RealtorMag has compiled information about the top reasons for delayed closings. This is why it’s important to not only work with a realtor you trust to navigate the local market for the best inspectors or title companies, but also to work with a lender that will actively help you ensure your financing comes through!
Seventy-three percent of home sales closed on time in October, but 25 percent of REALTORS® report a delay in getting to the settlement table, according to the latest REALTORS® Confidence Index, a survey based on responses from more than 3,500 real estate professionals. Only 2 percent say a contract was terminated completely.
What are the main problems encountered with delayed settlements? Real estate pros report the following:
- Issues related to obtaining financing: 32%
- Appraisal issues: 20%
- Home inspection/environmental issues: 16%
- Titling/deed issues: 11 percent
- Contingencies stated in the contract: 6%
Seventy-four percent of all contracts in October contained contingencies, most often for home inspections, appraisals, or financing.
Source: “REALTORS® Confidence Index Survey,” National Association of REALTORS® (October 2017)
As Denver market continues to grow so will ours here in Summit County.
| Oct 13, 2017
Realtor®Mag helps outline some of the pros and cons to flipping, renting or holding you home. (Source Realtor.com®)
Flip, Rent, or Hold: The Best Investment Option
What are the pros and cons of each type of real estate investment, and which ones are the most profitable? “Over the generations, real estate has proven itself to be a pretty good, time-tested investment,” says Eric Tyson, co-author of Real Estate Investing for Dummies. “Like investing in the stock market, people who follow some basic principles and buy and hold over long periods of time should do fairly well. But, of course, there’s no guarantee.”
Realtor.com® analyzed the five most common real estate investments and broke down the typical returns investors have received over the past five years. Here’s an overview:
1. Home Flips
- First half of 2017 gross returns: 48.6%
- 2014 gross returns: 45.8%
- 2012 gross returns: 44.8%
2. Rental Properties
- 2017 gross returns: 13%
- Three-year returns: 9.9%
- Five-year returns: 11.67%
- 2017 returns: 2.75%
- Three-year returns: 8.39%
- Five-year returns: 9.79%
4. Crowdfunding (pooling money to invest in apartment complexes, office buildings, or shopping centers)
- Year-to-date annualized returns: 8.72%
- Two-year returns: 8.89%
5. Home Appreciation
- One-year appreciation: 10%
- Three-year appreciation: 26.7%
- Five-year appreciation: 44.8%
Source: “Flip, Rent, or Hold: What’s the Best Path to Real Estate Riches?” realtor.com® (Sept. 25, 2017)
6 Things You Should Never Let Movers Touch
So after years of DIY/friend-assisted moves, you’ve finally decided to hire movers. As a fellow
lazy convenience-minded person, I salute you. The heavy-lifting, traffic-negotiating, stair-climbing nightmare parts of moving day are out of your hands.
But before you kick back and start daydreaming of sleeping in on the big day, I also have some bad news: There are some things you always want to move yourself.
Even if you’ve hired pros, you’re still probably going to be renting a truck or tucking a few things away in your car. Yes, I know—that completely bursts your nothing-to-do bubble. But you’ll want these things for their safe arrival.
1. Your pets
Obviously, you’re not going to pack Rover in a box with some air holes, but you still need to do some prep work.
Moving is stressful for pets. Add the potential danger of their busting free in the chaos of moving, and it could be a bad situation. Save yourself a headache later and pack them a travel bag now.
If you’re moving across town, plan to take water and food bowls, food, treats, an extra leash, a favorite toy, and a crate with you in the car.
If you’re moving out of state, your movers probably won’t transport your pets, but you can hire a pet-moving service.
Houseplants are a bigger moving-day hassle than you might realize.
First, your mover might not be able to take some of your plants, because local and interstate laws may forbid it.
“Before doing anything with houseplants, it’s good to check with your state’s Department of Natural Resources or the U.S. Department of Agriculture to make sure there aren’t any restrictions for moving that particular type of plant,” says Jonathan Deesing, a community specialist with imove.
If the plants are allowed on the truck, you’ll still have to worry about everything arriving safely.
“Only pack up plants that are hardy and can survive a bumpy ride,” he says. Fragile plants (we’re looking at you, orchids) may not survive in the back of the truck. So put them in an open box in your car with some padding to keep the pots from tipping over.
If you’re packing, the movers probably aren’t.
Whether you’ve got an antique revolver just for display or a powerful hunting rifle, this one is a big no-no for obvious reasons.
“It’s best to move your guns on your own for safety reasons, and many moving services will not even consider moving guns for you anyway,” Deesing says.
If you’re moving your arsenal, don’t forget your safety lessons. Pack bullets and guns separately, and keep everything clearly marked and out of the reach of children.
And remember the rules and regulations.
“Make sure you have all the paperwork in order before moving guns across state lines,” Deesing says.
4. Your record collection and other valuables
Whether it’s the complete history of the blues on 350 vinyl records, or a collection of antique snow globes, “if you can’t stand the thought of losing it, don’t put it on a moving truck,” Deesing says.
Your moving company isn’t going to toss any of your stuff around (we hope), but accidents do happen. It’s one thing when it happens to that bookshelf you bought at Target, but another when it happens to your great-grandmother’s antique lamp set. If in doubt, bring it with you.
5. Personal paperwork
Pack your Social Security card, birth certificate, auto title, and any other important paperwork in a waterproof case, and haul that with you. Inevitably, something gets misplaced in a move. And it’s not helpful to find your passport six months after you had to scramble to get a last-minute replacement for your vacation to Spain.
“Of all your belongings, these can often be the most difficult to recover if lost or damaged in transit,” Deesing says.
6. Climate-sensitive artwork
If you’re moving across town or within the same state, your artwork can probably be safely packed and stowed away on the moving truck. If you’re moving several states away and the temperature might change drastically on the trip, you might want to bring those originals with you in your climate-controlled car.
“If you have artwork in a truck and move from the Northeast to the Deep South, it could irreversibly damage certain paints and materials,” Deesing says.
For everything else, follow this rule: When in doubt, overcompensate.
“Communication is key with any part of the move, and this is no exception,” Deesing says. “Don’t take risks, either—clearly label your fragile items and feel free to supervise movers as they load items onto the truck.”
5 Home-Buying Mistakes That Can Sabotage Your Retirement
Buying a home is a major step toward building a solid, secure financial future—so whether you’ve made the plunge into ownership or are aiming to soon, you should pat yourself on the back! (This, of course, is not as easy as it seems.) And yet, in the race to settle into a place of your own, it can be easy to overextend yourself and cut corners on yet another important financial goal: saving for retirement.
Even if retirement is decades away for you, this subject nonetheless repeatedly tops the list of Americans’ economic fears in Gallup’s annual Financial Worry metric. But just because you buy a home doesn’t mean you can’t save for retirement, too. It’s a high-stakes balancing act, one where the right home-buying decisions will keep your retirement on track, and the wrong ones may throw you seriously off-kilter.
Here are some common retirement saboteurs to avoid.
Saboteur 1: Buying a house outside your price range
When you purchase a home, your retirement savings are on the line—even if it may not seem that way at the time.
“Housing is the biggest expense most people have,” points out Mary Erl, a certified financial planner and owner of Nest Builder Financial Advisors in Gurnee, IL. Hence, if you purchase a property that’s way outside your budget—and you’re forced to forfeit saving for retirement in order to make your mortgage payments—you’ve put yourself in a bind. A pickle, even.
And don’t just consider your current income, but your future income, too.
“People almost never take future earnings into consideration,” laments Joe Pitzl, a certified financial planner and partner at Pitzl Financial in Arden Hills, MN. “Younger couples get married, buy their first home based on their combined household income. But then when they start a family, one of the spouses leaves the workforce to raise the children and all of a sudden they’re bringing in a lot less money each month. That reduces how much money you can save for retirement.”
Saboteur 2: Draining retirement accounts for a down payment
While it’s tempting to borrow from your IRA or 401(k) to amass a down payment on a home, many financial experts say home buyers should do so sparingly, only as a last resort. IRAs and 401(k) plans are called retirement accounts for a reason—you’re not meant to touch the money until you’ve entered your golden years. If you borrow from either plan before age 59½, you’ll get slapped with a 10% excise tax on the amount you withdraw, on top of the regular income tax you pay on withdrawals from traditional defined contribution plans. Ouch.
Making early withdrawals also obviously prevents the money from accruing interest in these accounts. Put simply: Raiding the piggy bank before the money has matured can put a serious dent in your retirement savings, and many underestimate the repercussions.
“Withdrawing $5,000 from your IRA or 401(k) to pay for home repairs may not seem like a big deal,” Pitzl says. “But if you do so at age 30, that money would have grown exponentially over time if you left it in the account.”
Saboteur 3: Paying off your mortgage too quickly
While it sure sounds impressive to pay off your mortgage in three years, it’s not necessarily the best for your retirement. The reason: There’s good debt and bad debt. You want to pay off your credit card bill (bad debt) in full each cycle or you’re going to pay interest. Mortgage payments, though, work differently.
From a psychological standpoint, you probably don’t like owing a hefty sum to your lender. (We don’t blame you.) However, if you’re a younger homeowner with a new mortgage (good debt), it’s beneficial from a retirement savings perspective to make only the minimum monthly payments on the loan and invest the money where you can get a higher return.
For example, on a 30-year mortgage, at today’s interest rates, it makes more sense to put the money into an IRA or 401(k) than increase your mortgage payments, Pitzl says. “Don’t throw every penny you can at your mortgage debt,” he says. Granted, if you’re approaching retirement and are close to paying off your mortgage, it may make sense to up your payments if you want to retire debt-free.
Saboteur 4: Not saving for a rainy day
When asked about their emergency savings, an alarming 29% of Americans said they had none, according to a report last year by Bankrate.com. Nada. But without a sufficient emergency fund, you may be tempted to run up credit cards or tap your home’s equity or retirement accounts to pay for major repairs (new roofs don’t come cheap). And “if you get laid off, your mortgage payments don’t stop,” Erl says.
Therefore, make sure you have enough cash tucked away to cover six months of living expenses in the event you lose your job and budget 2% of your home’s value for annual maintenance (1% for newer homes), says Pitzl.
Saboteur 5: Waiting too long to downsize
Your $1 million McMansion may have made sense when your family of five was living under one roof, but if you’re heading into retirement, it’s probably time to downsize.
A common mistake, says Austin Chinn, a certified financial planner at Fountain Strategies in San Jose, CA: “People destroy their retirement savings by staying in their home so that they can have their kids move back in after they graduate college.”
Unless you’ve budgeted for a boomerang child, you need to do what makes sense for you financially.
“If you can move from a larger home to a smaller home and wipe out your mortgage, that’s a huge boost to your retirement,” says Erl.
Because crunching the numbers can be complicated, it can be helpful (and a huge relief) to meet with a financial planner to determine if a reverse mortgage makes sense for you (find one at Napfa.org).
7 Bathroom Renovations That Really Pay Off
Let’s get real: The first room you stumble into in the morning—bleary-eyed, dazed, and yawning—should be a soothing oasis. A bathroom that achieves those lofty heights? That’s a bathroom you can love. That’s why these most special of rooms are second only to kitchens as the areas homeowners eagerly spend time and money renovating—and that catch a buyer’s eye when you’re trying to sell.
But exactly which upgrades are the best, in terms of both usefulness and return on investment? Before you go nuts installing saunas and rain shower heads, check out this second installment in our series Renovations That Really Pay Off, for some smarter tweaks you’ll be very glad you made.
Reglaze, don’t replace, the tub
“No, no, no—do not put in a new tub,” says Rebecca Knaster, associate broker with Manhattan’s William Raveis. “It’ll cost thousands between the tub and the installation.” Instead, have the tub reglazed for “around $1,500,” which will make it look brand new.
Matt Plaskoff, founder of One Week Bath, agrees that if the shower area “is in decent shape,” it’s best to concentrate on the front part of the bathroom, which “sets the tone for the space.”
Invest in a new sink
Face washing, teeth brushing, gerbil bathing—your sink sees a lot of use. It’s also the very first thing a buyer notices in a bathroom, says Knaster.
“Step 1 for getting the most bang for your buck is a new contemporary sink,” she says. “It will set you back a few hundred dollars and make all the difference.”
Just note whether the sink you already have is an undermount (where the edge is below the countertop to create an uninterrupted surface) or overmount (where the sink lip comes up over the countertop), says interior designer Randal Weeks, founder of Aidan Gray Home.
An undermount can be difficult to remove unless it’s under a formica top. If the sink is adhered to the surface, the top will also have to go, which quickly drives up the cost. One easy and dramatic sink upgrade Weeks recommends is replacing separate hot and cold faucets with a sleek single-handle faucet that starts at $70.
Go for timeless tile
While natural stone is hot, Weeks prefers neutral styles that will appeal to a broader range of people and provide better return on investment. Pricey stones are taste-specific, he notes, and can give a busy look that’s a turnoff regardless of expense.
In fact, Weeks says one of the biggest issues buyers consider when making offers is the cost of redoing other people’s “bad choices.” So go for crowd-pleasing features such as bright white subway tiles, which run a mere 21 cents each. The payoff?
“You can add $10,000 of value to your home by selecting timeless elements that won’t date it.”
Upgrade your lighting
It’s not just Snow White’s evil stepmother and the Kardashians who spend lots of time staring into the mirror on the bathroom wall. For most of us, lighting and lighting fixtures are critical elements.
“Dated light fixtures are a turnoff,” says Knaster. “For no more than $100 you can buy a basic but nice bathroom light fixture.”
Install a double vanity
The last thing you need in the morning is a battle with your partner over who gets the sink. It’s no wonder “I’m looking for a double vanity” is one of the most common things heard by Will Johnson, a Hendersonville, TN, real estate agent and founder of the Sell and Stage Team.
A double vanity typically costs between $200 and $800, with installation falling around $220, Johnson says—and it’s a wise investment. Johnson has clients who “won’t buy a house simply because there’s only one sink in the master bathroom!”
Swap in new fixtures
“Old materials such as bronze can instantly date your bathroom,” says Johnson. To knock out this easy DIY update, simply purchase new door handles, drawer pulls, and towel bars. A nice chrome drawer pull can cost as little as $3, while a towel bar canaverage $30.
Get a water-saving toilet
Old toilets use 6 gallons of water per flush, gobbling up about 30% of all residential water in U.S. homes. Go green when you swap out your throne. New WaterSense models using only 1.28 gallons per flush (e.g., TOTO’s Carlyle II 1G toilet) conserve up to 18,000 gallons of water annually. The initial cost of $974 will shave more than $110 per year off a water bill and add up to almost $2,200 over the lifetime of the toilet. Bonus: The latest water-saving thrones actually work.
But skip the bidet
Bidets may be considered the Rolls-Royce of toilet upgrades, but most bathrooms simply don’t have room for them. What’s worse: Most Americans have no idea what on Earth these things are and may even be weirded out by them.
“My personal opinion is that our society is not accustomed to this practice and doesn’t see the extra value in them,” says Tracy Kay Griffin, an expert designer at Express Homebuyers in Springfield, VA. “We haven’t renovated a home yet where we thought it would be a good investment to add a bidet.” Just say nay to the bidet.
Non-Bank Servicers Creating Bigger Mortgage Problems
It’s hard to find a more sympathetic foreclosure story than Kathleen Conrad’s.
The disabled widow of a Marine who served in Vietnam, Conrad, 66, lives in a rundown Westchester house the couple bought in 1999, realizing their modest version of the America dream.
But after her husband died in 2004, Conrad faced larger-than-expected cuts to her widow’s benefits. During the 2007 housing market boom, she took out a second mortgage from GMAC. In 2013, Conrad fell behind on payments and was contacted by her loan’s new owner, Infinite Customer Systems and the strong-arm tactics began to get Conrad out of the home.
Unlike big banks, non-bank servicers like Infinite are not bound by even the modest consumer protections built into the National Mortgage Settlement (NMS) of 2012.
Non-bank servicers are taking a page from their predecessors’ playbooks. Sources say that many of the same old problems the NMS partially sought to address are back with the nonbank servicers, including long delays in reviewing loan modifications and wrongful denials of loan modification requests.
While Federal Housing Finance Agency director Mel Watt is still dithering about whether to finally allow principal write downs to help troubled borrowers keep their homes, private investors who’ve already gotten a steep discount on distressed debt sold by government-sponsored entities are using hard-knuckle tactics with homeowners.
“The investors buying these loans are not interested in offering home-saving solutions to struggling homeowners,” said Jacob Inwald, director of foreclosure prevention at Legal Services NYC.
As government-sponsored enterprises including Fannie Mae sell delinquent mortgage loans to shore up their balance sheets and banks pull back on this market, private investors are muscling in. They range from small fry like Virginia-based Infinite Customer Systems to $60 billion Texas-based private equity titan Loan Star Funds. Loan Star is the backer of mortgage servicer and originator Caliber Home Loans, a major new player in New York.
After a flood of complaints about Caliber’s practices, Attorney General Eric Schneiderman opened an investigation last year. Loan Star declined to comment. A spokesman for the AG said the investigation is ongoing.
ICS’ Patrick Desjardins said he tried to reach a deal with Conrad before filing foreclosure. She halted the case by filing for bankruptcy protection, aided by foreclosure defense attorney Linda Tirelli. Earlier this month, a judge voided ICS’ lien, leaving the investor with worthless paper, and Conrad in her home.
“I don’t know where I would have [gone]” Conrad said. “That’s why I was fighting so hard to keep the house.”
Experts fear the new wave of investors will steamroll other vulnerable New Yorkers.
“We’re really concerned about the outlook,” said a spokesman for the Center for NYC Neighborhoods. “This is an unprecedented transfer of property ownership, accelerated by the distressed sales to non-bank servicers.”
Non-banks serviced 25 percent of the $9.9 trillion in outstanding US residential mortgages last year, against just 7 percent in 2012.
That’s according to a new Government Accountability Office report released last week by Sen. Elizabeth Warren (D-Mass.) and Rep. Elijah Cummings (D-Md.), who called for more oversight. This shift could lead to “harm to consumers, such as problems or errors with account transfers, payment processing, and loss mitigation processing,” the report said.
These new risks come as thousands of New Yorkers are mired in foreclosure. A new report from New Yorkers for Responsible Lending notes that as of last October, the state had nearly 90,000 pending foreclosure cases, half of which were filed in the previous 12 months. The crisis has bypassed wealthy enclaves of the city while ravaging low-income minority neighborhoods in Brooklyn, Staten Island and Queens.
As a RSPS certified realtor I can help you find your perfect family get away. Realtor.com explains how owning that home can even help get you more tax benefits.
5 Tax Benefits of Owning a Second Home
There are tons of benefits that come with owning a second home: novelty and adventure, a place to escape and unwind, an opportunity to create memories that last a lifetime, a valuable tool to make vacation-craving friends like you a whole lot (for better or for worse).
But there’s another benefit that’s often overlooked: the tax breaks.
You already know that owning a home usually offers some tax deductions. But what if you own two? Or three? What if you’re a regular Donald Trump (back in his real estate, meat magnate heyday, of course)?
Since we know you won’t mind a little extra cash to spend while soaking in your surroundings during your next getaway, we thought we’d tell you how to reap the fruits of your second-home purchase.
1. Mortgage interest—yes, again
When it comes to owning a second home, the interest on your mortgage is deductible. The same rules that come with writing off mortgage interest for your first home apply to your second.
In fact, you can write off as much as 100% of the interest you pay on up to $1 million of debt, which includes total debt taken on to pay for both homes, as well as money spent on improving the properties. (That’s not up to $1 million for each property—just up to $1 million in total.)
2. Home improvements
Is your second home a fixer-upper? If you want to spend the off-season making improvements to your hideaway, you can deduct the interest on a home equity loan or line of credit.
But there are a couple of exceptions.
For starters, there will be a limit on the amount you can deduct if the home equity loan on your main or second home is more than $50,000 if filing single or $100,000 if married or filing jointly.
Second, the amount you can deduct has a limit if the mortgage is more than the fair market value of the home, says Gil Charney, director of The Tax Institute at H&R Block.
For example, let’s say a taxpayer has a mortgage of $220,000 and takes out a home equity loan of $65,000. The property’s fair market value is $275,000. Since the difference between the fair market value and the mortgage is $55,000, then $55,000 of the home equity loan can be deducted, not the full $65,000.
3. Property taxes
You can also deduct your second home’s property taxes, which are based on the assessed value of the home. That’s good news. Even better news? Unlike the mortgage interest tax deduction, there’s no dollar limit on the amount of real estate taxes that can be deducted on any number of homes owned by the taxpayer.
But beware: Taxpayers who can afford two homes are likely to land in a higher tax bracket—which means slimmer pickings for tax savings. For example, in 2016, a married couple whose gross income exceeds $311,300 would have limits on the types of itemized deductions they could take.
4. Renting out your home
If you rent out your second home for 14 days or less over the course of a year, that rental income is tax-free—and there’s no limit to what you can charge per day or week. Score!
But if you’re hoping to put your secondary digs on Airbnb or another rental site for more than 14 days during the year, be prepared to do some heavy math come tax time.
You’ll want to figure out the number of days you rent your home and divide that by the total number of days your home was used—whether it was you or a renter staying there. (The total number of days that the home was vacant doesn’t fall into this equation.)
For instance, let’s say you rented out your vacation home for 30 days within a year, and vacationed in your home for 90 days.
We’ll divide 30 (the days you rented it out) by 120 (the total number of days the home was used). The result: 25% of your rental-related expenses—which could range from utilities to the cost of a property manager—can be deducted. Now, if your home is losing value, that same percentage (in this example, 25%) of depreciation costs can also be deducted.
Here’s the caveat, Charney explains: Depreciation costs can be deducted only if there is rental income remaining after taking into account other deductions, such as mortgage interest, property taxes, and direct expenses tied to renting your home—like agent fees or advertising.
5. When it’s time to sell
Maybe you bought a far-off hideaway that you’re lucky to visit a couple of times a year. Or perhaps your vacation home is just a quick drive away, and you spend every possible moment there.
If it’s the latter—and you don’t already know which of your homes is your primary residence and which is the second home—now’s the time to figure it out. Distinguishing between the two can have big tax implications when it comes time to sell.
That’s because a capital gain of up to $250,000 (or $500,000 for taxpayers who are married/joint filers) on the sale of the principal residence may be excluded from taxable income.
Your principal—or primary—residence is the home you used most during the five years prior to the sale. But other factors—such as your job’s location, voter registration address, and banking location—could also come into play. Among other requirements, you must own and use that principal residence for at least two of the five years before the home is sold.
We know—that’s a lot of heavy stuff to take in. But you knew your second home would pay off in more ways than one, right? Now, hurry up and file your tax return—so you can escape to your happy place and forget about burdensome things. Like taxes.