Every two weeks I'll update you with a video on how to make a smart decision in real estate, improve the value of your home, and keep you up to date on what's happening in our Cincinnati real estate market.
If you’re in the process of buying or selling a home, there’s a good chance you have implemented, seen or heard of an inspection contingency. This contingency is almost always offered at the time when a property goes under contract.
The Cincinnati Area Board of Realtors cites a specific time frame within which the buyer is allowed to show the property in question to professionals for the sake of inspecting it for defects. If during the inspection process anything is found to be unsatisfactory, defective or questionable, the buyer has a legal right to provide the seller written notice of this fact.
Furthermore, this added step in the home buying/selling process allows the buyer a chance to walk away from the transaction if they are not happy with something. This means they may change their mind if they are not satisfied with the property for any reason as a result of the inspections. The contingency in place allows them to be able to cancel the contract – regardless of the reason. In fact, the buyers do not even have to state a reason for changing their mind.
The Inspection Addendum is drafted on behalf of the buyer and presented to the seller, after which the seller may choose to do one of several things. They may opt to respond to any repairs the buyer may have requested to rectify specific problems. The sellers may choose to offer or accept the buyer’s request for financial concessions and therefore accommodate repairs needed as a result of the inspection. Or the seller may decide to review the terms and choose whether or not to accept them.
As you can see, the settlement period is virtually a second round of negotiations, centered on the findings of professionals hired to check the property in detail for defects or aspects that may be unacceptable to the buyer. Just as the buyer has the right to back out of the deal, so does the seller have the right not to agree to changes proposed by the buyer.
When going through a purchase or sale, it is important to keep in mind the inspection contingency, a very critical part of the contract.
For questions about this, or any other real estate related inquiries you may have – please do not hesitate to contact me today. I would be happy to assist you!
For some, the phrase “home maintenance” might sound like a great way to spend a weekend, while to others it might seem like a dreaded, even avoided, task. However you view routine home maintenance, the fact of the matter is that this somewhat simple task, if done consistently, can increase your home’s value over time. Increased Property Value Benjamin Franklin once said,“An ounce of prevention is worth of a pound of cure.”This is certainly true when it comes to your home. In fact, proactive maintenance is essential to preserving the value of your home. If you ignore this important task, your home could actually lose 10% of its value over time. There are a number of benefits you can expect from just making sure you home is kept in decent shape with occasional maintenance.For one, your curb appeal is improved by just simple acts of routine upkeep from time to time. Ultimately, your home reflects your attention to detail, or lack thereof. Neglecting a home can greatly bring down the value of any property. Things like a house with chipped or fading paint, sagging gutters, or worn carpeting leads to a problem when it is time to sell.Not only does the work accumulate over time, so do the costs.A few simple fixes every year can add up to an increased home value over time. Cost vs. Value It’s easy to look at the cost of regular home repairs as a burden that might be able to be avoided. However, it is important to look at the value that you are placing in your home by performing the regular costs of upholding a well-built and maintained home. A study out of the University of Connecticut and Syracuse University suggests that home maintenance can actually increase a home’s value by about 1% each year.Instead of viewing the routine tasks around a home as “chores,” these tasks should be looked at as a money maker. When you sell your home, you will reap their rewards.
Dr. John P. Harding, Professor of Finance and Real Estate at the University of Connecticut’s School of Business and an author of the study said,“It’s like going to the gym. You have to put in the effort to see the results. People and houses are somewhat similar – the older they are, the more work is needed.” Some years what needs to be down may be more expensive than others, but it is the overall strategy to keep a “fit” home that should be the ultimate goal. Proactive Maintenance Strategies Budgeting for home repairs each year will prevent them from seeming like a burden each year.Knowing there will be a certain amount of money going to home repairs and upkeep makes them a regular part of your annual routine.They won’t be a source of financial devastation they can be for many families. Other things to keep in mind to take the burden out of home maintenance include: Play offense, not defense.Being proactive is vital in preventing a small problem becoming a mountain of problems. By having a regular inspections and creating a maintenance schedule, you are in control, for the most part, of home expenses, instead of the other way around. Focus on a room a year.If you home is generally in good order, you may be at a loss of where to start. By targeting a room each year, you can inspect each and every item in that particular room and know where improvements can be made. This prevents an overwhelmed feeling with you looking at your entire house, scratching you head of where to start. Keep track. Maintain a notebook or computer file to keep track of all of the maintenance and upgrades you perform is important. Also, either keep a physical file of paper receipts or a file on your computer where can put your scanned receipts. This helps you keep track of what you have done and also helps you prove to a potential buyer exactly what you have done to the home. It also shows you are a conscientious homeowner who has paid attention to the details of your home. Home maintenance is an important task that should not be overlooked. Not only does it maintain a nice home while you live there, it also helps increase your home’s value when you are ready to sell.
Everyone knows that – all things being equal – the first areas buyers look at when considering the purchase of the home are thekitchen and the bathroom. They know they’re heavily-used areas and also the most expensive to upgrade. So, buyers want to know they’re in great shape or need, at most, minor repairs. This tells you that you need to make the kitchen and bathroom “shine” in terms of their appeal. By some estimates,you can earn back 80 to 90 percent of your money in resale value! Here’s more good news! Depending upon the state of these rooms, improvements don’t have to be all that expensive! Let’s look at the kitchen first. Making Your Kitchen Shine! The first bit of advice for you actually applies to both the kitchen and the bathroom – use paint! In fact, use high-quality paint. It’s a fact of life that kitchen walls get spattered with grease and food (especially if you have kids!), and bathroom walls get battered with steam and moisture. So, the first thing to do is to take a look at those walls, clean them, and then paint them. And consider the color carefully. It should be a color that’s relaxing and tends toward a neutral tone. Once you’ve chosen a color, spend the money on good paint, not the cheap stuff.It’ll look better, and buyers will notice that it’ll resist stains and water for a longer period of time than lower quality paint. It’ll also tell them that you’ve taken good care of your home. Another inexpensive “fix” you can do yourself is, of course, the faucets over the sink (or the sink itself). A visit to a “big box” store like Home Depot, Menards, etc. will cost you little money. All you have to do is invest some “sweat equity.” Of course, fresh curtains always spruce up a kitchen as well as orderly counters, islands, etc. And don’t forget lighting! Warm, friendly lighting can make a huge impact upon a buyer’s first impression. Another area to look at is the kitchen floor. If it’s worn, I’d recommend that you replace it with a hard-wearing material. Everyone knows the kitchen is a high-traffic area so they’ll look closely at the floor to see if they’ll have to bear the expense of replacing it. Again, if you have handyman abilities, you can do this yourself. There are many inexpensive materials available today that are relatively easy to put in – high-quality tile, laminate floors that clean up easily, etc. In terms of kitchen cabinets and counters, you may want to consider refinishing them or replacing them if they’re in bad shape. This can be rather expensive, of course, but it also might make the difference between a sale and the home staying on the market. Moving on up in terms of expenditures, buyers today expect modern appliances in the kitchen – stoves, dishwashers, etc. These are big ticket items, of course, but if your appliances are worn or out-of-date, think about replacing them, especially if you’re having trouble selling your home. Look for sales on modern higher-end appliances such as the ones available at Sears, etc. Buyers will spot cheap ones in a heartbeat, and this can cost you a sale. Today’s buyers look for spacious kitchens that open on to another room and which have a window over the sink. Obviously, if your kitchen doesn’t have these features, it would be far too expensive to put them in. However, you can make your kitchen look as open as possible. Make sure the counters are clear, visible pots and pans are ordered neatly, and the floor is free of clutter. Okay, now onto the bathroom! Making Your Bathroom Shine! If your bathroom is in good to great shape, then it’s a simple matter of paint, as I mentioned before, and a good all-round clean up. Since we’re dealing with sanitary issues, you want this area to sparkle as much as possible. But, what if the shower, tub, sink, or toilet are not in great shape or are out of date? Well, then, I’d recommend that you do a whole remodel. It can be expensive, but when you replace, say, just one item, it can create an unharmonious look. Ideally, you want the sinks, faucets, toilets, showerheads, tile, etc. to match to make the bathroom look as unified and appealing as possible. Depending upon your expertise, you can install these items yourself at a lower cost. If not, hire an expert to do the work, especially if your home has been on the market a long time and isn’t selling. Okay, here’s one last suggestion. It’s an expensive one but it’s been proven to add value to your home – add a second bathroom! One-bathroom houses are simply harder to sell and sell for less than ones with two or three bathrooms. So, if you have the financial wherewithal, consider adding one. A good place for a second bathroom is right off the master bedroom. This will appeal to buyers with children since they’ll have a space separate from the kids. Also, if for some reason, you decide not to sell, a second bathroom can make life easier for you if you have children as well! Want to hear some more suggestions for improving the value of your home? Contact me todayand we can talk about some inexpensive methods of doing just that!
The Internet can be a great resource for a host of things centered on buying or selling your home but in some cases, the most you can expect to gain is a basic understanding of things. For something as serious and important as pricing your home to either value it or sell it, relying on the Internet can only go so far. Here we’ve outlined some key differences between the figures you will yield from online sources versus those that have been compiled by your local Realtor.
ACCURACY IS VITAL In today’s market especially, accurately pricing your home to sell is essential. With it being a buyers’ market, you will have to gain a solid understanding of allfactors that contribute toward your property’s value. There can be negative repercussions of pricing a home either too low or too high. One such scenario is if there was a seasoned buyer who had taken the time to research in advance of searching for homes. That buyer’s knowing what to expect in the local market seeing your overpriced home could result in a turn-off and you could lose the sale. By the same token, you stand to get the shorter end of the stick in case of not knowing what you could have charged. Spending a little more time and/or expense can make a huge difference in the end outcome.
ONLINE TOOLS AND CALCULATORS There are more than several websites where anyone can log on, put in their zip code and be given an instant “analysis” of their real estate value. The figures that appear as results from searches made through online resources stem from a conglomeration of several weeks and sometimes months of data collected from a particular region.
Websites such as www.zillow.com,www.realtytrac.com or www.trulia.comoffer a great way to get a generic idea of the value that homes in your region are going for or have gone for recently. As an added resource to other services also offered on these sites, the goal is not to assist homeowners in assigning a selling price on their property based on the data, rather to offer a snapshot on sales and pricing data for the area. In fact, for many people it is the perfect tool to add an extra edge when determining the fair market value of your home, along with other factors.
PROFESSIONAL COMPARABLE MARKET ANALYSIS While online real estate tools are a great way to get a preliminary idea, they are only going to yield a figure that will show you where to start. To get an accurate assessment, you will need to avail the professional services of a Realtor. The only way to get an accurate “reading” of what the market rates are for homes in your vicinity and your neighborhood in particular, is to have a comparative market analysis conducted by a Realtor who understands your neighborhood. There is a good chance that they have dealt with properties in the area on a first-hand basis, regularly interact with the agencies and organizations that deal with very homes in your neighborhood and are familiar with the people in various facets that you will end up needing to interact with yourself, as the seller of your home.
Realtors conduct a detailed Comparable Market Analysis (sometimes also called Competitive Market Analysis) through a series of data compilation of area homes and properties, considering factors such as amount of land, the square footage and number of bedrooms or typical amenities in the neighborhood. But homeowners can also opt to delve into accurate detail about their property’s value by relying on an independent appraiser. Also, through the use of CMA data the County Tax Assessor determines the value of your property taxes. ~ When you are pricing your home to sell, it is vital that you use all available resources. At first, it makes sense to “shop around” and get to know the generalities before you head for the specifics. And as with most transactions dealing with your real estate world, it is always best to rely on your Realtor for quality, effective and accurate information that is relevant to you and YOUR market.
Using an FHA 203k loan can help you get the home you want - especially if you are looking at building some fast equity in a 'fixer upper'. Looking for a home that's almost perfect? Check out this loan to get funding for the house and any repairs that is bundled together, and a 203k loan may be easier to get than other home improvement loans. First, I'd like to share an example of how this works. We are closing on a home for a client shortly who is purchasing property for 120,000 dollars. After escrowing approximately 10,500 dollars for cosmetic and deck repairs, their "subject to" appraisal came back at 195,000 dollars! That's 64,000 dollars in equity the minute the Deed is recorded! What an awesome program! You can kill two birds with one loan.
203k Loan Bundling
Using a 203k loan allows you to combine loans for purchase (or refinance) and home improvement. This can reduce closing costs and paperwork; multiple loans mean more closing costs, and temporary loans may have higher interest rates than your 203k loan. You kill two birds with one loan.
Keep in mind that 203k loans require a little more paperwork than some other loans because you have to manage and document improvement projects.
Handle Deal Breakers
You may want to buy a home that's almost perfect. However, serious defects may scare lenders off. If sellers won't fix the problem, you can't buy the house unless you use something like a 203k loan. The lender knows you'll fix serious problems that you've agreed to fix, and they can move forward on the deal.
Temporary Housing
203k loans allow you to set money aside for housing while your repairs are completed. You can continue to pay an existing mortgage, or pay rent for up to six months. You won't have to live with an on-going construction project or come up with two housing payments each month.
Large Loans
Using a 203k loan provides access to large loans. Yes, there are limits, but you can borrow enough to finance 110% of the home's projected value after improvement. 203k loans, like other FHA loans, have low down payment requirements (for better or worse). Because they're guaranteed, the interest rate is competitive.
Improvements that Matter to You
The main benefit of 203k loans is the ability to make the improvements you want. Funding for an addition or updating the kitchen is taken care of up front. You can turn the home into something you want. If you're environmentally conscious, you can even choose green appliances and materials
There are many homes available that with a little TLC could be your dream home. A Cincinnati fixer-upper may also make a great investment, especially if you are able to do some of the labor yourself, or you are a savvy buyer. You are the person that has the vision to take that sad-looking little home on a great lot in a good location and turn it into the most desirable home on the list of Cincinnati homes for sale!
Ask your lender if they offer a 203k loan or contact Sarah Close Associates at Keller Williams and we will put you in touch with ours.
It is imperative, if you are looking to build or remodel a home, that you are aware of any deed restrictions.A deed restriction is a provision in a deed that limits what can be built on a property, or how a property can be used.So if you want to assure that your dream home will not turn into a nightmare, here are common deed restrictions that any property owner should be aware of.
Obstructing a Neighbor’s View
Many deeds have agreements in them that state that the neighboring properties views must be the same as when the agreement was reached, which may have been decades ago.Though extremely popular in resort towns where views of mountains or the beach are highly valued, these restrictions are also in place in many communities with more subtle views.
Type and Number of Vehicles
In order to keep neighborhood streets from appearing cluttered, some properties may have restrictions on the number of cars each house may keep in the driveway and parked on the street.If there are multiple members of your household that are driving age and have a vehicle, make sure you are aware of any restrictions that may prohibit some of these vehicles from being parked in the driveway or street.
Building Fences
The size and style of fence which may be built on a property are often specified in a deed.The most common of those outlawed by deeds around the country include chain-link fences or very tall privacy fences.
Removing Trees
This restriction is becoming much more commonplace in many neighborhoods which wish to maintain an environmentally conscious atmosphere or preserve tree-lined avenues.There may be a complete ban on tree removal or a certain percentage of trees on a property may be protected, so before you start up your chainsaw, brush up on your properties stipulations regarding the removal of trees.
Approving Plans
In an attempt to keep a neighborhood’s identity uniform, many HOAs (Home Owners’ Associations) will need to approve your building plans before construction begins.So, if you are hoping to build a modern home in a neighborhood full of Victorian-style homes, contact the HOA beforehand to get the go-ahead or you may face an injunction that forces you to alter your building plans to conform to the neighboring houses.
Adjacent Structures
One of the most heavily controlled deed restrictions consists of the building of any adjacent structures on a property, whether it be a shed or pool house.If the building of such a structure is not forbidden outright, odds are that the type, size, and location of the structure on the property are limited due to a deed restriction.
No Business Here
Perhaps the most easily adapted deed restriction consists of prohibiting the running of a commercial enterprise out of a residential abode.The reasons behind such deed restrictions include limiting the number of traffic in the neighborhood consisting of customers and deliveries.However, recently judges have been finding that these covenants are unlawful restrictions to private rights.
Color Palettes
Lists of approved, or occasionally unapproved, colors which a house can be painted are often provided by home-owner association.So if you are building a new house or giving your current house an exterior make-over, be sure that the color you choose for your home falls within the permitted color spectrum.
Pet Restrictions
If you have a furry loved one in your family or if wish to keep any sort of livestock on your property for organic food purposes (such as chickens or goats), check with your neighborhood covenant to assure that these animals will be allowed on your property.Though restrictions on livestock may not surprise a home owner, there may also be restrictions against certain breeds of dogs, pot-bellied pigs, or the number of animals you may have in the house.
Number of Bedrooms
Deed restrictions are in place to limit the amount of septic use of a household due to the idea that the number of bedrooms in a home correlates to the number of bathrooms.If you are not able to fit your entire family comfortably into your dream house, then this would be a major setback, to say the least.
Instead of fighting deed restrictions, facing heavy fines, or being forced to alter your after new building or modifications have occurred, a home owner is much better of knowing any limitations set in place due to deed restrictions before buying the property.Arm yourself with the knowledge of any HOA covenant regulations or deed restrictions before purchasing or remodeling a home, and it will make the transition into the house you’ve always wanted much smoother.
1.) Straight exchanges—two parties trade properties of equal or approximate value. This is the simplest exchange.
2.) Multi-party exchanges—this involves three or more parties buying, selling, or exchanging properties. Don't attempt these exchanges without the aid of a tax professional; they tend to be very complex.
3.) Delayed exchanges—this exchange allows the sale of the relinquished property and the buying of the replacement property to occur at different times as long as stringent rules are followed.This is the exchange most often used.
What's the Advantage of the 1031 in Terms of Taxes?
As the law's title indicates, the capital gains tax is deferred, but not eliminated. However deferral is a great way to leverage small real estate holdings into larger ones! Since you can postpone gains, you're able to use a tax-deferred exchange strategy to transfer equity to a larger property, all without paying taxes!
Another advantage is that there’s no limit on exchanges. This means you can make as many exchanges as you want! So, over the course of your lifetime, you can keep growing income and appreciation by adding new properties without having to pay the capital gains tax!
If you specialize in buying and renovating properties and want to keep reinvesting your profits into larger properties, then this strategy is especially attractive.
Note: If you don’t keep reinvesting, you risk being classified as a real estate dealer by the IRS and will not be able to participate in exchanges.
What Are the Basic 1031 Qualification Rules?
There are some basic rules that must be followed in order to qualify for a 1031 exchange. These include the following:
1.) The properties to be exchanged must be located in the United States. Note: You can exchange foreign property for foreign property and domestic for domestic. However, you can’t mix these exchanges together.
3.) An exchange must be made that’s equal to or greater in both value and equity. Any cash or debt relief received above this amount is considered “boot” and is taxable.
4.) The like-kind property must be identified within 45 days of the closing on the initial property.
5.) All proceeds from the initial sale must be turned over to a"qualified intermediary" (also called a QI, facilitator, exchanger, etc.) who is the person or company playing the role of middleman.
6.) Any of the proceeds not under the control of the middleman are subject to taxation.
7.) The middleman holds the funds from the initial property in escrow until such time as the closing on the second property occurs.
8.) The middleman also assists the owner with the preparation of paperwork and other services to ensure the transaction progresses in a smooth manner.
9.) The closing on the second property must take place within 180 days following the close on the first property.
Wow, as you can tell, this is pretty complex subject and can't completely covered here! But if you're an investor or plan to be one, I hope I whetted your appetite for this subject.
And please, if you have any further questions, feel free to call me! I'd love to tell you more!
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