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First-time homebuyers are a declining group. Historically, 40% of homebuyers have been first-time buyers, but that percentage continues to shrink, even as millennials continue to show more interest in becoming buyers (eventually). If you’re already a homeowner, your wheels might be spinning right about now — if people aren’t buying starter homes, then the rental market has to be booming, right? It is in many areas, particularly where unemployment is low, the population is high, and homes are not overpriced. But before you start searching for a home for sale in Austin, TX to rent, you should think about the responsibility that comes with being a landlord — and learning by trial and error is not the best way to go about gathering intel (or a steady income).
7 Things To Know Before Becoming A Landlord
Thinking about investing in a rental property? Here are some great tips that will get you started!
Before you take the plunge, study up on how to become a landlord with these seven tips.
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Ideally, you want to live near your rental property
Living close to your property allows you to check on it periodically (after giving your tenants proper notice), take care of repairs yourself, and show the property when it’s time to list it for rent again. Research the best investment areas — but even if you don’t live in a prime rental region, you can still invest in one by hiring a property manager to take care of day-to-day details.
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Know landlord-tenant law
Most states have specific landlord-tenant provisions that cover issues such as security deposits, level of access to the property, and how much notice you need to give your tenants when you want them to leave. There also are federal laws you need to know, such as habitability and anti-discrimination laws. “Many landlords gloss over housing discrimination laws because they assume that as long as they’re not racist or sexist, they needn’t worry about fair-housing violations,” says Ron Leshnower, real estate attorney and author of Fair Housing Helper for Apartment Professionals. But fair-housing liability traps can arise in many ways, so it’s important that you fully understand the law and ensure that you aren’t breaking it.
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Make sure you can enforce that the rent is paid on time
This seems like a no-brainer, but believe me, if you get too friendly with your tenants, you might just let them slide a couple of weeks beyond the first of the month, or allow a partial payment when they’re between jobs. Before you know it, your tenants are six months behind and you’re struggling to make the mortgage payments. But being firm doesn’t mean you shouldn’t treat tenants with respect. Cultivating a good relationship with your tenants often goes a long way to ensure rent will be paid on time and that repair requests will be easier to deal with.
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Screen potential tenants
It’s worth the time to do a background and credit check on all potential tenants: online tenant-screening services are convenient, and you should be sure to check potential tenants’ credit scores. A credit score alone shouldn’t be the sole reason to accept or deny an applicant, but it is a useful screening tool: For instance, if your renter is fresh out of college with a solid job offer, they may not have enough credit history to warrant a good score—but could be a great rental candidate.
You should also conduct an interview to make sure you’re comfortable interacting with them, and check references, especially from employers or past landlords. But be advised, it’s hard to find the perfect tenant. According to Casey Fleming, author of The Loan Guide: How to Get the Best Possible Mortgage, it’s important to have a thick skin, and advises people not to buy rental property if tenant shenanigans will “drive you crazy.” Case in point: Fleming once had an evicted tenant break into the house, change the locks, and move back in!
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Customize the lease
If you don’t hire an attorney or a property manager, you can use a standard lease form from Nolo, for example, but you should tweak it to fit your situation. For example, if you allow pets, specify how many, what kind, and any rules that apply. Your lease could state that tenants should leash their dogs when outside the fenced-in yard and stipulate that pets should not become a nuisance to neighbors.
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Inspect the property regularly
“Have language regarding inspections clearly written in your lease documents,” says Timmi Ryerson, CEO of Smart Property Systems. She suggests taking pictures to establish a baseline (and document the move-in condition) and conducting an inspection at three months. If you find problems, Ryerson recommends that landlords “issue a notice to comply and set another inspection in one week.”
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Understand this is not a get-rich-quick scheme
Being a landlord is not just sitting around collecting a big wad of cash each month. You’ll need to spend some money to ready the property for tenants, buy landlord insurance, and pay property taxes. If you’re taking out a mortgage, be prepared to fork over at least a 20% down payment. Think of being a landlord as part of your overall investment strategy and be realistic about your goals — most landlords aim for about a 5% return on their investments.
Source: Trulia Blog
What to Consider Before Buying a Home on the Golf Course
Traditionally considered the ultimate location, here is what you need to know before you purchase a home on the golf course!
Is there anything on par with living on a golf course?
Before you buy that home on the fairway, there are a few things to consider. From maintenance to memberships, privacy to views, life on the golf course comes with a few questions. To settle the score, we turned to our golf pro, Cara Ameer with Coldwell Banker Vanguard Realty, Inc. to learn her tips for what to consider before buying a home of the golf course. In the segment below, which first aired on NBC Open House, Cara explains how to tee your home search up for success and avoid any bunkers along the way.
To find a home on the green, visit Kappelgateway.com. You can find golf properties around the world using the lifestyle search found in the top navigation of the site.
Source: CB Blue Matter
Five Tips to Identify Fixer-Upper Homes Worth Investing In
You may know someone who did very well during the market crash in 2008 purchasing fixers. Its a complex issue that you need to study up on before you even consider taking that plunge!
When shopping for a fixer-upper home, some properties have potential beyond their appearance. Keep the following tips in mind as you look for that home.
When shopping for a new home, be aware of properties that have potential beyond their current appearance. Home buyers often overlook a great property because they are too focused on the cosmetic appeal, which can be easily altered. Keep the following tips in mind as you search for your perfect home:
- Finding the Best Neighborhood for You
Location is one of the most crucial factors to consider as you look for possible homes. Unlike the style and even structure, no amount of time, effort, or money can change a home’s location. To find the best neighborhood for you, it can help to visit the area multiple times at various hours. This will help reveal the local culture and activity to be expected from neighbors. - Identify a Cost-Efficient Fixer-Upper Home
Look for a home with sound fundamentals and an appealing floor plan. Cosmetic improvements like new paint, lighting fixtures, and flooring are relatively cheap and easy to change, while work on plumbing, electrical systems, structural walls, or cabinets are more difficult and expensive. Typically, the most expensive change involves altering a home’s structure.
- Hire a Contractor Before Buying a Home
You may want to hire a contractor in your search if you know you want to make changes to a home you plan to purchase. A contractor can help you better understand what kind of commitment a given home will require. Many remodelers will visit a potential purchase at no charge to give an estimate of how much the work would cost. This is valuable information when comparing different homes with one another. - Know What to Check Before Buying an Old Home
Examining a home can be a complex process, and looking for one with unused potential can make it more difficult. Keep in mind that homes older than 50 years are likely to have similarly aged plumbing, electrical, heating, and other systems. The home may also be worn out or too outdated to remodel. - Real Estate Agents Can Help
Real estate agents are valuable resources. They can help you understand a home in the context of its neighborhood and area, and may be able to offer advice on how to increase the value of the property after purchase.
Source: CB Blue Matter
2017’s Most Important Summer Home Maintenance Projects
These projects are what you should be focusing on this summer regarding maintenance on your home.
Being proactive when it comes to your home’s maintenance can save you time and money! Focus on maintaining these 5 areas.
With the bright sunlight and warm temperatures that accompany summer, you may be spending more time outside — and you may be noticing areas of your home’s exterior that need repair. But there’s more reason to tackle your home maintenance projects this summer than simply cosmetic appearance. Maintaining your home will prevent major leaks and damage that may eventually require professional help, usually when its most expensive and inconvenient for you.
Being proactive when it comes to your home’s maintenance can save you time and money, and it makes sense to do it when you’re more likely to be outdoors in the comfortable summer months. Here are five areas of your house that are most important to keep updated.
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Windows
Start by cleaning the exterior of your windows with hot soapy water and a sponge or squeegee. If you’ll need a ladder, make sure to review safety guidelines.
While you’re washing, inspect each window pane for cracks. Double or triple glazed windows with damaged seals or cracks may need to be replaced. Think back: Have your windows had excessive condensation inside through the winter and spring? That’s another sign that the seal might have been compromised and that your window might need to be replaced.
You’ll also want to inspect caulking and weatherstripping around your windows. Recaulk any spots where the caulk is loose or chipping away, or consider applying new caulk for a tight seal. Summer is a perfect time to do this because the warm temperatures and low humidity will help the caulk set perfectly.
Finally, wash window screens and replace any screens that have rips or holes.
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Roof
Visually inspect your roof every summer for missing or broken shingles, shakes and panels. Again, if you’ll be using a ladder and climbing up to your roof, make sure you follow safety guidelines. If you have any concerns about using a ladder or moving around on your roof, or if you’re unsteady on your feet, call your roofing company. Most roofers will make inspections and do basic maintenance for you.
While you’re up on your roof, you’ll also want to check flashing and seals around vents, chimneys and skylights. Apply caulk around any areas that haven’t been re-sealed in the past year.
Algae and moss can plague even new and well-maintained roofs. Apply a moss killer designed for roofs or install zinc strips that can help keep algae and moss from taking hold.
Your gutters should be cleaned and checked for holes or other damage. Look for water stains around your gutters and downspouts that indicate a problem.
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Exterior
Check high and low over your exterior and look for holes, gaps and cracks in your siding. It’s less expensive to replace siding that is just starting to deteriorate than to wait until it’s broken down completely and impacted your home’s structure, insulation and inside walls.
While you’re walking around your home, look for any signs of pests. Termites and carpenter ants can be devastating to your home’s structure, while ants and wasps can be a nuisance and cause minor damage to your home’s exterior. Check vents and crawl-space access doors to make sure rodents and other wildlife can’t get in.
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Foundation
Check your foundation for any cracks and signs that there has been a leak, such as water stains. Any small cracks can be repaired, but larger cracks should be inspected by a pro. Once you repair small cracks, re-seal the foundation with a good waterproof masonry sealer.
Pull out any larger plants growing close to your home that might impact the foundation. Besides the risks of roots growing into your foundation, watering plants close to your home can cause water to pool around the foundation and lead to damage.
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Heating and Cooling
You’re going to want to make sure your air conditioning is ready for the heat ahead, so replace filters and remove and clean your unit’s fan and condenser. Make sure you turn off power to the unit before you tackle any work.
At the same time, your furnace should be checked and readied for use again at summer’s end. Vacuum out the burner and blower cavities, and vacuum and brush the blower blades. Change the filter so the furnace is all ready to go when it’s time to turn it on again.
Your home is a big investment, and it’s important to keep it in good “health.” Spend some of your summer days inspecting and making minor repairs and you’ll reduce your chances of needing a big repair later.
Source: CB Blue Matter
Why You Really Need a Home Inspection
This is such an important topic and a MUST READ for buyers!
Buying a house is probably the single largest investment you’ll ever make – learn how getting a home inspection can help you get the most value for your home.
Buying a house is probably the single largest investment you’ll ever make, and you want to ensure you get the best value for your hard-earned dollar. That’s why more and more home buyers today are turning to professional Home Inspection experts. A professional Home Inspector takes a close look beneath a house’s surface, and then prepares a detailed written report for the prospective buyer on such things as the condition of the foundation, electrical service, roof, insulation, and other critical structural factors. Your Coldwell Banker sales professional can help you connect with an experienced trusted Home Inspection service in your community.
Although costs will vary, you can probably expect to spend two to three hundred dollars for an inspection of a single family home. And who pays for it? Well, since the benefit is almost entirely that of the home buyer, it’s usually the buyer who pays the cost of the home inspection …particularly in a “hot” real estate market, where the home sellers have more leverage. All things considered, it’s a small price to pay for the peace of mind it provides, and the negotiating power it can give you — especially if it indicates that there are major repairs required, but you decide to make an offer anyway.
When it comes to making your offer to purchase, your Coldwell Banker professional can provide you with good advice on how to allow for a home inspection as a part of this process. Subject to the homeowner’s permission, you can commission a Home Inspection before or even after submitting your offer to purchase. This is done by having your Coldwell Banker salesperson prepare a conditional offer that’s contingent on a Home Inspection report that’s acceptable to you. This approach gives you some distinct advantages: if the conditional offer is accepted, the property is temporarily held against other offers, yet you still have a legal escape route if the report turns up some major negative surprises, such as a bad roof or a crumbling foundation. On the other hand, if the conditional offer isn’t accepted, then the need to pay for a home inspection may never arise. Your Coldwell Banker professional can counsel you on the best approach to suit your market and your individual situation.
Source: CB Blue Matter
The Basics of Buying Investment Properties
With this terrific checklist, you, too, can be on your way to being a savvy investor!
Everyone wants a magic and immediate path to wealth. The bad news? The path doesn’t exist. Wealth is attainable through more conventional means. If you come to understand the real estate industry and if you deepen your own firsthand experience as you buy and sell investment properties, you’ll be on the road to success.
Along the road, there are six core principles that will make or break each real estate investment deal. They are the most important concepts you will learn. I call them the Big Six. With each successive deal I negotiated, I grew to recognize the common elements. The Big Six are part of a sequenced step-by-step formula that enables you to identify and purchase the right income property at the right price.
The elements of the Big Six Formula that will guide you into the basics of buying income properties are the following:
Location
Location is the single most important component of any real estate deal. It is crucial in determining your investment success. Look for properties that are situated in an “A” location. Such locations include the socioeconomic levels of the people who live or work in a particular neighborhood, its proximity to shopping centers, public transportation, crime levels, the nearness of prestigious universities and medical facilities, traffic congestion, zoning restrictions, the quality of schools, fire and police protection, and even the reputation of the local government and its officials.
Building Quality and Design Efficiency
Design efficiency interfaces with building quality. When you find an investment property you’d like to buy, you will need to scrutinize both elements. Look for properties that far exceed minimum construction requirements and that have useful and innovative design elements. This will not only make the property attractive to tenants but will add value to the property in the future. Design features on apartment complexes that stand the test of time include walk-in closets, large kitchens with windows, and his-and-her bathrooms. In an office building, a common area factor of 15 percent is desirable as well as a ratio of four parking spaces for every 1,000 square feet of rentable space.
Tenant Profile
Tenants can represent either an asset or a liability in an investment. When you invest, your mission is to make sure your tenant profile is the former and not the latter. Just as you want a well-constructed and well-designed property, you’ll want stable tenants who are a good match for your property and have appropriate lease agreements. Find out how much rent is generated and whether it is at market rate or under market. You want to focus on finding an income property that offers the opportunity to increase rental income and, by doing so, multiply the value of the property so that you can resell it at a substantial profit.
Upside
This fourth element refers to the cash flow growth possibilities offered by a particular property along with the likelihood that the property will increase in value. A property may cost $1,500,000 to construct, but if it brings in only the income of a $900,000 property, then it is worth only $900,000. The key to increasing value lies in buying a solid Class B property in an “A” location where the rents are under the market, the leases are short term, and there are no options to renew the leases.
Financing
In the musical Cabaret, there is a song with the lyrics “Money makes the world go around.” It could just as easily be used to describe real estate’s role in the economic landscape. The free flow of money and access to credit is what adds vibrancy to property investment. Before you get started, you’ll need to get a number of finance-related items in order. The first thing you should do before applying for a mortgage loan is to review your credit reports and your credit scores. Also, learn the terms, understand the components of a mortgage and how they interact, and be open to the full range of financing options available. Banks and other financial institutions make money from mortgages. They are willing to negotiate. Be creative—you may be surprised at the terms you’re able to obtain from a bank or insurance companies, especially in today’s low interest rate environment.
Price
The successful evaluation of a property’s price has to do with how much information you can gather about a seller and the property than it does about the price tag on the real estate deal. You must look at the value of the property, which is not the same thing as its price. The crucial concern is not just how much the property costs, but what kind of income it can generate for you. A property may be architecturally perfect and engineeringly sound, but if you’re locked into long-term, under-market lease rates, the value will be eroded.
If you master these principles, wealth will be within reach. However, it’s not enough to just understand and utilize the Big Six. You must execute them in order. That’s because they all fit together snugly to form your customized real estate formula.
Source: RisMedia
What is the Difference Between a Short Sale and a Foreclosure?
Distressed sales can be difficult but the more you know about the differences in them, the better your ability to navigate those waters if you are in the market!
Here is how to dip your toe into the water on foreclosures and short sales while heeding all the risks when buying a home.
Not sure about the world of foreclosures and short sales? Don’t worry. Here’s a rundown of everything you need to know to grasp the basics of foreclosures and short sales.
What Are Foreclosures and Short Sales?
A foreclosure is a process by which a lender is able to repossess a property when the borrower defaults on loan payments.
A pre-closure is the period between when the lender files the Notice of Default and when the foreclosure process is complete. If the home is sold during this period, the transaction is called a short-sale foreclosure (or “short sale” for short).
While both a short sale and a foreclosure result in the unfortunate event of the borrower not being able to stay in their home, a short sale allows a borrower to avoid the harmful effects that a foreclosure would have on their credit score.
How Can You Buy a Foreclosure/Short Sale Property?
There are fewer foreclosures and short sales on the market today than there were a few years ago. “Default notices, scheduled auctions and bank repossessions…are down more than 7 percent from a year ago,” according to RealtyTrac’s November 2015 U.S. Foreclosure Market Report™.
But if you’re a buyer, you can still find a great deal on a foreclosure or short sale, particularly if you work with an agent who focuses on finding these deals.
If you are interested in purchasing either a foreclosure/short sale property, talk to an agent who specializes in foreclosures and short sales.
What Are the Pros and Cons of Buying a Foreclosure/Short Sale Property?
Let’s start with the advantages.
Foreclosures and short sales are often priced below retail, which means that you can buy these properties for less than the cost of other comparable homes. Subsequently, your monthly mortgage payments will be smaller and you’ll spend less interest over the life of the loan.
Furthermore, you may build equity quickly, particularly if you improve or renovate the home. This equity increases your net worth, and you have the option of borrowing against this equity in the future if you choose.
Additionally, if you purchase a short sale, you’ll also enjoy the emotional satisfaction of knowing that you helped someone avoid foreclosure.
Although foreclosures and short sales can offer the buyer exceptional deals on real estate prices, there are some drawbacks.
Foreclosures and short sales often need renovations or repairs. It’s likely that the owner wasn’t able to maintain the property, which means that you might have to deal with deferred maintenance issues. It’s important to get a full report of the maintenance issues you might face. Ask your real estate professional if he or she can recommend a qualified licensed home inspector who can produce a full report for you.
It is possible that some foreclosed properties are vandalized while they’re vacant, which can add to these repair bills. However, this damage will generally be reflected in the pricing of the home.
Foreclosures and short sales are in shorter supply, which means there’s a lower likelihood that the property has all your wants and needs. You may need to compromise on certain features, amenities or desired location. You may also need to act quickly, as these opportunities can get snapped up fast.
For a short sale, the seller may be motivated to sell, but he or she may not be able to budge on the negotiation price due to the outstanding balance on the mortgage.
Short sales are notorious for their lengthy closing times – typically between 45-90 days. This is because the original lender needs to approve the sale. If you’re in the market for a quick closing, a foreclosure or short sale property may not be for you.
That said, however, the financial benefits of buying a foreclosure or short sale can be fantastic for homebuyers who are flexible and patient.
Source: RisMedia
6 Flood Insurance Myths Debunked
If you live in a designated flood zone that requires flood insurance, then you need to understand your policy. What is covered and (more importantly!) what is NOT!
If a flood swamps your home, will insurance cover the damage?
That depends on the value of your home, the amount of water damage and whether you have a flood insurance policy.
Regular home insurance doesn’t cover flooding. You’ll need a policy offered through the government’s National Flood Insurance Program (NFIP)—but note that those top out at $350,000 in coverage for your home and its contents. For higher amounts, you may need supplemental coverage to protect your savings from taking a hit.
People tend to associate floods with a total loss, but the average flood claim for U.S. homeowners is about $39,000, according to the NFIP.
Here are six other persistent myths about flood insurance—and the truths you need to know.
To Get a Policy, You Must Live in a Flood Plain
Not true. If you live in a flood plain, your mortgage company will likely require you to buy flood insurance, but you can purchase it even if you don’t live within a flood zone.
“Almost anybody can get flood insurance who wants flood insurance,” says Chris Hackett, director of Personal Lines for the Property Casualty Insurers Association of America.
The price through the federal flood insurance program is based on standardized rates and depends on the home’s value and whether or not it’s in a flood plain, says Don Griffin, vice president of Personal Lines for the Property Casualty Insurers Association of America.
The average price for flood insurance is about $660 annually. Your agent can help you buy a policy and may accept payment by credit card.
According to Griffin, one in four flood claims is for a home not in a flood plain.
Flood Insurance Is Just for High-Risk Areas
Merle Scheiber’s dream home wasn’t in a flood plain, and he didn’t have flood insurance.
Just after completing a three-year renovation project for his 1,800-square-foot, cabin-style home, flooding put it underwater for almost four months.
Scheiber, who happened to be South Dakota’s director of Insurance at the time, says he had to tear the home apart and put it back together all over again.
He urges that all homeowners—even those who do not live in designated flood plains—weigh the dangers and their options and seriously consider buying flood insurance.
Flood Insurance Covers Everything
Not necessarily. When it comes to the physical structure of your house, federal flood insurance policies top out at $250,000. If you have a $300,000 house that’s a total loss because of a flood, the most you can recoup through the program is $250,000 to cover the structure itself.
For your personal possessions, the cap is $100,000 under the federal program.
If you already have insurance through the federal program, then you can buy “excess flood insurance” through a private carrier that would cover claims above the national limits. In essence, it’s a flood policy with a $250,000 deductible, Griffin says.
Note that flood insurance doesn’t cover living expenses if you have to relocate while your home is being repaired.
My Homeowners Policy Covers Floods
“Unfortunately, a lot of folks may be under the impression that their standard homeowners policy might cover flood damage,” Hackett says. But the standard policy doesn’t.
The typical home insurance policy doesn’t cover earthquakes or floods, so a homeowner wanting coverage for either of those disasters will need to pick up separate, specific coverage against those types of disasters.
If you want flood insurance, it pays to think ahead. There is a 30-day waiting period between when you buy the coverage and when it kicks in. When a hurricane is bearing down on your area, it’s too late to get a flood policy.
Water Damage Is Water Damage
When it comes to your insurance, not all water damage is the same.
If there’s a storm and your “roof comes off and water comes through, that would be covered under your homeowners policy,” Hackett says, “versus a flood situation where the riverbank overflows and you look out of the front of your house and you need a boat to get from point A to point B.”
Most consumers “have a pretty good understanding” of how to draw the line between storm damage and flood damage, he says.
Some homeowners policies offer an optional “water-backup endorsement” that covers damage from water backing up into your home from causes such as a broken sump pump.
Flood Maps Don’t Change
Flood plains (and flood plain maps) change and evolve. Just because you weren’t in a flood plain when you bought your home a few years ago doesn’t mean you’re not in one now.
There are a couple of ways you can find out about your flood risks.
- FloodSmart.gov: This site will allow you to put in your address and see if it’s in a flood plain, and give you information on risks, premiums and agents. But use it as one tool, not the final word on whether your home is in a flood plain.
- Your insurance agent: When it comes to researching whether your home is in a flood plain, you definitely want someone knowledgeable to research the question for you—and, you might want to get a second opinion from a different agent.
“Agents have different levels of sophistication with regard to this product,” says Griffin. “You get a different answer sometimes. So you make a couple of checks to make sure you’re protecting yourself.”
First-Time Homeowners: Everything You Need to Know About Homeowners Insurance
Oh my…this is a MUST READ for First Time Home buyers! Don’t leave home without it!
What exactly is home insurance and do I really need it?
Ready to buy your first home? Before you dot the I’s and cross the T’s on your mortgage, it is important to understand the ins and outs of homeowners insurance.
Without homeowners insurance, a property buyer is unlikely to secure a house. Homeowners insurance protects a residence and the items stored in a residence against disasters. Therefore, if your home is suddenly destroyed in a hurricane, tornado or other natural disaster, homeowners insurance guarantees you are fully protected.
Homeowners insurance should be simple, but there are many factors to consider as you evaluate all of the coverage options at your disposal.
Now, let’s take a look at five common questions about homeowners insurance.
- Why Do I Need It?
There are two reasons why homebuyers must purchase homeowners insurance:
- It enables you to protect your assets. Homeowners insurance safeguards the structure of your home and your personal property. It also protects you against liability for injuries to others or their property while they are on your property.
- Your mortgage lender probably requires you to have it. Most lenders will require you to maintain homeowners insurance for the duration of your mortgage. A lender usually will require you to list the company as a mortgagee on your homeowners policy. Moreover, if you let your homeowners coverage lapse, your mortgage lender likely will have your home insured at a much higher premium and with less coverage that what you had in the past.
Homeowners insurance is a must-have for homeowners, without exception. If you allocate the time and resources to find the right homeowners coverage, you should have no trouble protecting your house and personal belongings for years to come.
- How Does It Work?
Generally, homeowners insurance is considered a package policy because it includes a combination of coverages. The package policy focuses on the following areas:
- Dwelling: Covers the costs associated with damage to your home and structures attached to it, including any damage to electrical wiring, heating systems or plumbing.
- Other Structures: Ensures you’re protected against damage to fences, garages and other structures that are on your property but not attached to your house.
- Personal Property: Guarantees you’re covered for the value of possessions like appliances, clothing and electronics if they are lost or damaged. This coverage applies even when your personal property is stored off-site, like in a storage unit or college dorm room.
- Loss of Use: Provides financial assistance to help you cover some of your living expenses if you need to temporarily vacate your house while it is being repaired.
- Personal Liability: Offers protection against financial loss if you are sued and found legally responsible for injuries or damages to someone else.
- Medical Payments: Covers the medical expenses for people who were hurt on your property or by your pets.
Clearly, there’s a lot to consider as you evaluate a homeowners policy. Review your coverage options closely, and you may be better equipped than other homeowners to secure your house and personal belongings effectively.
- Are There Homeowners Coverage Limits?
You should get homeowners insurance that covers the full replacement cost of your home, not just the market value of your residence.
The replacement cost and market value of a residence may seem identical at first. But upon closer examination, it becomes easy to understand why you’ll want to purchase a homeowners policy that offers protection for the full replacement cost of your house.
For homeowners, the replacement cost refers to the total amount it would cost to rebuild or replace your home if it was completely destroyed. This cost may vary based on your home insurance provider and usually accounts for the plans and permits, fees and taxes and labor and materials that you would need to replace your house. However, the replacement cost does not account for the value of the land associated with your home.
On the other hand, the market value reflects what your home is worth today. It fluctuates based on the current condition of your house, the real estate market and various economic factors.
The market value of your home commonly proves to be great indicator of what your house may be worth if you intend to sell it in the near future. Conversely, when it comes to homeowners insurance, it is always better to err on the side of caution. If you calculate the full replacement cost of your home, you can insure your residence appropriately.
- Are There Optional Homeowners Insurance Coverages?
Believe it or not, a standard homeowners policy won’t cover everything. As such, you may want to consider adding some of the following optional coverages to supplement your homeowners policy:
- Flood Insurance: Floods rank among the top natural disasters in the United States, and even an inch of water can cause severe property damage in a short period of time. The National Flood Insurance Program (NFIP) offers flood insurance coverage that will protect your home for up to $250,000 and your personal property for up to $100,000. Keep in mind that there often is a 30-day waiting period before a flood insurance policy goes into effect. This means if you want to buy flood insurance in the days leading up to a hurricane, you may be out of luck.
- Earthquake Insurance: Many Western states are prone to earthquakes. In California, Oregon and Washington, earthquake coverage is available from multiple insurance providers. Or, if you live outside these states and still want to purchase earthquake coverage, your state’s Department of Insurance can help you find licensed earthquake insurers.
- Daycare Coverage: If you take care of a friend’s children and are unpaid, your homeowners insurance offers limited liability coverage. Comparatively, if you provide daycare in your house, you will need to purchase insurance to cover the related liability.
- Additional Liability: You can purchase additional liability coverage any time you choose. These add-ons may require a nominal premium but sometimes makes a world of difference for homeowners.
Of course, if you’re unsure about which coverages you need, it always helps to consult with an insurance agent. This insurance professional will be able to respond to your homeowners insurance concerns and queries and help you get the coverages you need, any time you need them.
How Much Will It Cost?
There are several factors that will affect your homeowners insurance premium, including:
- Attractive Nuisances: If you have an attractive nuisance like a swimming pool or trampoline, you may have to pay more for homeowners insurance than other property owners.
- Coverage Options: Adding flood insurance, earthquake insurance and other coverages may cause your homeowners insurance premium to rise.
- Home Protection System: If you have a home burglar alarm, security devices for windows or deadbolts on doors, you may be able to lower your insurance premium.
- Pets: Some insurance providers won’t offer homeowners coverage if you own certain types of pets.
- The Home Itself: Your house’s age, condition, construction and distance from a fire department and water source may impact your homeowners insurance premium.
Homeowners insurance premiums will vary from person to person. But those who take an informed, diligent approach to homeowners insurance can boost their chances of getting the best homeowners policy at the lowest rate.
Homeowners Insurance Tips
Let’s face it, homeowners insurance can be confusing, particularly for those who are searching for coverage for the first time. Lucky for you, we’re here to help you discover the right homeowners policy.
Here are five tips to help you secure homeowners insurance that meets or exceeds your expectations:
- Shop around. Meet with various homeowners insurance providers and learn about different types of coverages so you can make an informed homeowners insurance decision.
- Bundle your homeowners and car insurance policies. In some instances, you may be able to save between 5 and 15 percent if you purchase your homeowners and car insurance from the same insurance company.
- Minimize risk across your house. Homeowners insurance offers immense protection, but you also can install storm shutters, enhance your heating system and perform assorted home upgrades to reduce risk across your home.
- Look at your credit score. With a good credit score, you may be able to lower your homeowners insurance premium. If you don’t know your credit score, you can request a free copy of your credit report annually from each of the three credit reporting bureaus (Equifax, Experian and TransUnion). Keep in mind that only some carriers use credit scoring.
- Stay with an insurer. If you find an insurance company that you like, stay with this company for several years, and you may be able to reduce your homeowners insurance premium over time.
There is no need to settle for inferior homeowners coverage. If you use the aforementioned tips, you can purchase homeowners insurance that guarantees your home and personal belongings are fully protected both now and in the future.
Source: CB Blue Matter
Does It Really Matter What Your Neighbor’s Home Sold For?
Interesting food for thought. Depending on the dynamics of the other homes in the neighborhood, fair market values can vary.
Whether you’re buying or selling, remember that your neighbor’s sale price is just one piece of the puzzle. Whether you’re buying or selling, make sure you look beyond the data to get the big picture on home values.
After researching the sale prices of his neighbors recent home sales, Steve Rennie thought he knew exactly what his Kansas City, MO, house was worth. But when the Rennies decided to sell and started interviewing real estate professionals, they discovered they needed more and more relevant information. While the sale price of homes on your street can provide important insight into the price of a home you’re selling or buying, here are some of the other factors you should consider to make your best deal.
Unique or unusual home? Comparable sales may not exist
The Rennies quickly realized that recent sales near them wouldn’t be the perfect way to gauge their home’s value. We had interviewed several agents, and most came back with prices for homes that were not truly comparable to ours, because we had a unique older home in an area of newer ones, recalls Rennie. Eventually, the couple called real estate agent Dan Vick, vice president of RE/MAX Results in Kansas City, who offered a different perspective.
Since I didn’t have comps in their exact neighborhood, I went a half-mile away to find homes of similar age and style, says Vick. They’d said they wouldn’t list their home for one penny under $180,000, but based on my comps, I asked: Would you mind if I listed it for more? The house sold the first day it was on the market for $189,500. The Rennies were thrilled.
While comps give sellers a point of reference and an understanding of how strong the real estate market is, Vick suggests calling a professional familiar with your neighborhood to interpret comps properly and gauge what your home is worth. In newer subdivisions, especially if one or two builders have built the majority of the homes there, you can look at similar floor plans. But in older areas, that rule doesn’t apply, because you don’t have the same house four doors down the street.
Stick to the facts and expert advice when pricing a home
Even when you’ve studied comps and have noted relevant details about recent nearby home sales, it’s often easy for sellers to overlook important information when setting a price, says Michael Kelczewski, a real estate agent with Sotheby’s International Realty in Centerville, DE. I continuously encounter sellers who value their home above fair market price, he says. Cosmetically upgrading a kitchen or bathroom won’t usually generate a 100% ROI, so I’m tactful when explaining the reality of property valuations or asset depreciation.
Pricing your property appropriately, regardless of what your neighbor sold for, is key in today’s market, adds Matt Laricy, managing partner with Americorp Real Estate in Chicago, IL. A couple of years back, people would price a home high, get lowball offers, and be willing to negotiate, he says. Nowadays, with low inventory, many sellers are too aggressive: Their neighbor’s house sold in one day, so they think, I’ll overprice my place because I know I’m the only one on the block. But buyers are smart; they may not even look at it until the price comes down.
Bottom line? Don’t be greedy, Laricy says. If you price your home realistically, you’ll likely get more than one offer and net more money in the long run.
Understanding how agents set prices can help buyers score the perfect home
Buyers can benefit tremendously from checking what homes in their chosen neighborhood have sold for, says Laricy. In Chicago, we don’t do price per square foot, so knowing what a neighbors house sells for is huge, he says. If it sold really low, that’s good news for you as a buyer.
However, buyers sometimes overlook other crucial details in their quest to zero in on the best price, he adds. That can lead to a harder sale or lower profit in the future. In big markets like New York, Chicago, Miami, and LA, where people are coming and going all the time, you’re buying an investment, he explains. Buyers usually don’t think about value: why certain buildings trade at different rates now, which ones will trade higher than others in the future, and which neighborhoods are worth more. These are things you need an expert eye for.
He notes that younger buyers tend to neglect that all-important real estate factor: location. They chase kitchens and bathrooms, he says. They’ll buy in a less desirable location to get a nicer kitchen. You can always change a kitchen, but you can’t pick up a property and move it.
Yet even as buyers and their agents leverage comps to make a good buy, sometimes the heart wants what it wants, says Vick. I think you can get too caught up in the comparable data. If your buyers have looked at 15 homes, and this is the one they’ve fallen in love with, it really doesn’t matter what the comps are; you’d better go after it with a strong offer, he suggests. A note of caution to buyers: be careful not to overestimate a home’s appraisal value, since an offer that’s much higher than appraisal value could put your purchase at risk.
Buyers should bring their best offers from the start!
Especially in red-hot real estate markets, Laricy advises buyers to bid smart the first time or risk losing out to another buyer. Usually, buyers who lowball are the ones who end up missing out on two or three properties before actually getting something, says Laricy. Be realistic by putting in a strong offer upfront.
First-time homebuyer Corinne Hangacsi followed that advice before purchasing her two-bedroom townhouse in Wilmington, DE, this spring. We did our research through Trulia. Our real estate agent definitely clued us in to what was happening in the area, but we also looked at other comparable properties ourselves, she says. That in-person research helped Hangacsi feel comfortable making a strong initial offer. My biggest piece of advice for first-time homebuyers is to be patient and do your homework. Go with your gut; when you find the right place, you’ll know.
Source: Trulia Blog
