawn areas maintained until the date of closing. That doesn’t mean everything has to be perfectly manicured, but if the grass is five feet tall, or has died during the escrow period, that’s a problem.

The Utilities Have Been Shut Off

Typically, your real estate contract will stipulate that the utilities have to be on through the final walk-through. If you don’t have power or running water during the walk-through, that could technically be a breach of contract.

The Appliances Aren’t Working

For homebuyers, it’s important to use the final walk-through as an opportunity to test all the appliances included in the sale, confirming they work as intended. If something doesn’t work, you can ask the seller for a repair allowance.

There’s Major Damage to the Walls

Did the seller remove a wall-mounted TV, a piece of artwork, or some kind of home automation technology? And if so, did it leave behind damage to the wall? This could be a big issue.

The HVAC Systems Aren’t Working

Buyers should test out both the heating and cooling capabilities of the home. See that they work satisfactorily. If not, that’s something for which you’ll likely want to negotiate repair costs or a price adjustment.

The Home Was Damaged in the Moving Process

If the sellers did any kind of damage to the home while they moved out, that’s something for you to take stock of. In some cases, it may be worthwhile for you to request a repair allowance.

These are some of the main items you’ll want to look out for if you’re a buyer going through your final walk-through. And if you’re in the process of selling a house, let these serve as words of caution. Make sure to avoid these common hurdles to the home closing.

 

 

How to Write an Offer Letter to a Seller

Connect with home sellers to make them feel good about letting you purchase their home. A personal letter to a home seller allows you to provide better context to the offer price and conditions, and also allows you to make a personal connection by sharing everything you love about the home. 

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By Tania Isacoff Friedland, Contributor to U.S. News & World Report

First impressions are everything. Whether you’re buying a home, an apartment or some other type of property, presenting your initial offer in a positive light paves the way for a productive and smooth negotiation process. 

Typically, formal offers are sent by the buyer’s broker to the seller’s broker in writing via email. In some cases, a buyer will also write a personal note to the seller to send along with it.

In this case, the buyer’s broker will often include a short profile about the buyers and express their love for the property, but brief enough so the buyers' personal letter remains impactful and is not redundant. If the buyer is not working with a real estate broker and does not have representation, the offer would come directly from the buyer.

So, if you truly love a home or want to acquire an investment property, how do you write the perfect offer letter that combines your personal touch with a formal offer? 

Keep it simple, and focus on three things: State your intentions, show that you have the financial means to make the purchase and make a personal appeal to the seller.

Here's how to write your letter to the seller:

  • Start with the details.

  • Paint a picture.

  • Romance the seller.

  • Go the extra mile.

Start With the Details

At the beginning of your offer letter, express your appreciation for having the opportunity to visit the property, and state your terms upfront. Note the example below is intended for an offer on a private residence – an offer for a different type of property should be modified accordingly:

“Thank you for allowing me to visit [INSERT ADDRESS]. I love [INSERT ADDRESS] and I’m eager to make it my new home. I’m pleased to present my offer of [INSERT OFFER PRICE].” 

Next, include information about how you plan to pay for the purchase (all cash or financing), your requests for contingencies (financing contingency and inspection contingency, for example), your desired closing time frame and any other special conditions. If you’re financing the purchase, a preapproval letter from your bank should be provided along with the offer letter. 

It is important to make it clear that you’re a serious buyer and you're prepared to sign a contract upon completion of the due diligence process. You should also be in touch with a real estate attorney to help with the transaction.

If you’re making an offer that’s substantially lower than the seller’s asking price, you might consider including your reasoning for the low offer. To help build your case, consider contextualizing current market conditions and recent sales of comparable properties in the same neighborhood or building to put things into perspective. If the property is older or in need of repairs and renovations, outlining what specific updates need to be done and the approximate renovation costs can also help justify your offer.

Paint a Picture

Presenting yourself as a human being, rather than a simple dollar amount, is key to establishing a successful negotiation position. Provide the seller with a brief personal background and tell them about your spouse or family, if applicable.

Include career details, such as your current job and a description of your professional industry, as well as a quick summary of your career path leading up to your current position. This could also include where you grew up and which schools you’ve attended. You can even tell them about any pets you have.

Now, you’re a person with a story – you’ve painted a picture about who you are, which is harder for a seller to ignore. The seller will think of you as a human being, not just another buyer who offered a certain price for the property. 

Romance the Seller

Once you’ve shared a bit about who you are, shift your focus to romancing the seller when it comes to his or her home. Flatter the seller by highlighting all the things you love about the house, and explaining why it is the place you want to call home. Be enthusiastic, but don’t go overboard. 

While a real estate negotiation is a business transaction, if the sellers identify with you on a personal level, they can develop an affinity towards you – particularly in a competitive bidding situation – which may mean that they offer some flexibility during a negotiation. The sellers can feel pleased that they are passing their home on to someone who will love and appreciate it as much as they have.

Go the Extra Mile

In a competitive bidding situation, buyers can send flowers or cookies to the seller, along with a handwritten note. A small gesture like this indicates your thoughtfulness and authentic love for the property. Just be sure to keep it simple and tasteful, as you never want a seller to feel uncomfortable by being overly aggressive.

In the end, the important thing to remember is that you want to make sure your offer letter clearly states your intent to purchase a home, that you are in a sound financial position to make the purchase and that you’re providing a personal appeal to the sellers so they know their home will be in caring and responsible hands.

 

 

The Guide to Buying a Home

Here's what you need to know to get from start to finish in the home buying process. From when to begin your search to how to secure financing to the right way to make an offer, buying a house requires carefully navigating a number of steps. 

By Devon Thorsby, Editor, Real Estate at U.S. News & World Report

Whether it’s your first home or your fifth, the home buying process can be daunting. Not only does the housing market change from season to season, but the process of searching for a house, making an offer and working toward closing evolves over time.

For any homebuyer, you first need to account for your current financial situation, needs in a new home and what features and amenities you hope to have at your fingertips. Before you start touring houses, study your local real estate market to get a better grasp of what’s available and within your budget.

With home prices rising across the U.S. and many markets reporting few homes available for sale compared to the number of buyers, it can be easy to get discouraged. It may take a little extra time to wait for the right house, or it may take some work to improve your credit and save for a higher-priced house, but either way, buying your next home is possible. 

The biggest determining factor in your ability to buy a home, of course, is your ability to pay for it. While some people can liquidate assets and pay for a house in cash, most opt for mortgage programs through a bank, credit union or other type of lender to leverage the total cost of the property.

The first steps to buying a house always revolve around the financial side of the deal – how much you can afford and how you plan to pay for it.

Getting a mortgage

Financing through a mortgage is the most common, and often the most attainable, way to buy a house or condo. 

To avoid being shocked if a bank turns you down for a loan or approves a far lower maximum price than expected, it’s important to know how your credit history and current financial status measure up. The interest rate or amount you pay upfront to the lender (points) is all connected to how attractive a borrower you appear on paper: “How much you can afford also ties into what your future cash flow looks like, and that then ties into rates and points.”

It’s free to receive your credit report once a year through annualcreditreport.com, where you can access reports from the three major credit bureaus, which will provide you with all the information a lender will see about your financial history.

Also take a look at your current financial situation, including the amount of money you have in savings, gross income, recurring expenses and how much you’re able to put toward savings on a regular basis. From this, you should be able to determine how much you can comfortably spend on monthly mortgage payments.

Next, it’s time to shop around for lender and mortgage program options. The most common type of mortgage is a 30-year, fixed-rate mortgage, which typically comes with a slightly higher interest rate in exchange for the guarantee that the payment amount won’t change for the life of the loan. 

The interest rate is typically the most-discussed aspect of a mortgage, as it can differ from lender to lender and program to program. The interest rate offered to you based on your financial situation can be completely different from what’s in a mortgage rate table.

“That’s why the interest rates advertised online are worthless,” he says. “If the lender doesn’t know essential information such as your credit score, your debt-to-income ratio or the size of your down payment, it’s impossible to provide you with an accurate rate quote.”

Buying a home with no money down

If you’re lacking the savings needed for a down payment, you may not be out of the running to buy a home just yet. Active members of the military and veterans can apply for a VA loan through the U.S. Department of Veterans Affairs, which requires a small additional monthly cost in lieu of a down payment, but otherwise requires zero percent down.

There are plenty of other low down payment options – as low as 2 or 3 percent – available to first-time homebuyers, buyers with nontraditional credit histories or those who have recovered their credit over time, among other situations, with additional regular fees. Keep in mind, however, that the less you put down, the more you’ll be required to pay each month.

Buying a house with bad credit

A blemish or two on your credit report can be a problem when it comes to getting approved for some mortgage programs. But fortunately there are options aimed at homebuyers who don’t have a perfect credit history. For example, if you're a borrower with a credit score of at least 580, you may be considered for an FHA loan through the Federal Housing Administration.

Bad credit doesn’t have to keep you from homeownership. Lenders are more likely to look past a low credit score if you’re planning to make a high down payment or have solid proof of a high income that will be consistent for a long time, for example.

Buying a house with cash. If you’ve got the funds to skip financing altogether and pay for your house with cash, you should have a faster transaction, as you won’t have to wait for a loan to be underwritten, the property to be appraised and the lender to formally approval the mortgage.

But that doesn’t mean you don’t have to get your financials in order ahead of time. “The way a cash buyer can be prepared is to be willing and able to show proof of funds, whether it’s stock they’re going to liquidate or cash that’s already in the bank,” says Gannon Forrester, an associate broker with Warburg Realty in New York City.

Additional costs of buying a home

The costs don’t stop at the agreed-upon purchase price and interest to the lender when applicable. Homebuyers should prepared for other costs leading up to and at closing, plus they should have some cash remaining in savings afterward for unexpected repairs to the house. 

Costs include:

  • Inspection

  • Property appraisal

  • Attorney’s fees, points paid to lender and other fees required at closing

  • Property taxes

  • Rainy day fund for repairs

 

Best Time to Buy a Home

Home sellers and buyers alike favor spring as the ideal time for homes on the market. If you’re looking for the widest variety of home options, this is often the best time to start your search. Early fall also often sees a surge in buyers and sellers looking to strike a deal before the weather turns cold.

However, there are also benefits to shopping for a home in the off-season, when there are fewer buyers to compete with. You’ll have fewer houses to choose from, but you may be less likely to find yourself in a multiple-offer situation, which can make it easier to get a seller to take a serious look at your offer. 

Either way, if you live in a market currently low on housing inventory, don’t expect a sizable price difference from season to season. Sellers can wait a few extra days or weeks if a lowball offer doesn’t appeal to them, so keep your offer realistic for what you think a home is worth.

The absolute best time to start shopping for a house, however, is when you’re ready, both financially and personally. If you have children, for example, closing on a house during the summer months is ideal because you don’t have to worry about packing up while kids are doing homework or making a rough adjustment due to midyear school transfers.

The most important rule of thumb is to wait to start house hunting until you’re actually in a position to make an offer. “If you do that beforehand … you’ll end up finding the house of your dreams, you won’t be ready, and someone else will buy it,” says Amin Dabit, director of advisory service for Personal Capital, an online financial advisory and wealth management company.

Where to Start House Hunting

Once you know your budget and how you intend to fund your purchase, you can start looking for the right house to buy. You can begin your search online by searching consumer-facing listing sites like Zillow, Trulia or Redfin, which can help you get a feel for which neighborhoods and houses fall inside your budget.

You’ll also want to interview several real estate agents before you start working with one. It’s important to trust your agent to advocate for you in the deal, so you shouldn’t feel you have to withhold details about the reason you're moving or what’s included in the right home for you. Ask about the agent or Realtor’s schedule and experience and who you’ll be working with most often, and see if the answers meet your expectations as a client.

Be ready to answer questions from your real estate agent about how many bedrooms you need, your preferred neighborhoods – whether that’s based on public schools, access to public transportation or proximity to shops and restaurants – and anything else that’s nonnegotiable for you in a home purchase.

Especially in markets where housing inventory is low, your agent may have to discuss compromising on your vision of your dream home to help ensure that you have enough properties to tour in your price range. Zeibert notes many homebuyers are becoming more willing to sacrifice some square footage or a bedroom for the chance to live in the neighborhood they want: “The house is not the end-all, be-all. While super important, it is the neighborhood and the lifestyle that they are trying to purchase by going out and buying that house.”

How to Win Over a Seller

When you do find that right home in the right neighborhood, it’s time to put in an offer. And in a popular neighborhood, you may have to work fast. It’s important to start the house hunting process with your financial information on hand so you and your agent can put together a formal offer quickly.

Included in that financial information is a preapproval letter from your lender that notes the company’s willingness to work with you to purchase the home. A prequalification letter is also an option, though preapproval tells the seller that the lender has already done a deep dive into your finances and hasn’t found any surprises.

“A preapproval letter will give the buyer an edge when they put an offer in on a house, showing the seller they’re serious and have a good chance of obtaining a mortgage,” Simmons says.

Writing a personal letter to accompany the offer can also provide some additional insight to sway the seller, since people like to hear their house is going to someone planning to make memories in it. Especially if the seller has lived in the house for a long time, sharing your plans to raise a family in the house could make him feel comfortable selling the house to someone looking to make similar memories.

However, Forrester says it’s not always necessary and can occasionally backfire by leaving room for discrimination – intentional or not – and muddling an offer when a seller is focused on the financial details. There are also scenarios when a personal letter won’t have much of an impact. “Sometimes personal things can sway someone, but a lot of times in New York it’s a financial thing,” Forrester says.

Appealing to the seller is important, but don’t get caught up in the heat of a bidding war or negotiations – any agreed-upon price shouldn’t leave you skimping on meals for the next three years or otherwise make it difficult for you going forward. Forrester says buyers can have trouble making the connection between the purchase price in negotiations and actually paying the money when it’s time to close the deal: “They don’t realize they actually have to come up with the cash or be happy signing that down payment check.”

Closing on Your New House

It may take a few tries with different houses or it may require a little back-and-forth negotiation, but eventually the right seller will accept your offer. Now under contract, you feel like you’re in a whirlwind of activity working toward the day you close on the property.

You’ll need to schedule an inspection on the house, which helps to find any code violations or maintenance issues that you should be aware of. The inspection is key to catching any existing problems the seller may not know about or hasn't yet disclosed, and it's often a required step by the lender. Depending on the results of the report, you may need to renegotiate with the seller about needed repairs, a change in price due to the needed fixes or if you’re now questioning the purchase entirely.

Meanwhile, your lender will be working through the formal loan application process, which includes an appraisal on the property to ensure the lender feels comfortable with the sale price. If the appraisal comes up short, you may have to negotiate again with the seller to see if you can lower the price, or you may have to come up with the difference in cash to follow through with the deal.

Combined with fees for your real estate attorney and title insurance that are a part of the process on closing day, you should expect to pay an additional 2 percent to 5 percent of the purchase price.

The home buying process may be done once closing is completed, but your expenses certainly haven’t stopped. Make sure that even after the down payment and closing costs, you still have close to six months of expenses. It’s something that is very important because there is a lot of unexpected cost that pops up when you first move into a home.

How to Successfully Buy a Home in a Tight Seller's Market

If you’ve decided to buy a home this fall, good luck to you. Your challenge will be not just finding a home you like, but also beating out all the other homebuyers who like it and want to make an offer on it, too.

By Teresa Mears, Contributor, U.S. News & Report

The number of homes for sale is low, particularly in the price ranges desired by first-time homebuyers. 

That means if you want to end up with a nice home, you need to be strategic. Expecting to find the home of your dreams by nonchalantly walking into a few open houses or perusing some online listings is not realistic in this seller’s market.

Here are nine tips to help you get the house you want.

Get your finances in order first. Before you intend to start looking, you should get copies of your credit reports to make sure you’re in a financial position to buy. Shop for mortgage financing before you start looking at houses and get a preapproval letter or proof of funds to show the seller.

Move quickly once you find the house you want. That often means making a decision to purchase new homes within hours of them being listed and writing up an offer immediately if you like the house.

Don’t make snap judgments based on listing photos. A house that doesn’t look appealing in photos could still be a great house. Homes being sold by an estate or homes with tenants inside often yield particularly poor photos. Plus, photos fail to convey the feeling of a home or the floor plan. Unfortunately, sometimes pictures don’t tell the true story, you have to be willing to look past them.

Be realistic about the inspection and repairs. The more competitive the market, the less likely a seller will be to make repairs, though some sellers may lower the price if the inspection reveals expensive defects. The purpose of the inspection isn’t to get the seller to repair every small problem but to find out for sure that the house is what you thought it was. 

Start with your best offer. A competitive market is not the right environment to negotiate a bargain. You may get only one chance to make an offer, and your offer may be one of several the seller will choose from. You need to come in with your highest and best. Remember that the offer includes not only the price, but also your financing package and other terms such as the closing date and contingencies.

Write a personal letter to the sellers. Some sellers are interested only in how much money their home sale will yield, but others love their home want it to go to a new family that will love it just as much. If you really like a house, include a personal letter and a family photo with your offer.

Make a big earnest money deposit. The expected size of the earnest money deposit, and the rules about when you get it back, vary by locality. But sellers often see a larger deposit as a sign that you’re serious about the deal.

Make a backup offer. Many prospective buyers don’t want to make an offer on a house that has a pending contract. But deals fall apart over inspections, financing and other terms. If you found the perfect house, you can make a backup offer that will put you in first place if the initial buyer walks away.

Consider waiving or shortening contingencies. Most offers are made contingent on the buyer getting a mortgage, the appraisal being equal to the purchase price and the buyer approving the inspection. Waiving any one of those contingencies can be risky, but may be the right move in some circumstances.

15 Predictions For The Real Estate Market In The Second Half Of 2020

This year has been a rollercoaster for every industry. With global economies expecting to shrink significantly throughout the end of the year, it's the best time to take stock of what real estate can expect as the year closes. What can we expect for the latter half of 2020?

 

By Expert Panel® Forbes Councils Member

The unpredictability of this year is forcing real estate professionals to reassess the future of the industry.

Expert Panel asked 15 entrepreneurs from Forbes Real Estate Council their opinions on the current state of the market and what they expect to see in the closing half of this year. Here's what they said. (Forbes Real Estate Council is an invitation-only, fee-based organization for senior-level executives in the real estate industry).

     

Members of Forbes Real Estate Council share their predictions for the industry in the latter half of the year.

 PHOTOS COURTESY OF THE INDIVIDUAL MEMBERS.

1. Demand For Housing Will Remain Robust

I expect demand for housing to remain robust as millennials and baby boomers power through to keep the economy moving. Many homeowners will fall behind on their mortgages, creating distressed property sales. As developers assemble and develop new homes, old architecture and decaying mechanical systems in 1960s, 70s and 80s homes will be replaced by a new home revolution. - Gary LanhamGary Lanham Group

2. Home Sales Will Get Closer To 2019 Levels

Existing home sales will return closer to levels seen in the second half of 2019. White-hot summer activity due to pent-up demand will work its way through the system and pandemic-inflicted economic challenges will come home to roost. - Craig CheathamThe Realty Alliance

3. Refinance Demand Will Continue

We'll likely see the flood of new refinance demand continue while ongoing Covid-19 fears will force mortgage originators to shift most of their process to being fully digital. This means that getting and closing on a mortgage will finally start to become more of an instant experience for consumers, mirroring other industries like groceries, prepared meals, transportation and even medical care. - Max SimkoffStates Title

4. Substantial Increase In Foreclosures

There will be a substantial increase in foreclosures, short sales and bank-owned properties. This will happen toward the end of the year and the beginning of next year as banks start foreclosing on delinquent mortgages. - Lex LevinradThe Distressed Real Estate Institute

5. Remote Work Will Affect Home-Buying Decisions

The ability to work remotely will weigh heavily in home-buying decisions over the next six months. Remote work expands a lot of buyers’ geographic options and influences the features buyers are looking for. Unsurprisingly, home offices are becoming more important, but our research shows that people are also looking for a quiet location, an updated kitchen, a large backyard and an open floor plan. - David DoctorowMove, Inc.

6. Mass Adoption Of Tech To Limit Human Interaction

Covid-19 is speeding up the mass adoption of technology in order to limit human interaction. We’ll see the real estate space increasingly implement tools like keyless entry systems, voice-activated appliances, etc. to minimize anything face-to-face or anything that requires physical touch. This also includes using automated messaging solutions to send emails noting amenities in-property, check-in instructions and more. - Vered SchwarzGuesty

7. Virtual Tours With Human Guidance

Virtual tours are here to stay. Although there’s clearly a shift in consumer behavior toward a more digital homebuying experience, the human element remains a critical piece. The vast majority of buyers, especially those in higher price ranges, want to see a home in person—with the guidance of a skilled agent—before they put in an offer. - Adam ContosRE/MAX Holdings, Inc.

8. Capital Reallocation Between Real Estate Classes

We expect capital reallocation between real estate classes and a surge of capital deployment for multifamily and industrial assets. These classes have shown their resilience and weathered the storm of Covid-19 well, and should attract capital previously designated for retail and office. Couple this with the low-interest rate environment and we’ll see a wave of deal activity the second half of this year. - Carlos VazCONTI Organization

9. More Preferred Equity Fund Offerings

I see more preferred equity fund offerings. Investors are more risk-averse in this environment and are interested in higher fixed income with lower risk. Multifamily apartment operators are seeing new tighter lending restrictions with Covid-19 limiting their ability to finance deals. More funds are coming out of raising capital from investors to fill the gap by providing the funding for preferred equity. - David ThompsonThompson Investing

10. Class B Multifamily Properties Will Remain Solid

Class B multifamily properties will remain solid with stable cap rates as occupancy and around 95% of rent collections nationwide remained high during Covid-19. Class C properties and workforce housing naturally has more exposure to Covid-19 implications as many tenants work in the service industry. Hence, I expect Class C prices to slightly drop, especially those with delinquency issues. - Ellie PerlmanBlue Lake Capital LLC

11. More Opportunity To Acquire At A Discount

The end of 2020 will likely see certain sellers willing to accept a lower price for their assets. While some owners will hold on and weather the storm, others will no longer want nor have the flexibility to wait and will decide to liquidate their holdings. This means investors on the buy side will have an opportunity to acquire assets at a discount from their current price. - Todd SulzingerBlue Elm Investments

12. Commercial Real Estate May See A Slowdown

While residential sales remain strong in many markets, mainly due to the still-pent-up demand for inventory, commercial real estate may see a slowdown. With more and more companies allowing or even insisting employees work remotely, a rise in commercial vacancy rates is a distinct possibility. - David BolingerThe McDevitt Agency

13. Warehousing Market Will Continue To Grow

The industrial warehousing markets will continue to see growing demand as warehouse users look for distribution and last-mile delivery locations near major population centers. In many areas, office markets will be in a holding pattern due to changing Covid-19 guidelines and mandates of local and state governmental officials. - Josh GopanSimone Development Companies

14. Growing Interest In Suburban Or Rural Living

Right now, homeowners are adapting to a new lifestyle and realizing what doesn't work in their current home. The global shift toward remote work—and lack of commute—may cause homebuyers to reconsider suburban and even rural living. They’ll also desire more square footage and outdoor space, which is more readily available and affordable in suburban and rural areas. - Jennifer AndersonAnderson Coastal Group

15. More Interest In Properties With Fitness Amenities

With people spending most of their time at home, the value of on-site dining, fitness and leisure options in multifamily properties has never been greater. As leases expire during the second half of the year and renters seek new apartments in which to live, work and stay entertained, people will be drawn to properties with amenities and easy access to outdoor activities like parks and beaches. - Salvador GarciaMAS Development Group

 

5 Projects to Increase Your Home's Resale Value

Small improvements can make a big impression on potential buyers.

Sep 15 2020

Courtesy of Zillow

Not surprisingly, a recent Zillow survey¹ found that most people — 81% — reported spending more time at home this year compared to the same time last year. Some of us might be feeling a little stir-crazy, but others are taking the opportunity to tackle home improvement projects. You may decide to change up your space for your personal enjoyment or comfort, but if you’re a homeowner looking to sell, it’s worth considering which projects will not only look good but offer the best return for your time and effort.

Zillow partnered with Thumbtack to determine the average costs of a few common improvements sellers make before listing their home for sale. By better understanding the costs, you can decide whether it’s worthwhile to DIY or call in a pro. 

Whatever route you take, a few well-chosen updates could improve your home’s appeal and value. Zillow data finds homeowners who make at least one improvement are more likely to sell their home above their list price than those who don’t make any improvements: 23% vs. 17%, respectively.² With sale prices climbing and homes selling at their fastest pace in more than two years, this may be a good time for would-be sellers to start prepping their homes for listing.  

“There are small things anyone can do to present their home in a better light,” said Sue Cohn Darmon, a Zillow Premier Agent in Connecticut with William Pitt Sotheby’s International Realty. “First impressions go a long way, especially since buyers are now spending more time searching online for homes. Listing photos are going to look better if the home appears well-maintained. If the small things are taken care of, the assumption is that the bigger things that aren’t visible have been taken care of too.”

Here are five DIY projects recommended by agents that could help increase your home’s value.

Upgrade your lights

Good lighting can bring out the best in your home. Updating old fixtures and adding dimmer switches are fairly simple upgrades. You could also consider replacing your fixtures with smart lights controlled by an app, which can help you save on your energy bill and sell your home faster. Zillow research finds homes mentioning smart lights in their listing description sold seven days faster than expected.

Here’s a DIY guide to changing a light fixture, or if you want a professional installer to do the job, Thumbtack finds the average cost is $380.

Replace your faucets

Whether your look is modern or traditional, a new faucet can enhance the style of your bathroom or kitchen. Make it a touchless faucet for added appeal, as COVID-era buyers increasingly look for smart features that will keep their homes germ-free.

With attention to detail and a tolerance for tight spaces, you can handle this job yourself, but if you’d rather leave the under-sink contortions to a pro, Thumbtack finds, on average, you can expect to pay $205 to replace bathroom fixtures.

Landscape smartly

A desire for more outdoor space is the top reason people say they would consider moving as a result of social distancing recommendations, according to a Harris Poll survey conducted for Zillow.³ There’s no better time to spruce up your yard and create the functional, beautiful outdoor space buyers want.

If you don’t like getting your hands dirty (literally), expect to pay $2,600 on average, according to Thumbtack, for a professional landscaping business to clean up your yard, which typically covers mowing, pruning, weeding, planting new flowers or shrubs, and adding new soil, mulch or bark dust. Zillow research found homes mentioning landscaping in their listing description can sell for 2.7 percent more than expected, so depending on the value of your home, it could be a worthwhile investment.

Add a fire pit

Now that you have a nicely landscaped yard, go one step further and install a fire pit to create a family-friendly backyard hangout. Listings mentioning a fire pit can sell for 2.8 percent more than similar homes, according to Zillow research. Interestingly, that sale premium is higher than homes mentioning an outdoor fireplace or a chimenea. An added bonus: This is a DIY the whole family can help with

Paint your front door (and more)

A freshly painted front door can boost your curb appeal, and if you’re thinking about selling, you may be surprised by the winning color when it comes to ROI: Homes with black front doors can sell for up to $6,000 more than similar homes, according to Zillow research.

If it’s in your budget, consider painting the whole exterior (probably not black, though!) to create a great first impression. In a survey of Zillow Premier Agents, 77% recommended sellers paint their home.4 Thumbtack finds the average cost of exterior painting is $2,535.

 

1. Zillow Group Population Science Survey on Time Spent at Home, conducted 7/16/2020 – 7/21/2020
2. Zillow Group Consumer Housing Trends Report 2019
3. This survey was conducted online within the United States by The Harris Poll on behalf of Zillow from May 4-6, 2020 among 2,065 U.S. adults ages 18 and older. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact press@zillow.com.
4. Zillow Group partnered with independent market research and data analytics firm YouGov® to conduct a nationally representative, online quantitative survey that gathered information from 1000 sellers that sold a home in the past 6 months and 500 residential real estate agents. For more information visit zillow.com/report

 

4 Easy Ways to Save Energy and Money in Your Home

You have the necessary appliances like a refrigerator, stove, or microwave, and now you’re wondering what you can do to make your house more energy efficient. Here are some great pieces of technology that can make your house eco-friendly and even save you a few hundred dollars each year. Let’s take a look at a few of them!

By Jeremy Atkins, Rocket Homes Real Estate LLC

 

1. Smart Power Outlets

There are two main types of power outlets out there. One is a “connected” outlet and the other is an energy saving outlet. Connected outlets sync to your Wi-Fi network allowing you to control the power output to appliances remotely. Leave a fan on while at work? No need to let it run all day – just hop on your phone and turn it off. These are usually in the $25-$60 range depending on the unit.

Energy saving outlets go a step further by turning the outlet off completely. Kind of like flipping a switch on a circuit breaker. This saves you from the dreaded “vampire power” which is when a plugged-in device uses electricity, even when it’s turned off. These are a great way to keep your energy usage down and even save upwards of a $150-$400 per year. Energy saving outlets, like these, can be found for around $6-$25.

Energy saving outlets, like these, can be found for around $6-25.

2. Smart Thermostats

For someone like me who loves tech, smart thermostats are amazing. They connect to your Wi-Fi network and your furnace. Over the course of a week or two, they learn your schedule and heat up or cool your house down automatically right before you get home. They also adjust for when you leave. This is another boon for us forgetful folks. I can hear Ron Popeil now “Set it…and forget it!”

Most smart thermostats can be controlled remotely and allow for scheduling via an app or on the device. They’re easy to use and will help you save an average of $145 a year. The main players in this market are Ecobee, Nest, and Honeywell and they range from $170-$250.

3. LED & Smart Lights

Not as rare or expensive as they used to be, LED lights are a pretty amazing way to reduce your carbon footprint. A basic, 60-watt equivalent LED light bulb will use 10-15% of the energy needed of an incandescent bulb. They even give off less heat, which will help with your air conditioning bill in the summer too. You can find them for as little as $3 and they go up from there.

This wouldn’t be a “tech” article if I just talked about regular old LED lights. Good thing there are smart lights! I bought some Philips Hue lights a few months ago and they are awesome. I have them set to turn on at sunset because my wife is usually home then. Today, she has a meeting and isn’t home yet so I just went into to the app on my phone and turned them off. I even have them programmed to turn off at 8 am every morning just in case my wife or I forget to turn them off. Some versions can even allow you to adjust the color and sync them to music! Unfortunately, these can be pretty expensive at around $50 per bulb but could save you around $2-$4 per year.

4. Dual-Flush Toilet

Traditional toilets use more water than we usually need when we flush. That’s where dual-flush toilets come in. These unique thrones have a light flush option which, depending on the toilet/kit, uses a half-gallon less water per flush than a full-flush version. If you need more…ahem…flushing power, use the full flush mode and it’s business as usual. There are multiple manufacturers that sell toilets with this capability and you can even find kits online to convert your regular toilet to a dual flush. With these upgrades, you can save around $200 per year in water savings depending on the size of your household.

I’m always on the lookout for ways to help me save money and green tech has certainly helped. I’m thrilled to have made some of these energy efficient upgrades and I can’t wait to add more. Whether it’s a simple replacement LED light, new smart thermostat, or a dual flush toilet, you too can make your home more energy efficient and even save some cash.

 

Jeremy Atkins: Writer, Rocket Homes

Top Eco-Friendly Home Features Most Homeowners Want

With climate risks rising, an increasing number of homeowners are trying to do their part to improve the environment by investing in green and sustainable products and systems. Following are the top eco-friendly features most homeowners want in their homes.

Content sponsor Quicken Loans for REALTOR Magazine reveals the energy-saving products most in demand right now.

 

By Rachel Burris

What Are Eco Homes?

Eco homes are designed to promote greener lifestyles by minimizing the greenhouse gases they emit into the atmosphere. These homes reduce their environmental impact by including sustainable materials and technologies that reduce homeowners' energy and water needs.

Each of the following eco-friendly home features helps limit the waste produced by households. 

  • Energy Star-rated appliances. Homes with high-efficiency appliances are in demand because they offer enhanced performance with reduced energy usage. Not only do Energy Star-rated appliances lower homeowners’ carbon footprint, but they also look good and reduce utility costs.

              

  • Programmable thermostats. Homes with older HVAC systems are wasteful and costly because they pump hot and cold air throughout the home without regard to when and where it’s needed. Conversely, programmable thermostats provide homeowners with increased control over their climates.

           

  • Radiant floor heating. With heat directly transferring from the ground to the individuals standing on it, radiant heating uses much less energy than traditional heating methods. Commonly found in luxury bathrooms, radiant heating requires electric coils or water tubing to be installed under the floors. It’s pricey to install, but this technology ultimately contributes to lower energy expenses.

           

  • Solar panels. Instead of relying on the utility company to provide electricity, homeowners' are interested in generating clean energy themselves. Now that capturing the sun’s power is far more affordable, everyone's looking to deck their homes out with solar panels.

             

  • Recycled materials. Building and finishing homes with recycled materials is a trend that’s on the rise. Producing new materials depletes many natural resources, so reusing them eliminates waste and diminishes the environmental impact. Reclaimed materials, like barn wood and recycled quartz, also are more affordable and can furnish homes with striking textures.

             

  • Geothermal systems. “Geothermal systems use the ground’s relatively cool temperature to cool a home in the summer and relatively warmer temperature to heat homes in the winter,” says Chris Fisher, manager of solar product development and marketing at CertainTeed. “They’re eco-friendly because they can displace heating loads, which currently rely on the burning of fossil fuels to produce heat.” While this method is more efficient than traditional HVAC systems, it’s also more expensive to install. Since it regulates temperatures by transferring heat from the earth into your home, installation requires extensive drilling.

The Benefits Of Eco Homes

With their environmental and financial advantages, it’s no wonder everyone's seeking eco homes. The benefit of homes with eco-friendly features are they're highly coveted, so they’re likely to sell faster and possess a higher resale value in the future.

 

Rachel Burris is a writer for Quicken Loans’ Publishing House, covering topics of interest to present and future homeowners, as well as industry insiders.