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Hearthstone Group
at Kelly Right Real Estate

Marie Kamprath
Associate Broker
208.691.2007
Dori Schlader Realtor
208.661.5820

Serving Idaho & Washington

HearthstoneNW@gmail.com

Expect a quick response every day but Sunday.

 Marie Kamprath - Agent with Kelly Right Real Estate


 

Market News

Home Design Trends to Watch in 2018

We frequently get questions from clients who are taking on decorating and remodeling projects and want to ensure their dollars are invested wisely. 

 

Which looks will last for years to come, and which ones will feel dated quickly? What colors and styles are most popular among buyers in our area? How can I add the most value to my home?

 

So we’ve rounded up some of the hottest trends in home design to help guide you through the process. Whether you’ve planned a simple refresh or a full-scale renovation, making smart and informed design choices will help you maximize your return on investment … and minimize the chance of “remodeler’s remorse” down the road.

 

 

WHAT’S HOT NOW

 

While 2017 was all about millennial pink, brass fixtures and bright white kitchens, this year we expect to see a move toward warmer, cozier elements throughout the home.

 

1. Warm Colors

 

A cool color scheme has dominated home design in recent years, but this year warm neutrals like brown and tan are back, along with rich jewel tones. While the pastel craze of last year is still hanging on, expect to see alternative color palettes featuring deep, saturated shades of red, yellow, green and navy. Grey will remain popular, but in warmer tones, often referred to as “greige.”

 

Photo by Falcone Hybner Design, Inc. - Discover living room design inspiration

2. Cozy Elements

 

Along with warmer colors, we can expect to see a shift from stark, modern design to cozier looks. Velvet upholstery, woven textures and natural elements, like wood and stone, will heat things up this year.

 

3. Mixed Metals

 

It used to be considered gauche to mix finishes, however the look of mixed metals will be very big in 2018. Brass will continue to trend, along with matte black and classics like polished chrome and brushed nickel.

 

Photo by amorybrown.co.uk - Browse living room photos

 

4. Bold Patterns

 

Expect to see a lot of bright, bold patterns in the form of geometric shapes and graphic floral prints. These will be featured on everything from furniture to throw pillows to tile. 

 

5. Natural Elements

 

Look for the use of natural elements throughout the home, including wood, stone, plants, flowers and grass. Botanical patterns will also be seen in prints, wallpaper and upholstery. Concrete accents will complement these additions in an effort to bring the essence of the outdoors inside the home.

 

Photo by Your Design Envy - Look for bedroom pictures

8. Hardwood Floors

 

Hardwood floors will continue to dominate the market. The trend is toward either very dark stains paired with light-colored walls or light stains with darker walls. Greyish tones will remain popular, as will matte finishes, which are easier to maintain than high gloss. Expect to see frequent use of wider and longer wood planks, as well as distressed and wire-brushed finishes, which add texture and dimension.

 

9. Smart Homes

 

Everything is getting “smarter” in homes, from locks and lights to thermostats and appliances. And with devices like Google Home and Amazon Alexa, you can control many of these with voice activation from a central hub. We will see continued integration of and advancements in smart-home technology in 2018.

 

 

KITCHEN TRENDS

 

While white kitchens will remain popular in 2018, expect to see more color this year in everything from cabinets to tile to appliances.

 

1. Two-toned Cabinets 

 

Two-toned cabinets are quickly overtaking the white-on-white look that has dominated kitchen design for the past few years. While white remains a classic, grey and bleached-wood cabinet variations are surging in popularity, along with darker neutrals like navy and green.

 

Photo by Rebecca Hay Designs - Browse kitchen photos

 

2. Quartz Countertops

 

Granite reigned as the top countertop choice for many years, but quartz is now king. It’s highly durable, low-maintenance and comes in a wide variety of styles and colors. It’s also heat resistant, scratch resistant and non-porous (unlike granite and marble) so it doesn’t need to be sealed.

 

3. Bold Backsplashes

 

After years of dominating backsplash design, the white subway tile is officially on its way out. Expect to see it replaced with more elaborate shapes, patterns, colors and textures. Tile that mimics the appearance of wood, concrete and wallpaper is also gaining in popularity.

 

Photo by Smith & Vansant Architects PC - Look for kitchen pictures

4. Statement Sinks

 

While stainless steel and white porcelain are always safe bets, the trend is moving toward sinks that make more of a statement. Look for unexpected pops of color and materials like natural stone and copper. Touch-free faucets are expected to gain favor with homeowners this year, too.

 

5. Brass is (Still) Back

 

Brass fixtures came back in a big way over the past couple of years and will continue to be a popular choice in 2018 along with matte black, black nickel, polished chrome and brushed nickel. Missing from the list? Rose gold, which is decidedly “out” this year.

 

Photo by Showcase Kitchens and Baths - Browse kitchen ideas

6. Multi-purpose Islands

 

Kitchen islands have evolved from simple prep-stations into the “workhorse” of the kitchen. Many feature sinks, built-in appliances and under-counter storage while also serving as a casual dining area. They have become the focal point of the kitchen, and we expect to see more of them in 2018 and beyond.

 

7. Black Stainless Steel

 

Black stainless steel is the hot new finish option for appliances, and it’s hitting the market in a big way. It offers a cutting-edge look and is easier to keep clean than traditional stainless steel. However, it’s harder to match finishes amongst different brands, so it’s probably only feasible as part of a complete appliance package.

 

8. Appliance Garages

 

Appliance garages are counter-level compartments designed to house small appliances like blenders, toasters and stand mixers. They make it convenient to have these items readily accessible, without the look of a cluttered counter.

 

 

Photo by Santa Cruz Design + Build - More kitchen ideas

 

BATH TRENDS

 

Expect to see many of the same kitchen design preferences carry over into bathrooms this year, including two-tone cabinets, quartz countertops and brass fixtures.

 

1. Neutral Tones

 

Neutral shades will continue to dominate in the master bathroom as homeowners seek a soothing and relaxing retreat atmosphere. But expect to see more options than just white. Shades of brown, grey, blue, green and tan will help to warm things up.

 

Photo by Nina Williams Designs - Look for bathroom pictures

2. Natural Elements

 

Natural materials are particularly hot right now in bathroom design. This includes the use of wood and stone on walls, cabinets, counters and backsplashes, as well as the incorporation of botanical design elements.

 

3. Large Tiles

 

We expect to see a lot more large and slab-sized tiles in bathrooms, which have less grout so they are easier to clean and maintain. Wood-look porcelain tiles are also a favorite in wet areas, as they offer the warmth and rustic appeal of wood with the durability of tile.

 

Photo by Deep River Partners - Discover powder room design inspiration

4. Stone Sinks

 

Sinks will continue to be an area where homeowners like to exhibit creativity, and hand-carved stone sinks are especially fashionable right now. These may be more suited to powder rooms, where functionality isn’t as crucial. 

 

5. Freestanding Tubs

 

There’s been a tub resurgence in bathroom design after years of preference for stand-alone showers. Modern tastes are gravitating toward freestanding tubs that serve as a showpiece for the bathroom.

 

Photo by MAK Studio - More bathroom photos

6. Smart Features

 

Smart technology has entered the bathroom with the addition of features like wireless shower speakers and high-tech toilets, as well as digital shower controls that automatically adjust to your preferences in temperature and spray intensity.

 

 

OUR ADVICE

 

Style trends come and go, so don’t invest in the latest look unless you love it. That said, highly-personalized or outdated style choices can limit the appeal of your property for resale.

 

For major renovation projects, it’s always a good idea to stick to neutral colors and classic styles. It will give your remodel longevity and appeal to the greatest number of buyers when it comes time to sell. It will also give you flexibility to update your look in a few years without a total overhaul. Use non-permanent fixtures – like paint, furniture and accent pieces – to personalize the space and incorporate trendier choices.

 

If you’d like advice on a specific remodelling or design project, give us a call! We’re happy to offer our insights and suggestions on how to maximize your return on investment and recommend local shops and service providers who may be able to assist you.

Sources:

  1. Country Living –
    http://www.countryliving.com/home-design/decorating-ideas/g3988/kitchen-trends
  2. Elle Decor –
    http://www.elledecor.com/design-decorate/trends/g14486069/kitchen-trends-2018/
  3. Gates Interior Design  –
    https://gatesinteriordesign.com/hottest-interior-design-trends-for-2018/
    https://gatesinteriordesign.com/biggest-kitchen-bath-trends-for-2018/
  4. HGTV.com –
    http://www.hgtv.com/design/rooms/kitchens/17-top-kitchen-design-trends-pictures
  5. House Beautiful –
    http://www.housebeautiful.com/room-decorating/kitchens/g2664/kitchen-trends/
    http://www.housebeautiful.com/design-inspiration/g13938283/2018-decor-trends/
    http://www.housebeautiful.com/design-inspiration/g13820501/best-and-worst-decor-trends-from-2017/
  6. Houzz –
    https://www.houzz.com/ideabooks/93399913/list/interior-design-trends-expected-to-take-hold-in-2018
  7. Huffington Post – http://www.huffingtonpost.com.au/2017/09/25/the-kitchen-and-dining-trends-to-look-out-for-in-2018_a_23222693/
  8. Kitchen and Bath Design News –
    http://www.kitchenbathdesign.com/123995/year-end-look-and-new-trends-for-2018/
  9. MSN.com –
    https://www.msn.com/en-us/lifestyle/home-and-garden/12-flooring-trends-for-2018/ss-AAtp7QA
  10. Realtor.com  –
    https://www.realtor.com/advice/home-improvement/interior-design-trends-to-ditch-2018/
    https://www.realtor.com/advice/home-improvement/hottest-interior-design-decor-trends-2018/?is_wp_site=1
  11. Realty Times – http://realtytimes.com/advicefromagents/item/1007993-kitchen-design-trends-in-2018?rtmpage=MattLawler
  12. Sebring Design Build –
    https://sebringdesignbuild.com/top-trends-in-bathroom-design/
  13. The Flooring Girl –
    http://theflooringgirl.com/hardwood-flooring/hardwood-flooring-trends-2018/
  14. Vogue –
    https://www.vogue.com/article/interior-design-trends-according-to-expert-designers-decorators
  15.  

Real Estate 2018: What to Expect

Real Estate 2018: What to Expect

 

 

As we head into a new year, the most common question we receive is, “What’s the outlook for real estate in 2018?” 

 

It’s not just potential buyers and sellers who are curious; homeowners also want reassurance their home’s value is going up. The good news is that a strong U.S. economy, coupled with low unemployment rates, is expected to drive continued real estate growth in 2018. However, changes on the horizon could significantly impact you if you plan to buy, sell or refinance this year.

 

 

HOME VALUES WILL CONTINUE TO RISE

 

Get ready for another strong year! U.S. home values and sales volume will continue to rise in 2018. 

 

Experts agree that home prices will increase in 2018, but predict a slower rate of appreciation than 2017, which clocked in at nearly 7 percent nationwide. National Association of Realtors (NAR) Chief Economist Lawrence Yun predicts a growth rate this year of 5.5 percent,1 while Freddie Mac’s September Outlook Report forecasts a rate of 4.9 percent. Either way, all indicators point towards continued growth in 2018.2

 

What does it mean for you? If you’re a current homeowner, congratulations! Real estate proves once again to be a solid investment over the long term. And if you’re considering selling this year, there’s never been a better time. Contact us to request a free Comparative Market Analysis to find out how much you can expect your home to sell for under current market conditions.

 

If you’re in the market to buy this year, there’s good news for you, too. Although prices continue to rise, the rate of appreciation has slowed. Still, don’t wait any longer. Prices will continue to go up, so you’ll pay more six months from now than you would today. Call us to setup a free, no-obligation property search and get notified about listings that meet your criteria as soon as (or before) they hit the market.

 

 

NEW CONSTRUCTION WILL MAKE REAL ESTATE MORE ACCESSIBLE


Lack of inventory in the housing market has been a primary impediment to homeownership for many Americans. “Ten years ago, the problem in the housing market was lack of buyers,” says Yun. “Today, the problem is lack of sellers. Inventory levels are near historic lows.”3

 

Yun also notes, “The lack of inventory has pushed up home prices by 48 percent from the low point in 2011, while wage growth over the same period has been only 15 percent. Despite improving confidence [in 2017] from renters that now is a good time to buy a home, the inability for them to do so is causing them to miss out on the significant wealth gains that homeowners have benefitted from through rising home values.”1

 

The good news? Yun expects a 9.4 percentage point increase in single-family new home construction starts.4

 

Economists at Freddie Mac make a similar prediction. “Existing home sales are unlikely to increase much going forward. Limited inventory will remain a consistent problem … Growth in home sales will be primarily driven by new home sales, which should continue to grind higher with single-family construction.”2

 

Robert Dietz, chief economist at the National Association of Home Builders, agrees. "The markets that are going to grow are ones where builders can add that entry level product."5


What does it mean for you? If you’ve been frustrated by lack of inventory in the past, 2018 may bring new opportunities for you to find a budget-friendly home that suits your needs. Give us a call to discuss options for new construction in our area.

 

 

MILLENNIALS WILL MOVE TO THE SUBURBS 

 

The new entry-level construction will come with a catch though … it will be located in the suburbs, where the availability of land and fewer zoning requirements make it more cost-effective to build. Economists predict that’s where millennials and first-time buyers will flock for the greater variety of homes at affordable prices.6

 

Rising home prices, a sluggish job market, and an increase in student loan debt made homeownership largely unattainable for many millennials in past years. However, there’s significant evidence that this trend is turning around. For the fourth year a row, the National Association of Realtors' 2017 Home Buyer and Seller Generational Trends survey found that millennials were the largest group of homebuyers.7

 

As millennials age, they are settling down and having families, which has prompted an increasing demand for larger but affordable homes. Thus, many are flocking to the suburbs, with 57 percent of millennial buyers opting for a suburban location.

 

What does it mean for you? If you’re a millennial who has been priced out of urban living, or is looking for more space for your growing family, a number of suburbs in our area have a lot to offer. We can point you towards the communities that will best meet your needs.

 

And if you’re a suburban homeowner with plans to sell, give us a call. We know how to market your home to millennials … and can help you sell quickly for top dollar by appealing to this growing market segment!

 

 

BOOMERANG BUYERS WILL RETURN TO THE MARKET

 

“Boomerang buyers” comprise the nearly 10 million Americans who lost their homes to foreclosure or short sales during the housing recession of 2006 to 2014.

 

According to MyFico.com, a foreclosure remains on a credit report for seven years. It takes many boomerang buyers at least that long to raise their credit score and save up enough cash to qualify for a new mortgage.8

 

With this “seven-year window” in mind, RealtyTrac predicts that the largest wave of boomerang buyers – more than 1.3 million – will be eligible to re-enter the housing market in 2018.9

 

Markets likely to see the highest influx of boomerang buyers are those that had a high percentage of foreclosures AND have remained affordable. The majority of boomerang buyers are middle-class Gen Xers or Baby Boomers. Expect to see even more competition for entry-level homes in those markets.

 

What does it mean for you? If you’re a boomerang buyer, we understand your unique circumstances. We can help you navigate the real estate process and write competitive offers that will play to your strengths. Contact us to discuss your options.

 

 

NEW TAX LEGISLATION WILL IMPACT HOMEOWNER DEDUCTIONS

 

The “Tax Cuts and Jobs Act” passed at the end of 2017 nearly doubles the standard deduction, so far fewer Americans are expected to itemize this year. For those who do, however, it could mean less homeowner deductions are available than in the past.

 

Previously, homeowners could deduct interest paid on the first $1 million of mortgage debt, but that threshold has been lowered to $750,000 for new mortgages. (Existing mortgages will not be impacted.) 

 

Additionally, taxpayers will no longer be able to fully deduct state and local property taxes plus income or sales taxes. The new legislation restricts this deduction to $10,000. It also eliminates the deduction for moving expenses (except for members of the Armed Forces) and interest on home equity loans unless the proceeds are used to substantially improve the residence.10

 

It’s yet to be seen how the tax bill will impact the real estate market overall. While some economists predict a price reduction in certain markets, Republican lawmakers project the bill will increase take-home pay and stimulate the economy overall. According to Realtor.com Senior Economist Joseph Kirchner, “Some house hunters—particularly wealthy buyers—will see an increase in after-tax income, making an already tough housing market even more competitive. This increased demand could drive prices up even higher than they are already.”11

 

What does it mean for you? If you’re an existing homeowner, be sure to consult a tax professional if you’re concerned about the impact the new tax bill could have on you.

 

And if you’re planning to buy or sell this year, we can help you determine how the tax bill could affect demand in your current or target neighborhood and price range.

 

 

INTEREST RATES WILL RISE


No one knows exactly what will happen with mortgage rates this year, but the Mortgage Bankers Association anticipates the Federal Reserve will raise rates three times in 2018, with Freddie Mac’s 30-year fixed rate mortgage reaching 4.8 percent by the end of Q4, up from around 4 percent at the end of 2017.12

 

Kiplinger.com Economist David Payne also predicts interests rates will rise this year, with short-term rates outpacing long-term rates as the Fed aims to curb inflation in a tightening job market. He predicts the bank prime rate that home equity loans are based on will increase from 4.25 percent to 5 percent by the end of 2018. 13

 

What does it mean for you? If you’re in the market to buy, act now. Rising interest rates will decrease your purchasing power, so act quickly before interest rates go up. Give us a call today to get your home search started. 

 

And if you’re a current homeowner who is considering refinancing or a home equity loan, don’t wait. We can help you estimate your property’s fair market value so you’ll be prepared before contacting a lender.

 

 

WE’RE HERE TO HELP

 

While national real estate numbers and predictions can provide a “big-picture” outlook for the year, real estate is local. And as local market experts, we can guide you through the ins and outs of our market, and the local issues that are likely to drive home values in your particular neighborhood. If you have specific questions, or would like more information about where we see real estate headed in our area, please give us a call! We’d love to discuss how issues here at home are likely to impact your desire to buy or a sell a home this year.

 

Marie Kamprath, Hearthstone Group at Kelly Right Real Estate

208.691.2007

 

 

Sources:

  1. Inman News –
    https://www.inman.com/2017/11/03/what-to-expect-from-the-2018-housing-market/
  2. Freddie Mac September Outlook Report –
    http://www.freddiemac.com/research/outlook/20170921_looking_ahead_to_2018.html
  3. Marketplace.org –
    https://www.marketplace.org/2017/07/05/economy/tight-inventory-slows-housing-market-down-0
  4. National Association of Realtors Press Release –
    https://www.prnewswire.com/news-releases/existing-home-sales-to-grow-37-percent-in-2018-but-inventory-shortages-and-tax-reform-effects-loom-300549447.html
  5. Fox Business News –
    http://www.foxbusiness.com/features/2017/11/27/entry-level-buyers-drive-solid-new-home-sales.html
  6. Zillow Research  –
    https://www.zillow.com/research/2018-predictions-17217/
  7. National Association of Realtors’ Home Buyer and Seller Generational Trends Report  –
    https://www.nar.realtor/research-and-statistics/research-reports/home-buyer-and-seller-generational-trends
  8. MyFico.com -
    https://www.myfico.com/crediteducation/questions/foreclosure-fico-score-affect.aspx
  9. RealtyTrac -
    http://www.realtytrac.com/news/foreclosure-trends/boomerang-buyers/
  10. National Association of Realtors -
    https://www.nar.realtor/taxes/tax-reform/the-tax-cuts-and-jobs-act-what-it-means-for-homeowners-and-real-estate-professionals
  11. Realtor.com -
    https://www.realtor.com/news/real-estate-news/tax-cuts-survey/
  12. Mortgage Bankers Association Economic Forecast  –
    https://www.mba.org/news-research-and-resources/research-and-economics/forecasts-and-commentary
  13. Kiplinger Economic Forecast  –
    https://www.kiplinger.com/article/business/T019-C000-S010-interest-rate-forecast.html#iOf4mkSFvvTmi2wr.99

Why Real Estate Investing Makes (Dollars and) Sense

 

Turn on the television or scroll through Facebook, and chances are you’ll see at least one advertisement for a group or “guru” who promises to teach you how to “get rich quick” through real estate investing. The truth is, much of what they’re selling are high-risk tactics that aren’t a good fit for the average investor. However, there is a way to make steady, predictable, low-risk income through real estate investing. In this blog post, we’ll examine the tried-and-true tactics that can be used to increase your income, pay off debt … even fund your retirement!

 

 

WHY INVEST IN REAL ESTATE?

 

One of the basic principles of real estate investment lies in this fact: everyone needs a place to live. And according to the Bureau of Labor Statistics’ most recent Consumer Expenditures Survey, housing is typically an American’s largest expense.1 

 

But there are other reasons why real estate is a great investment choice, and we’ve outlined the top five below:

 

1. Appreciation

Appreciation is the increase in your property’s value over time. History has proven that over an extended period of time, the value of real estate continues to rise. That doesn’t mean recessions won’t occur. The real estate market is cyclical, and market ups and downs are natural. In fact, the U.S. housing market took a sharp downturn in 2008, and many properties took several years to recover their value. However, in the vast majority of markets, the value of real estate does grow over the long term.

 

The S&P CoreLogic Case-Shiller National Home Price Index, which tracks U.S. residential real estate prices, released its latest results on August 29 with the headline “National Home Price Index Rises Again to All Time High.”2

 

 

 

While no investment is without risk, real estate has proven again and again to be a solid choice to invest your money over the long term.

 

2. Hedge Against Inflation

Inflation is the rate at which the general cost of goods and services rises. As inflation rises, prices go up. This means the money you have in your bank account is essentially worth less because your purchasing power has decreased. 

 

Luckily, real estate prices also rise when inflation increases. That means any money you have invested in real estate will rise with (or often exceed) the rate of inflation. Therefore, real estate is a smart place to put your money to guard against inflation.

 

3. Cash Flow

One of the big benefits of investing in real estate over the stock market is its ability to provide a fairly steady and predictable monthly cash flow. That is, if you choose to rent out your investment property to a tenant, you can expect to receive a rent payment each month. 

 

If you’ve invested wisely, the rent payment should cover the debt obligation you may have on the property (i.e. mortgage), as well as any repairs and maintenance that are needed. Ideally, the monthly rental income would be great enough to leave you a little extra cash each month, as well. You could use that extra money to pay off the mortgage faster, cover your own household expenses, or save for another investment property.

 

Even if you only take in enough rent to cover your expenses, a rental property purchase will pay for itself over time. As you pay down the mortgage every month with your rental income, your equity will continue to increase, until you own the property free and clear … leaving you with residual cash flow for years to come.

 

As the owner, you will also benefit from the property’s appreciation when it comes time to sell. This can be a great way to save for retirement or even fund a child’s college education. Purchase a property when the child is young, and with a little discipline, it can be paid off by the time they are ready to go to college. You can sell it for a lump sum, or use the monthly income to pay their tuition and expenses.

 

4. Leverage

One of the unique features that sets real estate apart from other asset classes is the ability to leverage your investment. Leverage is the use of borrowed capital to increase the potential return of an investment. 

 

For example, if you purchase an investment property for $100,000, you might put 10% down ($10,000) and borrow the remaining $90,000 in the form of a mortgage.

 

Even though you’ve only invested $10,000 at this point, you have the ability to earn a profit on the entire $100,000 investment. So, if the property appreciates to $120,000 – a 20% increase over the purchase price – you still only have to pay the bank back the original $90,000 (plus interest) … and you get to keep the $20,000 profit. 

 

That means you made $20,000 off of a $10,000 investment, essentially doubling your money, even though the market only went up by 20%! That’s the power of leverage. 

 

5. Tax Advantages

One of the top reasons to invest in real estate is the tax benefit. There are numerous ways a real estate investment can save you money each year on taxes:

 

Depreciation

When you record your income from a rental property on your annual tax return, you get to deduct any expenses associated with the investment. This includes interest paid on the mortgage, maintenance, repairs and improvements, but it also includes something called depreciation. 

 

Depreciation is the theoretical loss your property suffers each year due to aging. While it’s true that as a home ages it will structurally need repairs and systems will eventually need to be replaced, we’ve also learned in this post that the value of real estate appreciates over time. So getting to claim a “loss” on your investment that is actually gaining in value makes real estate an appealing investment choice.

 

Serial Home Selling

Even if you’re not interested in owning a rental property, other types of real estate investments offer tax advantages, as well. Generally, when you own an investment property you pay a capital gains tax on any profits you make when you sell the property. 

 

However, when you sell your principal residence, you are exempt from paying taxes on capital gains (up to $250,000 for singles and $500,000 for couples). The Internal Revenue Service (IRS) only requires that you live in the house for two of the previous five years. That means you can purchase an investment property, live in it while you remodel it, and then sell it for a tax-free profit two years later. This can be a great way to get started in real estate investing.

 

Section 1031 Exchanges

In addition to profiting off of your personal residence tax free, it is possible to sell an investment property tax free if you do it through a 1031 Exchange. If structured properly, the IRS Tax Code enables an investor to sell a property and reinvest the proceeds in a new property while deferring all capital gains taxes.

 

Tax-Deferred Retirement Account

It’s a common misconception that you can only purchase financial instruments (i.e. stocks, bonds, mutual funds, etc.) through an Individual Retirement Account (IRA) or 401(k). In actuality, the IRS allows individuals to invest retirement funds in real estate and other alternative types of investments, as well. By purchasing your investment property through an IRA, you can take advantage of all of the tax savings these accounts offer.

 

Be sure to consult a tax professional regarding all tax matters related to your real estate investments. If structured correctly, the profits you earn on your real estate investments can be largely shielded from tax liability. Just another reason to choose real estate as your preferred investment vehicle.

 

 

TYPES OF REAL ESTATE INVESTMENTS

 

While there are numerous ways to invest in real estate, we’re going to focus on three primary ways average investors earn money through real estate. We touched on several of these already in the previous section.

 

1. Remodel and Resell

HGTV has countless “reality” shows featuring property flippers who make this investment strategy look easy. Commonly referred to as a “Fix and Flip,” investors purchase a property with the intention of remodeling it in a short period of time, with the hope of selling it quickly for a profit.

 

This is a higher-risk tactic, and one for which many of the real estate “gurus” we talked about earlier claim to have the magic formula. They promise huge profits in a short amount of time. But investors need to understand the risks involved, and be prepared financially to cover additional expenses that may arise. 

 

Luckily, an experienced real estate agent can help you identify properties that may be good candidates for this type of investment strategy… and help you avoid some of the pitfalls that could derail your plans.

 

2. Traditional Rental

One of the more conservative choices for investing in real estate is to purchase a rental property. The appeal of a rental property is that you can generate cash flow to cover the expenses, while taking advantage of the property’s long-term appreciation in value, and the tax benefits of investing in real estate. It’s a win-win, and a great way for first-time investors to get started. 

 

And according to the U.S. Bureau of Labor Statistics, rents for primary residences have increased 21.9 percent between 2007 and 2015 as demand for rental units continues to grow.1

 

3. Short-term Rental

With the huge movement toward a “sharing economy,” platforms that facilitate short-term rentals, like Airbnb and HomeAway, are booming. Their popularity has spurred a growing trend toward dual-purpose vacation homes, which owners use themselves part of the year, and rent out the remainder of the time. There are also a growing number of investors purchasing single-family homes for the sole purpose of leasing them on these sites.

 

Short-term rentals offer several benefits over traditional rentals, which many investors find attractive, including flexibility and higher profit margins. However, the most profitable properties are strategically located near popular tourist destinations. You’ll need an experienced real estate professional to help you identify the right property if you want to be successful in this highly-competitive market.

 

 

DOES REAL ESTATE INVESTING SOUND TOO GOOD TO BE TRUE?

 

We’ve all heard stories, or maybe even know someone, who struck it rich with a well-timed real estate purchase. However, just like any investment strategy, a high potential for earnings often goes hand-in-hand with an increase in risk. Still, there’s substantial evidence that a well-executed real estate investment can be one of the best choices for your money.

 

Purchasing a home to remodel and resell can be highly profitable, as long as you have a trusted team in place to complete the remodel quickly and within budget … and the financial means to carry the property for a few extra months if delays occur.

 

Or, if you buy a house for appreciation and cash flow, you can ride through the market ups and downs without stress because you know your property value is bound to increase over time, and your expenses are covered by your rental income.

 

In either scenario, make sure you’re working with a real estate agent who has knowledge of the investment market and can guide you through the process. While no investment is without risk, a conservative and well-planned investment in real estate can supplement your income and set you up for future financial security.

 

If you are considering an investment in real estate, please contact us to set up a free consultation. We have experience working with all types of investors and can help you determine the best strategy to meet your investment goals.

 

Sources:

  1. Bureau of Labor Statistics Consumer Expenditure Survey Annual Report  – https://www.bls.gov/opub/reports/consumer-expenditures/2015/home.htm
  2. S&P Dow Jones Indices Press Release –
    https://www.spice-indices.com/idpfiles/spice-assets/resources/public/documents/574349_cshomeprice-release-0829.pdf?force_download=true
  3. Durden, T. (2016 November 29). US Home Prices Rise Above July 2006 Levels, Hit New Record High [blog post] ZeroHedge  –
    http://www.zerohedge.com/news/2016-11-29/us-home-prices-rise-above-july-2006-levels-hit-new-record-hig
    h
  4.  

A rising real estate market

This could be a good time to cash in some equity, as the average sales price of homes are up 11% over last year to date in the greater Coeur d’Alene area, and 7.1% in the greater Spokane area. The average North Idaho sales price in August was $295,633! 

To put this in perspective, not many years ago those numbers were closer to $170,000! So perhaps some professional advice is in order...

The Consumer’s Guide to Hiring an Amazing Real Estate Agent

 

When you’re buying or selling a home, it’s crucial to work with a qualified real estate agent. Not just a professional, but an amazing agent and a market expert. So how do you ensure you’re hiring an amazing real estate agent?

 

There are currently more than two million real estate professionals in North America.1,2 With so many options to choose from, how does a prospective home buyer or seller choose the right agent or broker? According to the National Association of Realtors®, trust and reputation are the top deciding factors consumers use when hiring an agent.3

 

But how do you measure trust and reputation ... and what criteria can be used to help you make your decision?

 

In this guide, we've outlined the top attributes that amazing agents possess, as well as the questions you can ask to make sure you’re working with the right market expert to achieve your real estate goals.

 

 

5 ATTRIBUTES OF AN AMAZING AGENT

 

As we mentioned above, not all real estate professionals are the same. And it’s easy to be overwhelmed by the options and information about working with real estate professionals to buy or sell your home. In fact, many real estate markets are oversaturated with agents.

 

To help you understand what makes top agents and market experts stand apart from the competition, following are five key attributes of an amazing agent:

 

1. A Pricing Specialist

 

If an agent has their real estate license, they know the basics of the transaction process. They know what goes into buying and selling a home. However, there’s a difference between knowing the process and navigating it for an ideal result. This ideal result often means buying or selling a home for the best price.

 

For buyers, amazing agents have a strong understanding of market trends, competition, and how to make your offer attractive to sellers. They can help you identify and secure a deal to ensure you get the home you want, within your desired budget.

 

If you’re selling a home, market experts have experience pricing homes optimally for the market, and creating pricing plans to minimize the time spent selling the home. This will help you sell for your desired price, and avoid costs like additional mortgage and utility payments.

 

 

 

2. An Effective Time Manager

 

It’s common to underestimate the amount of time it takes to buy or sell your home. The average real estate agent may not be utilizing the latest tools and technology to make the transaction easier and more cost effective for their clients. Market experts have tools and strategies at their disposal to minimize the amount of time you spend on the process.

 

For sellers, market experts can make sure you only deal with qualified buyers, not the “window shoppers” who can waste your time. We also utilize the latest marketing practices to advertise and price your home effectively, ensuring it gets sold quickly.

 

When looking to buy a home, inexperienced agents may waste your time by showing you homes that are not a good fit for you. A market expert knows how to prioritize your needs and wants to find you the ideal home within your budget. They also know how to spot “red flags” and can steer you away from homes that are likely to turn up major issues in a real estate inspection, saving you time and money.

 

In addition, well-networked Realtors can gain access to the hottest listings before many websites do. Their extensive professional networks can help identify “pre-list” homes before they’re officially on the market. This can be invaluable in a highly-competitive real estate market.

 

 

 

3. A Market Insider

 

While most agents can pull market stats about a neighborhood, community or city, they may not understand important trends or developments that would affect your transaction. These can include the state of the school district, issues with a homeowner association, new businesses in the area, zoning rules or trends in home prices.

 

Market experts live and breathe local real estate and know the trigger points for buying and selling in this market. We also stay current on effective marketing and negotiation practices, resulting in our track record of success.

 

For sellers, we understand what features of your home and neighborhood are assets in the selling process. And for buyers, we share a deep understanding of market factors, including school and neighborhood quality, crime statistics, speed of sales and more.

 

 

 

4. A Strong Negotiator

 

Amazing agents truly set themselves apart in their ability to negotiate. Unfortunately, a large portion of agents don’t commit their full time to increasing this key skill.

 

Real estate negotiations can be challenging, even for seasoned professionals. It takes skill, experience and a knowledge of how to fight for your client’s best interests. While any agent can enter negotiations to buy or sell a home, they may not know the effective strategies to exit those negotiations with the result you want.

 

Experienced Realtors focus on negotiation as a key skill. We understand what to do before entering negotiations (establishing the upper hand to set up the best outcome), as well as during the process (when to offer or accept concessions).

 

 

 

5. An Effective Closer

 

Closing a deal fast is often a good thing. For buyers, it means you found the home you wanted quickly. For sellers, it often means you can avoid the added expenses of mortgage and utility payments, and maximize the value of your home sale.

 

However, an agent solely focused on speed can make decisions that aren’t in your best interests. Top real estate professionals know how to not only achieve your real estate goals quickly, but in the right way to avoid potential pitfalls.

 

Just like negotiations, the paperwork and process of closing a real estate transaction are complicated. And they can be overwhelming for the average agent who hasn’t handled a lot of transactions. Sales contracts, property disclosures, occupancy agreements and even lead paint records need to be executed with precision. Your agent not only needs to be familiar with these, but also stay current on any changes in requirements or regulations.

 

Market experts have a strong understanding of real estate contracts, timelines, clauses and contingencies within the closing process. In fact, avoiding pitfalls during the closing process is where many sellers find an experienced Realtor is a huge asset.

 

 

 

 

5 QUESTIONS TO ASK YOUR REAL ESTATE AGENT

 

So how do you know if you’re working with an amazing agent?

 

The first step would be to “shop around.” Many people work with the first agent they come across without a firm understanding of their level of experience. It’s always a good idea to interview a number of agents before selecting one. If you’ve gotten referrals from people you trust, then you may only need to interview 2-3 agents.

 

However, it can be tough to know what to ask in the interview process. Here are some questions that can help you qualify the best agent to help you achieve your real estate goals:

 

1.     Can you send me some information about yourself?

Look for professionalism and consistency. What are their professional accomplishments? Also, try to identify how they approach their work. Look for a business person who has a strategy and solid support system. If they’re a newer agent, ask about their team’s dynamic and accomplishments.

 

2.     How long have you been in real estate?

The average Realtor has 10 years of experience4. But while longevity is important, even more telling are the number of transactions they have closed or been involved in. So feel free to also ask: “How many homes have you sold in this area?”

 

3.     What will you do to keep me informed?

Do you want daily or weekly reports from your agent? Will the agent be able to meet these expectations? Determine how much communication you want, and then find an agent who will give you the attention and time you want and deserve.

 

4.     Can you provide me with further resources I may need?

From market reports and pricing trends to school performance and crime statistics, top agents have resources at their disposal. In addition, market experts have built strong relationships with their extended team of professionals, and can often get expedient service or be able to “cash in a favor” for you should a need arise.

 

5.  Seller only: Can you share with me your plan to market my property? Many agents will simply put your home in the MLS and wait for it to sell. An amazing agent should have a detailed plan of how to get your home exposure on social media, to their local networks, and more.

 

 

GET STARTED

 

Now that you’re armed with the 5 Attributes of Amazing Agents and the Top Questions to ensure you work with the best possible real estate agent, you’re ready to start interviewing agents. 

 

We’d love an opportunity to win your business. Schedule a free consultation with us to find out how true market experts can help you achieve your real estate goals!

 

 

Sources:

  1. National Association of REALTORS – https://www.nar.realtor/field-guides/field-guide-to-quick-real-estate-statistics
  2. Financial Post – http://business.financialpost.com/personal-finance/mortgages-real-estate/canada-housing-bubble-agents/wcm/b49d4e3a-bd8d-4d1c-9566-bd3d80c8e23a
  3. National Association of REALTORS – 

    https://www.nar.realtor/reports/highlights-from-the-profile-of-home-buyers-and-sellers

  1. National Association of REALTORS – https://www.nar.realtor/field-guides/field-guide-to-quick-real-estate-statistics

The Consumer’s Guide to Hiring an Amazing Real Estate Agent

The Consumer’s Guide to Hiring an Amazing Real Estate Agent

 

When you’re buying or selling a home, it’s crucial to work with a qualified real estate agent. Not just a professional, but an amazing agent and a market expert. So how do you ensure you’re hiring an amazing real estate agent? 

 

There are currently more than two million real estate professionals in North America.1,2 With so many options to choose from, how does a prospective home buyer or seller choose the right agent or broker? According to the National Association of Realtors®, trust and reputation are the top deciding factors consumers use when hiring an agent.3

 

But how do you measure trust and reputation ... and what criteria can be used to help you make your decision?

 

In this guide, we've outlined the top attributes that amazing agents possess, as well as the questions you can ask to make sure you’re working with the right market expert to achieve your real estate goals.

 

 

5 ATTRIBUTES OF AN AMAZING AGENT

 

As we mentioned above, not all real estate professionals are the same. And it’s easy to be overwhelmed by the options and information about working with real estate professionals to buy or sell your home. In fact, many real estate markets are oversaturated with agents.

 

To help you understand what makes top agents and market experts stand apart from the competition, following are five key attributes of an amazing agent:

 

1. A Pricing Specialist

 

If an agent has their real estate license, they know the basics of the transaction process. They know what goes into buying and selling a home. However, there’s a difference between knowing the process and navigating it for an ideal result. This ideal result often means buying or selling a home for the best price.

 

For buyers, amazing agents have a strong understanding of market trends, competition, and how to make your offer attractive to sellers. They can help you identify and secure a deal to ensure you get the home you want, within your desired budget.

 

If you’re selling a home, market experts have experience pricing homes optimally for the market, and creating pricing plans to minimize the time spent selling the home. This will help you sell for your desired price, and avoid costs like additional mortgage and utility payments.

 

 

 

2. An Effective Time Manager

 

It’s common to underestimate the amount of time it takes to buy or sell your home. The average real estate agent may not be utilizing the latest tools and technology to make the transaction easier and more cost effective for their clients. Market experts have tools and strategies at their disposal to minimize the amount of time you spend on the process.

 

For sellers, market experts can make sure you only deal with qualified buyers, not the “window shoppers” who can waste your time. We also utilize the latest marketing practices to advertise and price your home effectively, ensuring it gets sold quickly.

 

When looking to buy a home, inexperienced agents may waste your time by showing you homes that are not a good fit for you. A market expert knows how to prioritize your needs and wants to find you the ideal home within your budget. They also know how to spot “red flags” and can steer you away from homes that are likely to turn up major issues in a real estate inspection, saving you time and money.

 

In addition, well-networked Realtors can gain access to the hottest listings before many websites do. Their extensive professional networks can help identify “pre-list” homes before they’re officially on the market. This can be invaluable in a highly-competitive real estate market.

 

 

 

3. A Market Insider

 

While most agents can pull market stats about a neighborhood, community or city, they may not understand important trends or developments that would affect your transaction. These can include the state of the school district, issues with a homeowner association, new businesses in the area, zoning rules or trends in home prices.

 

Market experts live and breathe local real estate and know the trigger points for buying and selling in this market. We also stay current on effective marketing and negotiation practices, resulting in our track record of success.

 

For sellers, we understand what features of your home and neighborhood are assets in the selling process. And for buyers, we share a deep understanding of market factors, including school and neighborhood quality, crime statistics, speed of sales and more.

 

 

 

4. A Strong Negotiator

 

Amazing agents truly set themselves apart in their ability to negotiate. Unfortunately, a large portion of agents don’t commit their full time to increasing this key skill.

 

Real estate negotiations can be challenging, even for seasoned professionals. It takes skill, experience and a knowledge of how to fight for your client’s best interests. While any agent can enter negotiations to buy or sell a home, they may not know the effective strategies to exit those negotiations with the result you want.

 

Experienced Realtors focus on negotiation as a key skill. We understand what to do before entering negotiations (establishing the upper hand to set up the best outcome), as well as during the process (when to offer or accept concessions).

 

 

 

5. An Effective Closer

 

Closing a deal fast is often a good thing. For buyers, it means you found the home you wanted quickly. For sellers, it often means you can avoid the added expenses of mortgage and utility payments, and maximize the value of your home sale.

 

However, an agent solely focused on speed can make decisions that aren’t in your best interests. Top real estate professionals know how to not only achieve your real estate goals quickly, but in the right way to avoid potential pitfalls.

 

Just like negotiations, the paperwork and process of closing a real estate transaction are complicated. And they can be overwhelming for the average agent who hasn’t handled a lot of transactions. Sales contracts, property disclosures, occupancy agreements and even lead paint records need to be executed with precision. Your agent not only needs to be familiar with these, but also stay current on any changes in requirements or regulations.

 

Market experts have a strong understanding of real estate contracts, timelines, clauses and contingencies within the closing process. In fact, avoiding pitfalls during the closing process is where many sellers find an experienced Realtor is a huge asset.

 

 

 

 

5 QUESTIONS TO ASK YOUR REAL ESTATE AGENT

 

So how do you know if you’re working with an amazing agent?

 

The first step would be to “shop around.” Many people work with the first agent they come across without a firm understanding of their level of experience. It’s always a good idea to interview a number of agents before selecting one. If you’ve gotten referrals from people you trust, then you may only need to interview 2-3 agents.

 

However, it can be tough to know what to ask in the interview process. Here are some questions that can help you qualify the best agent to help you achieve your real estate goals:

 

1.     Can you send me some information about yourself?

Look for professionalism and consistency. What are their professional accomplishments? Also, try to identify how they approach their work. Look for a business person who has a strategy and solid support system. If they’re a newer agent, ask about their team’s dynamic and accomplishments.

 

2.     How long have you been in real estate?

The average Realtor has 10 years of experience4. But while longevity is important, even more telling are the number of transactions they have closed or been involved in. So feel free to also ask: “How many homes have you sold in this area?”

 

3.     What will you do to keep me informed?

Do you want daily or weekly reports from your agent? Will the agent be able to meet these expectations? Determine how much communication you want, and then find an agent who will give you the attention and time you want and deserve.

 

4.     Can you provide me with further resources I may need?

From market reports and pricing trends to school performance and crime statistics, top agents have resources at their disposal. In addition, market experts have built strong relationships with their extended team of professionals, and can often get expedient service or be able to “cash in a favor” for you should a need arise.

 

5.  Seller only: Can you share with me your plan to market my property? Many agents will simply put your home in the MLS and wait for it to sell. An amazing agent should have a detailed plan of how to get your home exposure on social media, to their local networks, and more.

 

 

GET STARTED

 

Now that you’re armed with the 5 Attributes of Amazing Agents and the Top Questions to ensure you work with the best possible real estate agent, you’re ready to start interviewing agents. 

 

We’d love an opportunity to win your business. Schedule a free consultation with us to find out how true market experts can help you achieve your real estate goals!

 

 

Sources:

  1. National Association of REALTORS – https://www.nar.realtor/field-guides/field-guide-to-quick-real-estate-statistics
  2. Financial Post – http://business.financialpost.com/personal-finance/mortgages-real-estate/canada-housing-bubble-agents/wcm/b49d4e3a-bd8d-4d1c-9566-bd3d80c8e23a
  3. National Association of REALTORS – 

    https://www.nar.realtor/reports/highlights-from-the-profile-of-home-buyers-and-sellers

  1. National Association of REALTORS – https://www.nar.realtor/field-guides/field-guide-to-quick-real-estate-statistics

Real Home Value Calculator: Tax Assessor Value vs Market Value

Real Home Value Calculator: Assessed Value vs Market Value

 

Understanding a home’s true market value is about more than pictures, software assessments and price-per-square-foot. Whether you’re a current homeowner thinking of selling or are house-hunting, it’s crucial you understand what factors affect home valuation. By partnering with a local market expert, sellers will avoid pricing their house out of the market (the kiss of death in real estate) and buyers will ensure they get a good deal on their next home. 

 

So, how do you accurately calculate a home’s value? After all, the value a home is assigned by its town or county and the one it’s given when it’s listed are often dramatically different from one another. Which one is accurate and what does it all mean? Read on to learn more.

 

Assessed Value vs Market Value: What’s the difference?

When it comes to home value, you’ll often hear two terms, assessed value and market value

 

A home’s assessed value is often the lower number of the two, and is the value given by your municipality or county. Investopedia defines assessed value as “the dollar value assigned to a property to measure applicable taxes.”1 Although property tax laws vary, assessors commonly arrive at this number by taking into account the following:

 

  • What comparable/similar homes are selling for in your area.
  • The value of recent improvements.
  • Income from renting out a room or space on the property.
  • How much it would cost to rebuild on the property.

 

A home’s market value, or Fair Market Value, is the price a buyer is willing to pay or a seller is willing to accept for a property. A skilled real estate professional will arrive at the value using a variety of metrics, including:

 

  • External characteristics, such as lot size, home style, the condition of the home and curb appeal.
  • Internal characteristics, such as the number of rooms and their size, the type and condition of the heating or HVAC system, the quality and condition of construction, the flow of the home, etc.
  • The sales price of comparable homes that have sold in your area.
  • Supply and demand; that is, how many buyers and sellers are in the area.
  • Location; that is, the quality and desirability of your neighborhood and other community amenities.

 

Why are these values often so different? An assessor usually estimates your property’s market value during a reassessment or if you make a physical change or improvement to it.2 As a result, a property may not be reassessed for many years. While your home’s market value may fluctuate with the market, your home’s assessed value is more likely to remain steady.3

 

What Determines a Home’s Value?

You’ve likely heard the motto of real estate: “Location, location, location.” This means a home’s value relies on its location. While the home and structures on the property will likely depreciate over time, the land beneath it tends to appreciate. Why? Land is in limited supply and a growing population puts increased demand on the housing supply. As a result, values increase.4 

 

Other factors that affect your home’s value include the function and appearance of the property, how well the home and other structures are maintained and whether the home is a lifestyle property, such as a ranch style with mountain views or waterfront bungalow. 

 

Ultimately, the best indication of a home’s value is the overall supply and demand of the market. This is why we recommend you partner with a real estate professional who takes all of these factors—the assessed value, local market conditions, home features and has physically walked through and experienced your home— into consideration to determine the most accurate market value. 

 

How to determine if a property is comparable to yours.

Both assessed value and market value are partially determined by the sales price of similar, or comparable, homes in the area. To determine if a home is comparable to yours, look for the following characteristics:

 

  • Lot size
  • Square footage
  • Home style or similar architecture 
  • Age
  • Location

 

While you may not find a home with the same exact characteristics as yours, you’ll likely find a few that are close. To account for any disparity, adjust the sales prices of the comparable properties. Look at the differences between your property and the one in question and determine if the differences increased or decreased the sales price and by how much. For example, if your home has two bathrooms and a similar home only has three, estimate how much that extra bathroom increased the sale price of the similar home. The adjusted sale price is the estimation of what the property would sell for if the properties were exactly the same.2

 

Where can you find comparable sales?

Fortunately, you can find comparable home sales in a variety of places.2

  • Your local assessor’s office is able to provide a list of recent sales you can browse and compare or a sales history of a particular house, home style or neighborhood.
  • Your municipality. Many cities keep local sales information in their offices or post it online.
  • Online databases, such as a real estate database
  • Your local newspapers may offer some real estate information in the form of quarterly sales reports in the business or real estate sections of the newspaper.
  • Our office. We can do Comparable Market Analysis for you.

 

How to calculate your home’s value.

By answering a few questions about your home, property and the local market, you can begin to estimate your property’s value. We’ve also included a worksheet for you below...

 

Home Value Questions:

When was your home last assessed?

What was its CMA assessment value?

What is your area’s average sales price?

What is your area’s average price/square foot?

 

Structure:

  • Is the architecture and exterior structure of the home consistent, superior or inferior to other homes in the area?
  • Does the era or genre (Modern, Victorian, Ranch, Cottage, etc.) add a premium based on current design trends?
  • How does the floor plan and room size proportions of the home compare to other homes on the market?

Interior Structure:

  • How does the kitchen compare to others on the market?
    • Updated or outdated
    • Floor plan
    • Appliance packages
  • How does the Master Suite compare to others on the market?
    • Size
    • First/second floor
    • Updated or outdated
    • Access to Master Bath
  • How does the Master Bath compare to others on the market?
    • Updated or outdated
    • Shower and bath
    • Flooring

Outside Areas:

  • Are there views, outdoor living areas or recreational areas?
    • Pools
    • Ponds
    • Patios
  • How does the landscaping and hard-scaping compare to the market? (e.g., built elements such as walkways, patios, decks, etc.)

Overall Condition of Home

  • What is the level of repair needed to compete with other homes?
  • Does the home need to be staged? How does it show?
  • What curb appeal projects are necessary to be consistent with others on the market?

If you want to accurately assess a home’s value, it’s crucial to know about the market activity of our local area. We can help! Give us a call to get the scoop on the local market.

 

Sources: 1. Investopedia http://www.investopedia.com/terms/a/assessedvalue.asp

    2. New York State Department of Taxation and Finance https://www.tax.ny.gov/pubs_and_bulls/orpts/mv_estimates.htm

                3. Realtor.com http://www.realtor.com/advice/sell/assessed-value-vs-market-value-difference/

                4. Investopedia, http://www.investopedia.com/articles/mortgages-real-estate/08/housing-appreciation.asp?lgl=myfinance-layout

 

What is Your Home Buying Power? or, What You CAN Afford

 

If you’re in the market for a new home or investment property, one of the first questions you’ll probably ask is, “What can we afford?” Many buyers become so caught up in how much they can afford that they don’t realize their total buying power—that is, the total amount of purchasing potential they actually have.

 

Buying Power Defined

Your buying power is comprised of the total amount of money you have available each month for a mortgage payment. This means the money you have each month after fixed bills and expenses. Any money you’ve saved for a down payment, the proceeds from the sale of your current home, if applicable, and the amount of money you’re qualified to borrow all impact your buying power as well. When you take all of this into account, you may find you are able to purchase a larger home or a home in a more desirable neighborhood, or you might realize you should be looking for homes in a lower price range.

 

What About Housing Affordability?

Housing affordability is a metric used by real estate experts to assess whether or not the average family earning an average wage could qualify for a mortgage on the average home.1 Although this figure is essential to creating a comprehensive overview of the real estate market, it’s not a factor you should consider in your home search. What may be considered affordable to you based on your income and other factors may be different than what’s affordable to the average buyer.

 

Why Buying Power Matters

A common misunderstanding is that a home’s list price determines whether or not you can purchase it. Although it’s important to look at the price tag, it’s essential to consider what your monthly payment will be if you own the home. After all, the purchase price doesn’t include the housing-related expenses, such as annual property taxes, homeowner insurance, associated monthly fees and any maintenance or repairs. Figuring out the payment will prevent you from overestimating or underestimating your buying power. After all, you’ll live with your monthly payment, not the sales price.

 

Once you have clarity on your buying power, you’ll be able to buy the home you want, instead of settling for a home because you feel it’s the only one you can afford. It will also prevent you from becoming “house poor,” a common term for someone who’s put all their money toward the down payment, leaving them nothing left over for fees outside of their monthly house payment. Both scenarios can negatively impact the lifestyle you want to live. Understanding your buying power can help you get the home you want without sacrificing the lifestyle you desire.

 

If you haven’t sold your current home yet, a Comparative Market Assessment (CMA) will give you a general idea of how much you may get for your home based on what other homes have sold for in your area. Contact our team for a FREE CMA!

  

Calculating Your Buying Power

You might be wondering, “How do I know what my buying power is?” Buying power is calculated by adding the money you’ve saved for a down payment and/or the money you made from selling your home (minus fees and mortgage payoff) to all of your sources of income and investments that could be used to make your monthly payment. Make sure to include your monthly pay, commissions or tips, dividends from investments, payments from rental properties or other monthly income you receive as well as the loan amount you’re willing to finance and qualify for.

 

Most lenders advised buyers to spend no more than 35 to 45 percent of their pretax income on housing, meaning all your income and sources of revenue prior to paying taxes. Make sure you factor in not only your mortgage payment, but also property tax and home insurance to the cost of housing.2 However, other financial experts advise spending no more than a very conservative 25 percent of your after-tax income on your housing expenses.2  Whether you plan to spend the average, play it conservative or split the difference is up to you.

 

Traditionally, mortgage lenders have targeted the ideal housing expense amount to be a ratio of 28 percent or less.3 

 

However, these figures bring up an important point: you don’t have to spend all of your savings and available monthly income on a mortgage payment. It’s important to set money aside for regular home maintenance, unexpected repairs and monthly fees, such as a condominium or homeowners association fee. While the above ratios are commonly accepted, a lender will look at your total financial picture when they decide how much they’re willing to lend. It may be tempting to take out a large loan in order to purchase the home of your dreams, but keep in mind the less money you have to borrow, the stronger your buying power may be.

 

4 Things That Impact Buying Power

1. Credit score. A great score can help you lock into a lower interest rate.

 

2. Debt-to-income ratio. The lower the ratio, the better risk you may be to lenders as long as you have an established credit history.

 

3. Assets, including the documentation of where the money for the purchase is coming from and the mix of your investments.

 

4. Down payment. The more you’re able to put down, the less you will have to borrow. With a down payment of 20 percent or more, you won’t have to purchase private mortgage insurance (PMI) and you may also be able to negotiate a lower interest rate.

 

How to Save for a Down Payment

If you’re thinking of buying a home one day, one of the first steps to take is to start saving for a down payment. Here are some tips to make saving easier.

 

First-time buyers:

1. Set a savings goal. One way to figure out how much to save is to use the average sales price for homes that are similar to what you want and figure out your target down payment percentage. For example, if homes are selling for $200,000 in your area and you want to put 20 percent down, you’ll have to save $40,000. Set a goal to save that amount within a specific time frame; just keep in mind the longer you save, the more the average selling price will change. Although the majority of buyers saved for six months or less, 29 percent of all buyers (and 31 percent of first-time buyers) saved for more than two years for a down payment.4

 

2. Cut back on expenses. Review your monthly expenses and look for ways to save. Twenty-nine percent of buyers cut spending on non-essentials items and 22 percent cut spending on entertainment while they were saving for a home.4 Think about items you can live without or cut back on temporarily while you’re saving.

 

3. Look for ways to boost your income. Get a side job or sell items online or at a garage sale to increase your income in a short amount of time. Be sure to save any windfalls you get, including your annual income tax refund or work bonuses.

 

4.  Check out home-buying programs. Your state, county or local government may offer special programs, such as grants, for first-time buyers to use.

 

5. Ask your family. Thirteen percent of all buyers, and 24 percent of first-time buyers, were given money from family or friends to use toward the down payment of their home.4 

 

Repeat buyers:

More than 52 percent of repeat buyers used the proceeds from the sale of their primary residence toward the down payment on their next home.4 Similarly, 76 percent tapped into their savings accounts.4 If you’re thinking of buying another home, here are more ways to save more money, in addition to the tips listed above:

 

1. Rent a room. If you have an income flat (or mother-in-law unit) attached to your home, rent it out and channel the income into a high-interest savings account.

 

2. Make your money work for you. If you don’t plan to buy for at least five years, invest it and let the compound interest work for you. Discuss this option with your financial planner or broker to see if this is ideal for you and your goals.

 

3. Tap into your 401(k). If you have a 401(k) plan, you may be allowed to borrow a portion of it, the lessor of up to $50,000 or half of its value, for your down payment. Remember, it’s a loan so you’ll have to pay it back. If you leave or lose your job before you’ve repaid the loan, you’ll have between 60 to 90 days to repay the balance or face stiff taxes and penalties.

 

If you want to buy an investment property

Whether you’re buying a second home or a rental property, here are a couple tips to save for a down payment.

 

1. Tap into your equity. If you’ve paid off or paid down your mortgage on your primary home, you may be able to tap into your equity to purchase another property. Contact your lender to learn more about a HELOC or home equity loan.

 

2. Get a partner. Find a friend or relative who’s willing to purchase property with you. Typically, you’ll split the costs and profits equally. Just make sure to work with an attorney to create a partnership agreement to fit your situation.

 

 

Work Out Your Buying Potential

What’s your buying potential? Fill out this worksheet to get an estimate.

 

 

Source: Iowa State University Extension, What is your house-buying power?

 

Monthly Payment on 30-Year Fixed Rate Mortgage

 

 

Didn’t see your desired loan amount? Use the table below to estimate your monthly payment (principal and interest) per $1,000 of your loan. To figure out an estimated loan payment, multiply the factor by the number of thousands in the amount of your mortgage.

 

For example, if you intend to borrow $400,000, with a loan term of 30 years at 4% interest, multiply 4.77x 400 = $1908 per month.

 

 

Source: HSH.com http://www.hsh.com/mopaytable-print.html)

 

Don’t forget to factor in property taxes and insurance. These are often added to your principal and interest of your mortgage payment—the money used to pay down the balance of your loan and the charge for borrowing the money. Since these numbers vary, contact your county assessor’s office for the current property tax rate and your insurer for a home insurance quote. Once you have these figures, divide each by 12 to estimate how much they’ll add to the above payment amounts.

 

Do you want a clearer picture of your buying power? Would you like to see what kind of homes you can get with your buying power? Give us a call!

 

Sources: 1. National Association of REALTORS https://www.nar.realtor/topics/housing-affordability-index/methodology

                2. Moneyunder30.com https://www.moneyunder30.com/percentage-income-mortgage-payments

                3. Credit.com https://www.credit.com/loans/mortgage-questions/how-to-determine-your-monthly-housing-budget/

                4. National Association of REALTORS, 2016 Profile of Home Buyers and Sellers

    5. Iowa State University Extension, What is your house-buying power? https://store.extension.iastate.edu/product/pm1460-pdf 

    6. HSH.com http://www.hsh.com/mopaytable-print.html

 

 

 

 

 

Top 5 Home Design Trends of 2017

Top 5 Home Design Trends of 2017

 

The current trends are all about utilizing rich color, maximizing texture and creating comfortable interiors you can’t wait to relax in. Use these trends to get inspired to makeover your home’s interiors, and create spaces you love. Remember, if you plan to sell in the next few years, you may want to avoid doing anything too dramatic and instead incorporate small changes that would appeal to buyers. 

 

Why are these trends gaining popularity?

The underlying theme of these trends is creating a home environment you love; one that appeals to your emotions and feels like a retreat from the stresses of the world. Although the home is a place where you can relax and spend time with loved ones, work expectations are beginning to blur the line between work and home. Even if people don’t work from home specifically, many are stretching their work hours into their evenings and weekends to complete work projects. 

 

It’s no wonder the Nordic concept of hygge (most often pronounced “hoo-gah”) has become a hot trend. A centuries-old concept, incorporating hygge in the home means creating simple and comfortable spaces that make you feel cozy and safe and appeal to your senses.1 The emphasis is on simplicity and fostering positive experiences, whether you’re spending time with family, reading a good book or catching up on work emails.

 

WARM AND RICH COLORS.

Whether you want to play with a bold color or stick with neutrals, one thing is clear—paint is the foundation of a great design. Painting your interiors has a return on investment of about 75 percent and is a relatively inexpensive project to complete, costing between $25 to $100 for paint alone.2 If you’re thinking of refreshing your home’s interiors with a coat of paint, popular colors include warm taupe, fresh green and dark tones. These colors are popular choices because they evoke feeling of warmth and coziness when you walk into a room.

 

Wondering how to pair these colors? Taupe is the perfect alternative to traditional neutrals, such as gray and white, and goes well with cool blues, earthy greens and deep shades of wine.  Green goes well with other earthy shades, such as copper and moss, as well as deep plum and bright pink. If you’re hesitant to paint your walls green, incorporate it into your home by way of accent pillows, rugs, lamps, vases and other accessories or add a few house plants.       

          

If you’re interested in adding more drama to a room, include bold, dark colors.  Dark shades add color and sophistication to any space. Plum and dark gray pair well with pale blues, warm whites and light gray.

 

Try one of these Colors of the Year: 

 

Poised Taupe – Sherwin Williams

            Greenery - Pantone 

Shadow – Benjamin Moore

 

RICH MATERIALS.

Lux materials create a space in which you can’t wait to kick off your shoes and relax at the end of the day. The Danes use a mixture of materials and pattern as a way of adding character and interest; however the overall look still needs to adhere to a color palette to prevent it from looking distracting. 

 

Natural materials and textures allow you to maximize the comfort of the bedroom, living room or family room. Wood accents give rooms an earthy feel. Incorporate rustic wood sculptures, trays and furniture into your space. Choose furniture made with sustainably harvested wood certified by the Forest Stewardship Council (FSC) or use reclaimed wood for an environmentally friendly alternative.

 

If natural elements aren’t your style, but you want to add more visual interest to your room, try mixing patterns. Although it may have been avoided in the past, mixing stripes, florals and geometric prints actually help ground a space as long as the patterns feature complimentary colors or different shades of one color. If you’re worried about going overboard and making your room look “busy,” focus your mix in one area of the room. For example, add throw pillows in a variety of patterns to your sofa.

 

GOING GREEN.

According to a recent study from the American Psychological Association, people are more stressed than ever, with 24 percent of adults reporting they’re experiencing “extreme stress.”3 

Top sources of stress include work and money. By incorporating small changes, like making your house more energy efficient, you can start to lower your bills and get back to relaxing and enjoying life like the Danish do (who consistently top the polls as the happiest people).

 

Save money on your energy bills by sealing the “envelope” of your home, which includes the windows and doors, walls, floor and roof. The better insulated your home is, the less heat will escape and the lower your energy bill (and stress level) will be.

  

The most heat loss occurs through the walls of the home: up to 35 percent of heat loss, to be exact.4 Ceramic insulating paint is a space-inspired coating of paint mixed with ceramic compounds and applied to interior or exterior surfaces. It seals your walls and prevents heat from escaping, which means reduced energy bills all year long.

 

THE FUNCTIONAL HOME OFFICE.

Twenty-four percent of employed people do some or all of their work at home.5 Since more people are working remotely than ever, home offices are becoming more popular. Even if you don’t plan on working from home, a home office gives you a place to pay bills, work on personal projects, plan your family’s schedule and more. Home offices tend to be multifunctional, serving as a guest room when family and friends visit, and have the potential to meet other needs that arise. 

 

The key idea behind hygge is to enjoy the environment around you and for each room to be a sanctuary to sink into at any given moment. Your home office is no exception! Maximize your productivity, efficiency and focus by painting the walls shades of green or blue.6 If space is an issue, create a nook by installing docking and tech cabinets that are big enough to store a printer and other small office equipment and files without taking over the room.

 

If you don’t have room in your home for an office, look no further than your backyard. Shedquarters, small structures or sheds built in the backyard for use as an office or home-based business, are an attractive option for homeowners who don’t have a room to dedicate to an office and don’t wish to add on their homes. while the jury is out on how much value these structure add to a home, they can convert easily into a storage shed if you plan to sell in the future.

          

SPLURGING ON KITCHEN RENOVATIONS.

The kitchen is often the busiest, most hectic room in the house and one of the top renovation projects with a high return on investment.7 We do more than cook meals there; it’s where homework is done, bills are paid, weeks are planned and more. 

 

Kitchen remodels consistently show a respectable return on investment. According to the 2017 Cost vs Value Report from Remodeling magazine, a minor kitchen remodel touts an 80.2 percent return on investment.8 You don’t need to overhaul your entire kitchen to make it more hygge. Smaller additions can transform it into a relaxing and functional space you enjoy spending time with friends and family in.

 

What does a “minor kitchen renovation” entail? In addition to replacing the fronts of your cabinets and drawers, it also includes replacing out-of-date appliances and fixtures. You may also consider replacing countertops. Quartz and quartzite are becoming more common as are other green laminate options, including ones that mimic stone, wood and concrete. Laminates install in less time, often over the existing countertop, make it an ideal choice for busy homeowners as well. Other hot kitchen trends include incorporating sustainable materials like bamboo into your countertops and floors and water filtration systems.  

                 

Want to improve the look and feel of your home’s interior? Are you thinking of upgrading to a home that better fits your changing needs? Call us—we’d love to help you achieve all of your home-related dreams.

 

Sources:  1. Time, Hygge, the Nordic Trend That Could Help You Survive 2016

                2. Quality Smith

                3. American Psychological Association, 2015 Stress in America

4.  Department of Energy

5. Department of Labor

                6. Entrepreneur, How the Color of Your Office Impacts Productivity

                7. Realtor.com

    8. Remodeling Magazine, 2017

 

The Compound Effect: Building Your Household’s Wealth

March2017

 

Wealth is within reach for many people; however, according to a recent study, 63 percent of Americans said it’s not likely they’ll become rich.1 While younger people are more likely to say they’ll achieve wealth one day, only 34 percent of people aged 30 to 49 and 21 percent of people aged 50 or older say the same. There is no secret to becoming rich: it takes time, sacrifice and good financial sense. Here are a few ways to build your household’s wealth.

 

Let Compound Interest Work for You

Compound interest is your interest earning interest. While the concept may work against you when you take out a loan to buy a car or use your credit card, it works in your favor when you’re saving money. For example, if your savings is growing at a rate of four percent, your investment will double in eight years and quadruple in 16 years. Your money will grow exponentially the longer you save: the more money you’ve saved, the more your money will grow.

 

Tap into Your Home Appreciation

Experts expect home prices to appreciate 3.24 percent and grow by 21.4 percent cumulatively. If a homeowner purchases a home this year for $250,000, they could earn more than $40,000 in equity over the next five years. Although the home value of the average American family’s home is $165,000, home values vary by market.3 If you’re curious about the value of your home, give us a call!

 

Build Equity in Your Home

One of the most compelling reasons to own a home is it allows you to build wealth over time. According to one study, the average homeowner has a net worth of $200,000, which is 31 to 46 times the net worth of the average renter.4 Saving for a down payment, especially if you plan to put down more than 20 percent, helps you adopt good financial habits. The more you put down when you buy, the higher your share of equity when you close. Although for the first five to seven years, the majority of your payment will go toward interest, over time more money will be applied to the principal. There are many tools online that calculate your current and future equity in your home, including this one here.

 

Build equity sooner by choosing a shorter amortization term. While your payment may be higher, you’ll likely qualify for a lower interest rate and will pay less interest over the life of the loan.

 

Build Equity Faster in Your Home

 

Source: Federal Reserve Bank of Dallas, Building Wealth: A Beginner’s Guide to Securing Your Financial Future

 

Pay Down Your Mortgage…or Not

Many homeowners grapple with whether or not to pay down their mortgage. On one hand, if you pay it down, or pay it off early, you’ll save money on interest, which you can use to make other investments. On the other hand, if your goal is to be debt free, it’s better to pay off your higher-interest debt, such as credit card debt, first before paying down your mortgage debt. Additionally, if you’re saving for retirement, putting extra cash toward your retirement accounts will help you build a nice nest egg to enjoy later on.

 

If you decide to pay off your mortgage sooner, here are a few ways to do so:

 

1. Pay more money at the beginning of your amortization period and apply it to your principal.

    2. If you receive a tax refund or other windfall, apply it toward your principal.

3. Make one extra payment each year. You’ll save money on interest and pay your loan off sooner.

4. Add an extra $50, or another amount you can afford, to the principal of your payment each month. 

5. If you locked into a 30-year fixed loan, refinance to a shorter, 15-year fixed loan. Your payment may be higher, but you’ll pay it off sooner.

 

Your financial advisor can help you decide if paying off or paying down your mortgage is right for your goals.

 

Purchase Investment Property

Investment properties provide passive income to your growing financial portfolio. More than 25 percent of Americans say real estate is the best way to invest money you may not need for the next 10 years.5 While many people flip houses to make money—that is, they buy a home at a low price, fix it up and sell it quickly—others purchase multifamily properties to create monthly cash flow to save or to reinvest in other properties. 

 

The longer you own a property, the better investment it becomes as you’ll continue to build equity. While rental costs rise with inflation, your mortgage will remain the same. The best part? Once you pay off the mortgage, your cash flow will increase. Remember to create a budget for maintenance each month, between 10 to 20 percent of the rent you receive, or more if the home is older. This will help you save more money in the long run and allow you to prepare for unexpected repairs.

 

There are tax benefits to owning investment property as well. You may be able to claim deductions for depreciation, as long as it fits within the guidelines; repairs, travel expenses, interest and more. If you’re thinking of purchasing investment property, talk to your tax professional to get the details.

 

Achieve More Wealth by Creating Financial Goals

Setting a goal will help you achieve your desired level of wealth. Once you achieve one goal, reassess and set the bar higher.

 

1. What is your idea of wealth? Your idea of wealth will change as you earn more money. That’s why it’s vital to set goals along the way. What do you want your net worth to be in 5 years, in 10 years and in 20 years?

 

2. Write down your short-term and long-term goals. Once you have determined your goals, write them down. This is the first step towards getting your desires out of your mind and into motion and it will be easier to refer to them later on.

 

3. Develop a budget to help you reach these goals. A budget not only helps you understand where your money goes each month, it may also prevent you from overspending. That way you can have more money to save and invest. 

    

Your Budget    

 

 

To increase the amount you can invest, make adjustments to your daily spending and monthly bills, if possible. Look for opportunities to save money and transfer that savings into your accounts.

 

 

It’s never too late to begin building your family’s wealth. Whether you’re interested in buying a first home, upgrading to a larger home or are thinking of renovating, we have you covered. Give us a call and we’ll answer all of your real estate questions and offer suggestions to help you increase the value of your home.

 

Sources: 1. BankRate.com

    2. Pulsenomics, Home Price Expectation Survey Q4 2016

    3. Statistic Brain, August 1, 2016

    4. National Association of REALTORS, Economists’ Outlook, September 8, 2014 

    5. The Motley Fool, July 30, 2016

5 Reasons to Sell Before the Snow Melts

"For the 57th-consecutive month, national home price appreciation has made gains on a year-over-year basis. According to CoreLogic’s U.S. Home Price Insights Report, national home price appreciation grew by 1.1% compared to September and was 6.7% greater than the same time last year when including distressed sales.

The State of Washington led the nation in the largest year-over-year home price appreciation in October, reaching 10.5% when including distressed sales. Idaho had the third largest home price appreciation in the nation with an 8.5% increase over the same time last year."

Studies show that homes listed in the winter offseason not only sell faster than those in the spring, but sellers also net more above asking price at this time. Don’t wait until spring! If you’ve been thinking of selling your property, here are five reasons to call now:

1.  Take advantage of low inventory. Since most sellers are waiting until spring to list, local inventory falls during the offseason. However, there are definitely many motivated buyers who are ready to buy now and don’t want to wait that long. According to the National Association of Realtors, 55 percent of all buyers purchased their home at the time they did because “it was just the right time.” Buyers who visit will be serious about writing an offer. As a result, your home will likely sell faster than it would have during the peak season.

 2.  Set a higher listing price. Homes sold during the offseason sell at a higher price, on average, than those sold during the spring and summer peak. There are many reasons for this. First, motivated buyers are willing to pay closer to the asking price for a home. Second, homes are more likely to be priced right and reflect the economics of not only the local market, but the neighborhood as well.

3.  Easier to maintain curb appeal.

The offseason eliminates the pressure to maintain a picture-perfect front landscape. Since most grass, shrubs and plants go dormant at this time of year, you’ll have less to maintain. Your landscape may be covered with snow. 

4.  Tap into the life changes of buyers. Many buyers receive employee raises and bonuses at the end of the year. If they’ve been saving to buy a home, this extra money may allow them to reach their goal for a down payment. Additionally, companies often hire new employees and relocate current ones during the first quarter of the year, creating a strong demand for housing.

5.  Rising interest rates motivates. What more needs to be said?

We can’t find enough appropriate homes for our existing clients. Properly prepared, priced, and marketed properties are selling quickly! So many people are moving here!

If you’re thinking of selling, give us a call!

We’d love to help you make a marvelous move.

Marie Kamprath, HearthStone Group

Kelly Right Real Estate

208.691.2007

hearthstonenw@gmail.com

Sources: 1. Time, October 30, 2015

    2. National Association of REALTORS, 2016 Profile of Home Buyers and Sellers