What Determines the Value of Your Home?

Watch on your mobile device >>

Basically, a home's worth is determined by its market value. How is "market value" determined? Most often, it's figured by a comparison ("comp") with homes similar to yours in the surrounding area. So, if the homes in your neighborhood average, say, $250,000, then it's likely that the value of your property will fall in the same range. But market value is also determined by a number of factors including the following: 

External Factors 

There can be several external factors influencing the value of your home. One is "curb appeal", or the first impression your property makes upon prospective buyers. A home that's in excellent condition on the outside will make a great first impression; a home in poor repair instantly loses its appeal to buyers. Other factors can include lot size, popularity of an architectural style of property, water/sewage systems, paved roads, sidewalks, etc. 

Internal Factors  

The condition of a home's interior also has a huge influence on prospective buyers. When you've demonstrated "pride of ownership" and kept up the maintenance (quality paint, trim, molding, etc.), a buyer's interest will immediately perk up for the simple reason that they know your care and concern will result in less cost and maintenance for them. Other internal factors include construction quality, condition of appliances, size and number of rooms, heating/cooling type, energy efficiency, etc. 

Supply and Demand 

"Supply and demand" simply refers to the number of homes for sale versus the number of buyers. When there are more homes than there are buyers, prices tend to be lower. When there are a lot of buyers chasing few homes, then prices tend to rise. In effect, supply and demand affects how quickly your home will sell. Location More than likely, you already know the old saying, "There are three main factors in real estate - location, location, location." While that's not the whole story, desirability is a big factor for home buyers. They may want to live in particular school district known for its education excellence…a great and safe neighborhood with rising property values…etc. 

But I Know My Home Is More Valuable Than a Lot of Comparable Homes in My Neighborhood  

Aren't Allowances Made for This? Definitely! Sometimes, it can be difficult to find homes exactly comparable to your own. So, dollar adjustments are made for the differences between your home and comparable properties. 

Where Do I Find Sales Comparison Information? 

The easiest source to access is your Realtor. After all, it's his or her business to know such information! But, there are also other sources you can tap into in order to get a complete picture of your home's value in comparison to others in your neighborhood. Here's an overview of them:

1. ) The Local Assessor's Office  

It's very likely that your local assessor will be able to provide the sales history of a particular house, neighborhood, or style of architecture. Many assessors also provide lists of recent sales which you can browse and compare to the assessment roll. Today, many municipalities provide local sales and assessment information online making it very easy to access. Check with your local government agency to find out if they provide this service. 

2.) Online Private Companies  

You can search for these companies using the Google search engine and the keywords "comparable home sales" or "comparable sales." Some companies offer free information; others charge a nominal fee. If you wish to get more specific, you can Google "real estate database" and type in the name of your particular state to get additional property information. 

3.) Your Local Newspaper  

It's likely that your local newspaper is a great source of specific real estate information. Look for quarterly sales reports in the real estate or business sections.

The Key to Getting the Price You Want (or Close To It) for Your Home 

The key to getting the best value is finding and matching the right buyer to your home. And that's the job of the Realtor! He or she should work hard to qualify those buyers upfront so the right people are viewing your property! In other words, the Realtor should weed out "lookers" and other unsuitable buyers as a first step in working with you. See how I do that for you by calling me today!

Selecting the Best Contractor for a Home Improvement Project to Increase the Value of Your Home!

Watch on your mobile device >>

Whenever selecting a contractor for a home improvement project, ask first for word-of-mouth recommendations by family, friends, neighbors, or business associates.

This is the acid test. Great contractors know that personal recommendations are the absolute best method of gaining new business and will work hard to make sure their reputation is sterling.

By the same token, poor contractors or scam artists hate word-of-mouth because it exposes their incompetence and lack of ethics.

If personal recommendations aren’t available, ask the contractors for references and then check out three or four of them.

Again, great contractors will be eager to provide you with these contacts because it means more business. On the other hand, poor contractors or scam artists will either refuse to give references to you or play down their importance.

But, don’t stop at checking references! Also, check out the contractor’s personality. Can you work easily with him or her? You want a person who will listen to your suggestions and do their best to incorporate them into the job. If the contractor is abrasive or dismisses your suggestions, choose another one!

Here’s another suggestion: If a contractor tries to bully you into signing with him or her with a big price drop at the last minute, simply tell them, “I’m going to get other bids and compare them, so just give me your best price now without the price drop.” If they don’t agree to your suggestion, tell them to take a hike.By the same token, don’t work with a window, siding, etc. contractor who tries to get you to change what you want to put into your home.

Often, this means that they’re only comfortable installing the product they normally deal with and want the easiest job possible. Again, it’s your money and you’re the boss, so insist on the product you want.

Finally, don’t let contractors make misleading product comparisons. They should be able give you an informed opinion on, say, the difference between the performance of old siding and new siding and the difference in costs between the two.

However, those comparisons should never lead to a product that more expensive than your budget will allows or isn’t really appropriate for your home.

The bottom line – with contractors, you should get straight-forward honest bids with no surprises! To learn more about how to deal with contractors, contact me today, and we can talk dollars and “sense!” 

Tax Tips for People Looking to Invest In Real Estate

Watch on your mobile device >>

It comes as no surprise to most of us real estate agents that so many people today are delving into the realm of property investment.  Today’s great value in terms of low prices, coupled with the unprecedented affordability factor that today’s interest rates provides – makes it almost a foregone conclusion that investment activity will be on the rise.

Despite a challenging economy with less than to be desired jobs rates in most states, more and more buyers are getting into property buying as a long term investment.  In fact, even world-renowned investor Warren Buffett has recently stated that real estate is among the strongest asset class right now.

Here are a few things to think about when considering property invesments:

Local Tax Auditor – Great Resource for Tax Values

If you are looking for preemptive tax values one of the best resources is your local tax auditor. Contact their office and share with them your intended use for the property in question and you will likely find out what kind of tax payments or implications you will be looking at.  They will also be able to confirm whether or not you will be considered owner/occupant status or otherwise and provide you with useful information about what taxes you can expect.

Homestead Tax Exemption for Seniors and Disabled Citizens

Until 2007, there were income level requirements that hindered the eligibility for the Homestead Tax Exemption for many homeowners.  But after the program was expanded the benefit became available for anyone 65 years of age and older or permanently and completely disabled individuals.  One other key change that was made was to include a flat $25,000 property tax exemption amount on the value of homes meeting eligibility requirements.  For more information on this program, visit the Ohio Department of Taxation’s Homestead Exemption frequently asked questions page. During your search for your investment property if you are looking for something that would qualify for this exemption, contact your auditor’s office to find out the amount of projected taxes for that property.

Investment Property Vs. Owner/Occupant Homes Taxed Differently

Most people new to investing in real estate do not realize that property taxes vary depending on the type of ownership involved.  If you are looking solely to invest in a property rather than use the home as your primary residence, then the tax implications will be different for each.  It is important to meet with your Realtor to discuss the potential differences in this regard to get as much information as possible about the expected property tax amount.

Land Used for Farming Is Taxed Lower Than Other Properties

The Current Agricultural Use Value Assessment in Ohio is a program designed to allow farmers the benefit of being taxed based on the agricultural value of the property as opposed to the full market value.  Typically this translates to a lower tax rate for those property owners.  During the transfer of property in these cases, if the new owner intends the land for development use then often the CAUV tax does not apply.  Additional tax implications for the new owner will ensue, so it would be worthwhile to consult with the tax auditor to find out what you may be dealing with.
~
This is a great time to buy real estate.  Whether you are getting into your first home or moving up to seize the affordability factor and buying a better home for nearly the same monthly payment – this could not be a better time.  Equally, investors are popping up all over the place.  In as little as seven or eight years, the property you invest in today will likely bring a good return – reason for many Americans to buy property nowadays!  If you would like further assistance with your real estate endeavors or seek additional information about the tax considerations in this article, contact us today!

Single-Family Homes a “Very Attractive Asset Class Now” – Warren Buffett

Watch on your mobile device >>

The news spread like wildfire.  No, it’s not another politician’s sex scandal or the latest (definitely not greatest) gas prices.  It is the monumental statement made by Warren Buffett that he would buy up “a couple hundred thousand” single-family homes.  The catch is that he would do that if it were something he could practically manage. He may not be able to practically manage it but individuals certainly can.

Think about that.  For months, if not more than that, countless Realtors have been urging their clients and potential clients that now is the perfect time to buy.  Now that it comes from one of the biggest investors of our time, it brings new light to the subject for many investors and has generated widespread industry buzz from the moment the billionaire uttered those words.

In an interview where he discussed several topics, soon into the discussion with Becky Quick of CNBC’s Squawk Box, he said that in addition to equities, single-family homes are probably the most attractive investment there is out there right now.  With the low rates that seem to be heading further down still, he suggests buying at these low interest rates and then for homeowners to refinance if and when the rates dips even more. 

He cited that the only reason he has not purchased as many homes as he would have liked is because of the practicality of managing the transactions and properties.  Apartment units might have been more manageable and in his words, he said he would “load up on them” had that been the case. But for the everyday investor it makes perfect sense to seize this opportunity and Warren Buffett highlights this repeatedly in his most recent discussion on CNBC.

Mr. Buffett shared his perspective on the idea of buying homes at distressed prices, fixing them up and renting them out as an ideal way to get a solid return on investment.  Referring to the changing trends and attitudes within the housing market, he also said this is the perfect way to “short the dollar” because with a 30-year fixed rate mortgage it can go two ways; either the interest rate is too high down the line after which you can go and refinance or if it’s too low the other guy’s stuck with it for 30 years.  Could this be the return of the house-flipping craze that we saw boom in the mid 2000s?

Mr. Buffett’s statement brings new light to something that so many agents and mortgage consultants have been saying all along.  Buy now.  At a time when stocks are just now rebounding after four years of inching their way back up, he says that consumers should acquire 30-year fixed rate mortgages and then refinance when rates go down further. 

If homeowners can hold on to their property for a long time after purchasing it at the lowest rates the industry has to offer they are sitting on the best investment possible of our time.  Of course equities are still very strong but they have come up quite a bit and Warren Buffett says owning a home is a “leveraged way of owning a very cheap asset”, making it quite possibly the most attractive investment that you can make.

It’s Movie Time! Come Watch the New Dr. Seuss Classic On Us!

Watch on your mobile device >>

We’d love to spend some time with you and treat you to a fun morning watching the new Dr. Seuss movie.  Ever since The Lorax was made into a film and released into theatres, kids (and adults) have been raving about it! So for our client movie this time around we’re inviting you, your children and your neighbors’ children to come on down to Newport on the Levee Saturday March 17th at 10am.  Come join us to watch The Lorax – see you there!

January 2012 Cincinnati Market Update

Watch on your mobile device >>

Real estate trends of the past are the most telling prediction of what is to come in the future – leaving aside catastrophic events such as the 2007 mortgage subprime crisis or the robo-signing scandal that broke out in 2011.  But for the most part as long as things are quiet we can tell where the market seems to be heading.

Sales and Inventory – Up From Previous Year

Year over year sales numbers were reported almost as much as twenty five percent up from the previous year.  This is great news for us! Similarly, based on MLS statistics our inventory is also up about 25% from the same period of time as last year.

Housing Prices Still Declining

Though our sales were up and inventory was also up, housing prices dipped about 10% year over year.  Even though buyers are enjoying this aspect of the property market, declining home prices continues to create a challenging situation for sellers.

Interest Rates Still At or Near All-Time Lows

Nationally, as well as locally, we have seen all-time low interest rates that have continued to provide welcome relief to many homeowners looking to have more affordable monthly payments through refinancing.  This has also been an ideal time for first-time homebuyers to be able to get into a new home that they may not have been able to do in any other economy.

Lenders Control a Fourth of the Market

Focusing on active inventory, we are reporting about 24% control by lenders.  More than one third (36%) of properties that are sold fall under the category or either short sales or REO properties.

Pending Sales Figures Up From Previous Year

Again, we are seeing an upward trend with pending sales numbers comparing this year’s sales with the previous year’s figures.  A nearly 8% increase in pending sales points to a long-awaited positive upward swing in the future.

~
Looking ahead it seems that 2012 will be a strong year for sales, we will continue to see existing inventory move and buyers will likely continue seizing opportunities available to them.  Government programs will remain in action and we will likely see fewer new foreclosures with more loan modification situations taking place.  Prices will continue to decline slightly but both prices and interest rates will not change during this year.

If you have any questions or would like to learn more about how our market is performing – please give us a call and we’d be happy to share the latest numbers with you!

Ten AWESOME Reasons Why You Should List Your Home During the Winter

Watch on your mobile device >>

Traditional school of thought dictates that selling a home during the holidays is a bad idea.  People are busy celebrating with their families and will hardly go shopping for a home, right?  Not so!  There are numerous advantages to listing a home during this season and below are ten great reasons to put a home on the market now. 

More serious buyers – Less time wasted

These are people who are interested in buying so there is a far greater chance of actually selling the property.  Nothing is more promising to a seller than a motivated and qualified buyer that knows what they want and is actively seeking to get it.

Fewer Homes On the Market

The less competition there is, the higher the chance there is for homes on the market to sell. Where during the peak season sellers might be dealing with some interest from buyers on their home, nonetheless there is more selection for buyers to choose from and they can stray to another property.

In January Inventory Increases – Chances of Selling Decreases

With so many homeowners assuming the holidays is a taboo time to sell there is a plethora of new listings in January, resulting in a diminished chance of your home selling.  Also, there is a risk that the price you may receive on the home can be less.

Decked Halls Look Great!

Homes are very appealing to prospective buyers when they are decorated for the holidays.  With all the festive décor, lights, greenery and added beauty of the season – the home shows very well and attracts buyers faster than if shown during other times of the year.

More Time To Browse Homes

Buyers have extra time off from work and are on vacation, which translates to a more aggressive buying pattern and more chances of your home being viewed.

Show The Home With Flexibility

Sellers that have their home listed prior to the holidays have the added advantage to be able to “pause” the process so they can celebrate the holidays, essentially not showing the home during a period of time during the break.  When the festivities die down, things can pick up again and the seller has not only managed to save potentially lost time but can also jump right back into the market.

Sell Now For More Money Then Delay Closing

Extended occupancy can be negotiated, leaving both parties the leniency to get through the holiday season and past the New Year so that all sides can rest assured the deal is done but it can follow through at a more convenient time.  For sellers this option is great because they are able to secure a higher selling price on the property before the market is inundated with new listings come January when the selling values drop.

Enjoy Non-Contingent Buyer Freedom

With the home sold, sellers can enjoy non-contingent buyer status during the rest of the slow season and take advantage of the market when there is a flood of new listings upon the New Year. 

Fewer Foreclosures On the Market

Many banks will suspend foreclosure listing during this time of year, especially on properties where there are still families occupying the home.  As a result of this, some of the competition that arises for sellers from low-priced foreclosures can be avoided during the holidays.
~
Keep in mind that the idea of your home’s value increasing significantly over the next several months is a myth.  The truth is that housing values likely only go up when consumer income rises.  Pay rates increase at a rate of three to five percent each year and that is about the maximum yearly increase we can expect to see in a home as well.  So if you are wondering whether or not to put your home on the selling market now, or to wait – one important factor is that waiting will not provide much benefit.