Welcome or Register
Hearthstone Group
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
KELLY RIGHT
REAL ESTATE

 

Market News

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

 

Real Estate 2017: What to Expect

Real Estate 2017: What to Expect

 

The American housing market is stronger than ever! Home values, prices and sales had their strongest numbers in 2016, a sure sign the market is healthy and strong. According to the Home Price Index from the Federal Housing Finance Agency (FHFA), property values have increased in 58 of the last 62 months and have increased more than 35 percent nationally. Washington and Idaho are in the top three year-over-year home appreciation states. Homeowners continue to build equity in their largest investment—their homes. The good news is the American real estate market is strong and healthy: home values are up, prices and sales are strong, and millennial first-time buyers are eager to become homeowners.

 

First-time buyers are back.

Housing forecasts from the National Association of REALTORS (NAR), the Mortgage Bankers’ Association, Freddie Mac and Fannie Mae all predict existing-home sales will surpass 6 million in 2017, higher than anticipated sales for 2016. Who’s driving the surge? According to NAR, millennials who have put off buying a home are ready to buy. While they may have avoided buying a home due to student debt and limited employment, many are entering their 30s, a time when their attention turns to marriage, family and setting roots with homeownership. They’re predicted to be the driving force behind home and condominium sales from now until into 2020. (Source: MarketWatch)

    

What does this mean to you? If you’re a millennial who’s been on the fence about buying, now is the time to act. Give us a call to answer your questions about the market and the buying process.

 

Renters are embracing homeownership

Additionally, many renters who’ve resisted buying are starting home searches due to the economic weight of rising rents. This year’s home buyers seek to take advantage of comparatively low interest rates and, in most cases, static payments each month—an advantage of home ownership. Rental costs will only continue to rise; if you’re thinking of buying, now is an ideal time to do so. 

    

What does this mean to you? Every month you pay rent, you lose the opportunity to build equity in a home of your own. Break free from the limits of renting and invest in your financial future. Contact us and we’ll discuss your options.

 

Home prices are on the rise. 

According to NAR, the median existing-home price not only increased 6.0 percent year-over-year in October, it’s also the 56th consecutive month of year-over-year increases. Prices are approaching the pre-recession peak.

    

What does this mean to you? Home prices, and subsequently home values, are increasing. If you’ve been waiting to list your home until you know you can sell it for what you think it’s worth, now is a great time to do so. We’ll be happy to give you a comparative market assessment of your home and help you get your home in stellar market shape.

 

If you’re in the market to buy, be prepared to act.

Homes were on the market for the shortest amount of time recorded since 2009: 52 days. The increase of qualified buyers in the market along with the increasing efficiency of the real estate process means homes are selling faster than ever, and in many cases buyers are engaging in bidding wars and paying over the list price to get the home of their dreams.

    

What does this mean to you? The home you have your eye on one day may be gone the next. In competitive markets, be prepared to come to the table with a competitive bid.

 

Looking for a new home? 

New-home construction will increase to an average of 1.5 million per year to 2024, according to a report from NAR. However, experts anticipate housing starts will only increase to 1.22 million in 2017, which is less than the 1.5 million new homes required to keep up with growing demand. This inventory shortage of new entry-level homes—typically purchased by first-time buyers—may drive up prices in some areas. Home builders have been focusing on multi-family construction for the last few years, but this type of construction has begun to level off providing hope that builders will once again focus on single-family home construction. However, stricter proposed immigration policies may impact new home construction and tighten inventory.

    

What does this mean to you? First-time and repeat home buyers agree—there are plenty of advantages of buying a new home. Whether you want a home customized to your family’s needs or you don’t want to bother with age-related maintenance, a new home has much to offer. Give us a call to discuss your options.

    

Whether you’d like to buy or sell a home this year, want to know how much your property is worth, or have general questions about our local market, give us a call! We’d love to discuss your particular market.

The Home Equity Playbook

What is Home Equity?

Home equity seems to be a very simple calculation — the total amount of mortgages owed subtracted from the current market value of a home. Here is a simple example:

 

Current Home Market Value      $325,000 

Existing Mortgage             $225,000 

Homeowner Equity            $100,000

 

One side of the equation is well defined, and it is found on the monthly mortgage statement, the loan balance. The other side is less obvious — the current market value of the property. 

 

As a homeowner, your down payment purchases your initial equity, and your monthly (or additional) principal payments increase your equity. In strong real estate markets and in-demand locations, equity can increase quite rapidly as the property value increases, but the inverse can also happen — too much available inventory and market down-cycles can lead to falling home values and a reduction in homeowner equity. 

 

It can be difficult to put an accurate value on something that you have emotional and monetary vesting in. It is safe to say that most people think their home is worth more than then it is. 

 

Homeowners can make savvy assessments about their home’s current market value by following the sales of similar properties in the neighborhood, but should stay away from websites such as Zillow and Trulia, which provide inaccurate and outdated estimates. The most accurate measurement requires a comparative market analysis from a real estate professional or having the home professionally appraised. The bottom line is simply:

Your home is worth as much as someone is willing to pay for it. 

 

Creating Value is in Your Hands

Maintaining the condition of a home is vitally important to retaining and increasing value. Homes are judged against their peers: how they compare to similar homes in the neighborhood. Another way to retain value is to not over upgrade, since it is rare to ever recoup the money spent if you exceed neighborhood value. Keep up the landscaping and do the little things to add curb appeal.

 

Putting Home Equity to Work

Home equity represents the largest single asset of millions of people, and because it represents so much of an individual’s net worth, it must be treated with respect. Home equity is not a liquid asset until a property is sold, or it is borrowed against. 

 

There are two types of loans that tap into homeowner equity as collateral. 

 

Home Equity Loans 

 

Many home equity plans set a fixed period during which the person can borrow money, such as 10 years. At the end of this “draw period,” the person may be allowed to renew the credit line. If the plan does not allow renewals, the homeowner will not be able to borrow additional money once the period has ended. Some plans may call for payment in full of any outstanding balance at the end of the period. Others may allow repayment over a fixed period, for example, of 10 years. 

 

A home equity loan, sometimes called a second mortgage, usually has a fixed rate and a set time to pay it back, generally with equal monthly payments.

 

Home Equity Line of Credit

    

A home equity line of credit is similar to a credit card. The lender sets a maximum amount you can borrow, and you can draw money as you need it, though many home equity lines of credit require an initial draw. The interest rate varies daily, and is usually prime plus a set number, but the required payment is usually interest only. Once the loan has been paid down, the payment is reduced, and it can be paid off and initiated as many times as a homeowner requires.

 

How Much Equity can be Accessed?

Since the financial institution is lending money and using a home as collateral, they will not lend 100% of the home’s equity. The bank does not want to take the risk that if the house price drops, they would be carrying a loan for more than its market value. Therefore, most banks will allow a qualified homeowner to borrow approximately 80% of their equity. 

 

It’s Important to Use Your Home Equity Wisely

Because it is likely the biggest asset most people have, losing your home equity is hard to overcome. It must be used in prudent ways, and the payments against the loan must be affordable. Using equity money to make the loan payment is only acceptable for a short-term solution. 

 

There are number of good reasons to use money from a home equity loan… and some really bad ones. First, let’s cover smart uses.

 

1. Invest in Your Home

The best way to use the money is create more equity in the home. Among the very best returns on your investment (ROI) include kitchen and bathroom remodels, adding square footage or an extra bath, enhancing curb appeal and repairing/keeping the existing structure sound. Making prudent investments in your home is a wonderful win-win: you enjoy the upgrades and the repairs can add value to the home.

 

2. Invest in your Children’s Education

Using your home equity to finance a child’s higher education may be the greatest payoff of all. Not only is the rate much lower than a student loan, it is an investment in the child’s future.

 

3. Supplement Retirement Needs

Older homeowners spent their working lives paying down their mortgage. At retirement, when monthly income is reduced, a home equity loan could pay for a dream vacation or an unexpected major expense.

 

4. Augment the Impending Sale of a Home

If you’re planning to sell soon, a home equity line of credit may be the best way to finance improvements, and you can pay it off entirely when you sell. Investing wisely on upgrades and repairs may even reap a profit on your investment.

 

Here are some examples of some not very wise choices.

 

Adding luxury amenities like a swimming pool, a hot spa, lavish landscaping, expensive appliances and exotic countertops and flooring rarely pay off. 

 

Purchasing a car or boat or most any personal luxury items is a poor use of the funds, since these items quickly depreciate in value.

 

Also stay away from using money on risk-heavy investments. Financing stock purchases, start-up businesses and paying routine bills is not financially smart. If you cannot afford to purchase those items with available funds, using equity from your home means they should not be in your budget. 

 

You should treat a home equity loan as an investment and not as extra cash when making financial decisions. If your intended use of the money doesn't pay you back in some way, it's not the best use of your valuable equity.

 

We Are Happy to Assist You

If you would like an assessment of the market value of your home and the current equity you can access, give us a call for a comparative market analysis.

 

Marie Kamprath, Associate Broker

Hearthstone Group, Kelly Right Real Estate

208.691.2007

hearthstonenw@gmail.com

 

www.IdahoDreams.com

www.SpokaneDreams.com

 

 

 

 

 

 

 

Should You Buy a New or Existing Home? 

Maybe your dream home has the intricate details that you usually find only in older construction - wainscoting and crown molding in the interior, the front porch with a swing, an older tree shading the back yard, and the white picket fence. 

Or maybe your dream home has all the conveniences of modern living - open floor plan in the living and dining spaces, large windows, connected, “smart” appliances and security systems, and minimalist design elements. 

 

Whether you go for a brand new construction or an existing home, both types of properties have their pros and cons when it comes to purchasing. What type of home is right for you will depend on which factors are most important for your lifestyle. 

 

Build your dream home with new construction

 

If you’re making a home purchase that’s still in the pre-construction phase, you may be able to customize many of the details. Many home builders will give you the option to add design elements that will give you the exact dream home you desire. If it’s a new subdivision, you may even be able to pick which lot you like best. 

 

Very early in the building process, you may have more room to customize. For example, if the walls aren’t complete, you may be able to add extra outlets in each of the rooms or custom wiring for surround sound in the media room. Perhaps you could move the laundry room to the top floor instead of the basement. You might be able to get a separate mudroom entrance. 

 

Later in the building process, you may be able to add marble countertops, an island, and custom cabinets in the kitchen. Your master bathroom could be upgraded with a steam shower, spa tub, and European fixtures. You will want to check with the builder to understand which features are included, and which ones are extra. 

 

New homes save money with fewer repairs and more efficiency

 

Once your home is complete, all you’ll need to do is move in. New appliances will be under warranty for a few years if they need repairs, and will likely work well for several years without needing fixes. Often, new construction is under a builder’s warranty, so any repairs needed in the first year should be covered. 

 

New homes often contain energy efficient and green appliances, like high-efficiency stoves, refrigerators, washing machines, heaters, or air conditioning units. These energy-saving appliances, along with good insulation and energy-efficient windows, will help you save money on monthly utility bills. 

 

New homes also often use new building materials that require less maintenance — for example, using composite siding instead of wood, which doesn’t need annual repainting. You won’t need to spend as much to maintain your new home. 

 

If you customized it during pre-construction, you won’t need to spend any money on renovations or upgrades for several more years. You can just enjoy it and not worry about saving for major home repairs. 

 

What you need to do to make a good new home purchase

 

Before you put in your offer, do some research on the builder. Do they have a good reputation? What else have they built? Did their other new properties have issues such as poor construction or unfinished details?

 

You like the model home, but will you like where it’s situated? After you look at the home itself, come back to the neighborhood to see what it’s like at different times of the day. Walk around during the day and in the evening, and see how you like the area. 

 

Brand new communities usually attract similar types of buyers—urban professionals, couples, or young families, for example. These will be your neighbors, so you’ll want to make sure that you want to be part of this new, homogeneous community. 

 

You may also need to be flexible with your move-in date. Builders will only be able to let you move in if they can meet their construction schedule. If the wiring is delayed, the walls can’t be finished. And because there are so many construction tasks that are dependent on the completion of prior tasks, schedules tend to slip. 

 

Get more variety and established neighborhoods with an existing home

 

Existing homes are those that have generally been built and lived in between the 1920’s and 1970’s. With existing homes, you will get more variety in home styles, as different types of construction have gone in and out of style throughout the decades. Within one neighborhood, you may be able to find a mix of different styles like Victorian, modern Tudor cottages, tract style, ranch or split-ranch, or contemporary homes.

 

Existing homes are situated in established neighborhoods, which may have more amenities nearby that a new home in a brand new subdivision may not have. Your new neighborhood may have restaurants, cafes, and boutiques within walking distance. 

 

You might also have access to more supermarkets, dry cleaners, discount stores, and gas stations nearby. An established neighborhood might have a nice park, running path, or playground for the kids to enjoy. You might also be closer to a library or the post office. 

 

Resale homes can be a less expensive purchase 

 

If you’re considering a resale home, you may be able to get into a beautiful, unique property at a lower purchase price than a new home. 

 

There are many more resale homes available than there are new homes — according to the National Association of Homebuilders, about 10 times as many. With such a large pool to buy from, the market for resales can be more competitive. You may have more room to negotiate the  selling price of the home. With a brand-new construction, you won’t likely be able to have the same kind of negotiating power. 

 

Before putting a home on the market, sellers often make home renovations or remodel parts of their homes to make them more attractive to buyers and to be able to potentially increase the list price. If the resale home has a brand new, modern kitchen, an updated bathroom, or even a new roof or upgraded windows, you could end up getting a home that’s comparable to new construction without having to pay the potential more expensive new-home list price. 

 

Existing homes have already been inspected at least once on the last sale, so you will know about any potential structural problems or repairs that have been made on the home. Knowing the track record on your potential home will help you avoid purchase mistakes—you’re much less likely to end up with a property that has a rotting roof, dangerous electrical wiring, or a crumbling foundation. With a new home, you could end up with incomplete construction or major issues that you didn’t know about because they weren’t yet documented. 

 

What you need to do to make a good resale purchase

 

Before you go too far down the road to a purchase, it is always recommended that you protect your purchase by first having the home inspected. A good home inspector will document all flaws, no matter how small they appear. If the inspector finds any major problems, like foundation cracks or leaky roofs, you may be able to counter offer and get the seller to either fix it or reduce the selling price. 

 

Even if the inspection doesn’t uncover any major issues, you will need to expect the unexpected. Older homes will eventually need replacement appliances, a new air conditioning unit, or a plumbing repair. As long as you know that before you buy a resale home, you can plan for surprise repairs. 

 

With an older home, you may want to eventually remodel parts of it. Will you be happy living in your house while you’re doing major work on the living room or the kitchen? If you know that it would disrupt your lifestyle too much, you may want to consider whether you really want to buy an older property. 

 

Whether you choose to buy a new home or an existing home, the best way to get started is to speak with your trusted real estate professional. 

 

208.691.2007

Marie Kamprath

Kelly Right Real Estate

Idaho & Washington

 

Guide to Real Estate Investing

A Beginner’s Guide to Real Estate Investing

 

Despite the grim economic outlook for some industries, one sector is gaining viability -- real estate. According to the 2016 Emerging Trends in Real Estate, which was released by the Urban Land Institute earlier this year, trends such as “18-hour cities” and millennial parents increasing moving from urban areas out into the suburbs signal that real estate as an industry is gaining strength every passing day in 2016. One lending officer at a large financial institution even went to far as to say that “the next 24 months look doggone good for real estate.” 

 

These trends means that real estate is a smart place to make an investment and grow your wealth. A housing shortage means that flipped homes tend to sell quickly and for high prices, and an increased demand across all age groups for rental properties means that finding tenants for your buy-and-hold properties should be a breeze. 

 

Of course, these trends also mean that the real estate market is highly competitive right now. If you want to make a foray into real estate investing, you’ll need to educate yourself and be strategic in who you work with and where you look for investment opportunities. Read on for our beginner’s guide to real estate investing.

 

Assemble your real estate team before you buy

 

Building relationships with your team will empower you to make serious offers that will more likely get accepted by sellers. Among your team members, you will want to include:

 

  • A mortgage broker or banker, who can help you get the financing for your deal
  • A real estate attorney to protect you by reviewing and revising contracts
  • An appraiser who can help you get a correct appraisal for your potential property 
  • An accountant who is well versed in real estate investments
  • A good contractor, for repairs whether you’re rehabbing or buying rental property

 

How to find rehab or wholesale deals

 

You can buy properties to fix up and resell (flip) or you can buy and hold properties that you rent out for monthly cash flow. 

 

The advantage of flipping properties is that you can end up with a good return on investment (ROI) in the short term. For example, you buy a property for $100,000, and invest $50,000 into repairs. Once it’s rehabbed, your property is valued at $200,000, and you sell it for a $50,000 profit. 

 

This is an extremely simplified version of ROI. There are many other factors that you need to determine to see if the numbers work in your favor — that is, you’re not overpaying initially when you buy the properties or for the renovations or holding costs.

 

Flipping properties means that you will need to spend more time looking for fixer uppers that may be under market value. These may be more difficult to find in a hot market with rising property prices. Beyond the actual purchase price, you will also need to factor in fixed purchase costs for inspections, closing, and lender fees. 

 

You’ll also need to factor in holding costs. Your budget should include funds for making repairs, whether you are doing them yourself or hiring contractors. While you’re upgrading the property, you’ll need to carry mortgage payments, property taxes, utilities, and insurance. 

 

Because of rising property values, fix-and-flip deals in good neighborhoods can be hard to find. But once you know where to find rehab opportunities, you can easily repeat the process by reinvesting proceeds from a previous flip into the next property, which can be bigger, in a more desirable neighborhood, or finished out more luxuriously, and therefore sold for more cash!

 

Working with the right real estate professionals will help you learn which neighborhoods to consider and determine where you should focus your search. We can help you find the right fixer-uppers that may be under market value. Also, a Realtor will have access to many properties that may not be publicly available. 

 

Finding buy-and-hold rental properties

 

A buy-and-hold rental property is one that your purchase with the intent of renting it out to tenants. If you find the right long-term buy-and-hold rental property, you can earn consistent cash flow each month, which can be a great source of supplemental income. 

 

You’ll need to carefully review the operating expenses on the property and what tenants are willing to pay for the space to know if you’ll make or lose money each month. For example, say your total costs to buy a duplex was $20,000, including down payment and closing costs. You can rent each of the units for $600. Assuming your building is 100% occupied, you’ll make $1200 per month in income. Your expenses include mortgage payments, taxes, insurance, utilities, and management fees, and you want to set aside some cash each month for capital expenditures and routine repairs. You calculate that your expenses add up to $1100 per month. Once you subtract your expenses from your income, you’ll have a positive cash flow of $100 per month. 

 

Of course, this is a very simplified example, and it doesn’t take into account that problems will inevitably arise. Emergency roof repairs, heating system breakdowns, broken windows that need replacing, and other unexpected expenses can eat away at your profits. One of your units may be vacant for a month or more -- for example, vacancies are high in the summer months in buildings around universities -- or you could have a tenant who fails to pay their monthly rent.

 

The more you can anticipate problems before they happen, however, the easier it will be for you to recover from setbacks! Moreover, rent isn’t the only way to make money on a buy-and-hold property. You can also add amenities, such as coin laundry and vending machines, to increase your potential monthly income. If your property has space to add a billboard, you can earn advertising revenue from renting that space, too. And when you decide to sell, your property’s value will likely have increased both from the overall rising property values and by the improvements you made to increase the cash flow.  

 

Once you find and invest in your rental property, you’ll need to decide how you want it managed from month to month.

 

Getting the right property manager 

 

Do you want to manage your own property or hire a manager? Property management can become a full-time job. As a property manager, you’ll have to deal not only with maintenance, repairs and tenant issues, but also with insurance, fair rental regulations, and building code compliance. So if you’re not an expert in these areas, managing your own properties may not be worth your time and effort. 

 

Hiring a professional manager can save you headaches over the long term. While you’ll have to factor in management as a fixed expense, your property manager will likely know how to better take care of routine repairs, tenant issues, and keeping your property near 100% occupancy.

 

Your real estate professional can refer you to reputable property management companies to help you take care of your investment.

 

Where should I start investing in local real estate?

 

Work with a knowledgeable real estate professional who knows about the different neighborhoods. We can help you find properties that will fit into your budget and your overall goals. Whether you’re seeking a duplex or multifamily property so you can maximize your rental income or whether you want a condo or single-family home to improve for resale, we can guide you to the best property to suit your needs.  

 

Contact me to learn more about investment properties in our area.