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Things to Consider

An autumnal wreath on a door

The Benefits to Buying in Autumn

Most homebuyers think that the best time to purchase a home is in the Spring when lawns are green, trees have leaves, and flower beds are in bloom. Did you know that house hunting in the Fall comes with is own great set of benefits? Buyers will avoid the competition that comes with busy real estate seasons and could even have opportunities to save money if they shop in Autumn!

There is Less Competition:

One of the biggest reasons to buy a home in the Fall is because it is considered off season for real estate so there is less competition between buyers. According to RealtyTrace, over the past 15 years, October buyers paid on average 2.6% lower than estimated market value. With less buyers putting offers on homes in the Fall, it leaves more room for negotiation on price.

Tax Advantages:

If you close on your new home before the end of the year, you may be able to get a tax deduction next April. In addition, many sellers want to close by December 31st so they can take advantage of a tax break, which means that they may be more willing to cut a deal.

End of the Year Sales:

Fall is a great time to buy appliances and furnishings for your new home because of Black Friday and end of year sales.

The Focus is on You:

Since business is slower in the Fall months, Real Estate Agents, Loan Officers, Home Inspectors, etc. have more time on their hands to dedicate to helping you find and purchase your perfect home.

 

Don’t let the lack of green outside, shorter days, and gloomy weather stop you from finding your dream home. You will avoid competition and have some money saving opportunities while house hunting in Autumn.


Things to Consider

3 houses on growing stacks of coins

Should you invest in real estate?

Financial experts don't agree on everything, but one thing they share common ground on is the reliability of real estate as an investment.

Since 2012, home prices have risen with each passing month, according to the National Association of Realtors. Within days of hitting the market, for-sale properties across the country are snatched up in short order, as demand continues to far outpace supply. Depending on your available resources and financial goals, investment properties can help supplement your income or become a full-time occupation.

If real estate is something that you've always found interesting, you may be wondering where you begin. In other words, how do you start investing in real estate or go about buying your first investment property. You may also be curious about what you should know before you fully enter the real estate market and the extent to which you'd like to be involved. This should help you answer some of these questions.

What do real estate investors do?

As their title implies, residential real estate investors use financial resources in order to build, optimize, maintain or otherwise manage property that people use for dwelling purposes. Everyone needs a place to put their things and kick back from life’s daily stresses, and polls show buying a home is something the vast majority of Americans hope to do. The ongoing desirability of homeownership has led more people to start investing in various types of real estate. Fun fact: According to NAR data, 23 percent of the home sales in February 2019, the most recent month for which data is available, were cash sales.

Just how involved real estate investors become in the process is for them to decide. For example, those who wish to supplement their income, may opt to buy shares in a real estate investment trust, or REIT.

Similar to mutual funds, REITs function as organizations that maintain various types of real estate, whether it be commercial (like offices in high rise buildings, residential (townhomes, single-family units) or those used for accommodation purposes (like hotels). REITs can be a good starting point for buying real estate because there's usually less responsibility involved, particularly if the REIT is a public one.

A much more involved form of real estate investing is buying houses to resell them, typically after implementing necessary renovations. Better known as house flipping, this can be a potentially lucrative way to turn a profit and is something that an increasing number of properties have been the product of. For example, in 2018, more than 207,950 single-family homes and condominiums were flipped, according to ATTOM Data Solutions. They accounted for roughly 5 percent of all real estate transaction over the 12-month period.

Getting a higher price on a flipped home is made possible by renovating properties, which can increase their resale value. However, it’s important to do your homework before investing in a fixer-upper so you know how much it will cost to make the necessary improvements. Whether you do the repairs yourself or hire someone to do them, you want to avoid spending more on the renovations than the potential increase in appraised value. 

The labor-intensive elements of home flipping - both in research and physical work - is part of the reason why experts recommend it only for those who have the amount of time and available resources to make the commitment.

Is it a good time to invest in real estate?

Former Speaker of the House of Representatives Tip O'Neill used to say that all politics is local. In other words, goings-on in terms of activities, events or circumstances are subject to change, depending on the place you're talking about. The same can be said for real estate. Asking prices, home buying interest and inventory in one portion of the country might be different from the next.

Generally speaking, though, few can deny that it's a great time to be buying real estate, if for no other reason than climbing home values and the pace at which people enter the marketplace. Indeed, in February, existing-home sales rose 12 percent from the previous month, based on the latest NAR data. Additionally, the median price among all housing types - single-family, townhome and condo - rose 3.6 percent on a year-over-year basis to $249,500. February 2019 was the 84th month in a row that home values rose from the same period a year earlier.

What's more, in a separate NAR study, more than 50 percent of those surveyed said they considered the current real estate market to be worthy of entering in order to buy a home. This was due, in part, to a strong economy, 53 percent of whom thought it was continuing to improve through
the first three months of 2019.

But just because there's ongoing consumer interest in buying homes doesn't necessarily mean it's a no-brainer investment. Here are a few key considerations before you make the decision:

Do your homework

Whether you buy property as an investment vehicle is a determination you should only make after doing your research. There are lots of online resources you can go to that provide tips on cost-benefit analysis, but things you can do on your own time include actually visiting the property that's up for sale, what other homes in the area sell for and your financial capabilities.

You may want to meet with a financial advisor or mortgage provider who can go over some of the numbers with you to give you an idea of whether or not you're a good candidate and have the necessary cash flow or ability to make a down payment on an investor mortgage (usually 20 percent of the purchase price).

Start out small

At the outset, avoid buying a house that will require a lot of renovation if you plan on rehabbing it yourself. Starting small will allow you to get your feet wet and determine if investment property work is something you wish to pursue long-term.

Pay off debt

Debt is always something you should try to avoid, but if you require an investment loan, you may be required to be free of any outstanding debt, such as medical bills or unpaid tuition bills. Prioritizing your finances and credit score can improve your odds of mortgage approval.

Real estate is a road worth traveling that's paved with endless possibilities. Through planning, research and smart money management, it just may be the super highway to a future of wealth and prosperity.


Things to Consider

Woman holding a multi-gas testing device

Why it is important to test for radon, lead and carbon monoxide:

Radon, lead, and carbon monoxide are silent dangers that could be in your home. Test for each of them to ensure that you and your family are not exposed to these hazards.

Radon:

Illustration of how radon gets into a homeIt is important to test for radon because it is a cancer causing, radioactive gas. According to the Surgeon General, radon is the second leading cause of lung cancer in America. Although radon is a very dangerous gas that could be in your home, you are not able to smell, taste, or see radon.

The only way to know if your home has a problem with radon is to test for it. You can buy your own testing kit from a hardware store, or you can hire a qualified radon tester to do it for you.

EPA recommends that you take steps to reduce your radon levels if your test results are 4 pCi/L or higher. Even if your home has high levels of radon, it is possible to fix the problem and reduce your radon to an acceptable level with the help of a professional.

Lead:

If you have any children in your home, lead can cause health and behavioral problems for them, especially if they are under the age of six years old. Lead can also be harmful to pregnant women and their unborn children. You should consider testing for lead if your home was built before 1978.

Workers in full body suits removing lead paint with tape in the foreground that says LEAD HAZARD Work Area Keep OutYou are able to test for lead by sending a paint and soil sample to a lab, or you can hire a certified assessor to do it for you.

If you do find hazardous levels of lead in your paint or soil, make sure your children under the age of six are tested for lead poisoning by your family doctor. You should also hire a state certified lead contractor who can help you reduce the lead hazards in your house and soil.

Carbon Monoxide:

Illustration of CO2 with a blue cloudCarbon monoxide is another colorless, odorless gas. It can cause flu-like symptoms so you wouldn’t know you had a carbon monoxide problem unless you have a working carbon monoxide detector properly installed in your home.

Carbon monoxide detectors should be installed in EVERY sleeping room in the house, every hallway, and every additional level of your home including the basement. Carbon monoxide detectors should be ideally at knee level, but they can be installed at chest level if you have children. Make sure carbon monoxide detectors are not blocked by furniture or curtains.

Simple tests for radon, lead, and carbon monoxide can ensure that you and your family are safe from these invisible threats.


Things to Consider

Woman working on finances with a calculator and laptop

Planning for the Extra Expenses of Homeownership

When deciding how much of a home you can afford, don't forget to factor in the extra expenses of homeownership that extend beyond your monthly mortgage payment, taxes, insurance and utilities.

Home maintenance

Home maintenance helps your home run efficiently and keeps your house in good condition. There are a few popular rules of thumb used to estimate how much homeowners will spend annually on home maintenance.

  • The 1% Rule: Budget 1% of the purchase price of your home each year to go towards home maintenance.
  • The Square Foot Rule: Budget $1 per square foot of your house per year for maintenance and home repairs.

Keep in mind that these general rules for home maintenance and repair budgets DO NOT take into consideration many factors like the age of your home, the location, the weather of the area where you live and the condition of your house. All these factors can affect your yearly maintenance and repair expenses.

Household items for your new home

There are many items that first-time homebuyers may need to purchase for their new home. See below for a list of some of the popular items new homeowners buy within the first few weeks of moving in.

  • Calculator with images indicating home, groceries, car and vacationNew locks and keys
  • Garden hose
  • Lawn mower (if applicable)
  • Snow shovel (if applicable)
  • Rake
  • Garden tools
  • Curtains or blinds for the windows
  • Light bulbs
  • Tool kit
  • Fire Extinguisher
  • Grill

Making sure things like maintenance, repairs, and additional household items are included in your budgeting will help you decide how much home you can comfortably afford. It pays to speak with local experts early in the home buying process so you can focus on the right price range and buy your dream home.


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Things to Consider

Foreclosure sign in front of a house

How to find REO properties

No matter where you are along you're homeownership journey, you've likely come across many new or unusual terms and phrases. One of them is typically expressed as an abbreviation: REO.

If you're looking to buy a home for sale at an affordable price - which can be said for most people in the real estate market - it can really pay off to know more about what REO properties are and where you can find them.

What's an REO property?

Short for real estate owned, REO properties are essentially foreclosed homes. When homeowners are unable to make their mortgage payments on time for a few months or longer, they receive a notice of default and, if payments continue to go unpaid, their houses go into foreclosure.

This means that the financial institution that provided the original loan assumes ownership. Much like homeownership itself, foreclosure is a process that can take several months to finish. REO is a shorthand way of indicating the transferral in ownership is complete.

During the financial crisis and the recession that followed, REO properties were fairly common in the U.S., with foreclosure starts topping 2 million nationwide back in 2009, according to ATTOM Data Solutions. They're nowhere near as prevalent today, thanks in large measure to the economy being in better shape and more rigorous mortgage approval standards.

Fewer than 500,000 homeowners were foreclosed upon last year, based on the most recent annual available from ATTOM. They continue to fall on a year-over-year basis, with nearly 55,000 default notices, scheduled auctions and bank repossessions recorded in February. That's the eighth consecutive month in which foreclosure filings fell on an annual basis.

The fact that REO listings are less common is an encouraging development, mainly because it's an indication that more Americans are in sound financial shape and paying off their monthly mortgage bills on schedule. Going into foreclosure can wreak havoc on one's credit score, making it more difficult for them to borrow money at an affordable rate of interest.

Why should you buy a REO or foreclosed property?

The one positive aspect about REOs, particularly for those who are in the market for the first time, is that once they go to public auction, they typically sell at price points well below market value.

Lenders do this in order to make bank-owned properties more appealing to buy and because foreclosures may not be "move-in ready," perhaps in need of some refurbishing to get them back in tip-top shape.

Thus, a single-family residence that originally sold for $250,000 may be listed for $200,000 as a foreclosure. Sometimes the price is more, perhaps even less. As with most aspects of residential real estate, what you spend is largely contingent on the circumstances of the moment and the local marketplace.

How do you buy a REO or foreclosed property?

Going about finding foreclosure listings is fairly similar to the process for the typical housing hunt.

Mobile apps, real estate listing websites and other online search tools will often categorize foreclosures as their own separate entity so shoppers can identify them more expeditiously by checking off the appropriate boxes.

Alternatively, many real estate agents specialize in foreclosed homes. Getting in touch with them can provide you with leads about new units in public auction and what you should be mindful of should you decide to purchase the property.

Much like existing, recently renovated or brand new houses, you never know when the next REO property will become available, but you can be sure they will. They're more common in certain portions of the country than others.

For instance, New Jersey currently has the highest foreclosure rate, accounting for 1 in every 1,006 housing units in February, according to separate analysis from ATTOM Data Solutions. Second to the Garden State was Delaware at one in every 1,008, followed by Maryland (one in 1,193), Florida (one in 1,365) and Illinois (one in 1,465).

As with any home purchase, buying an REO property should not be taken lightly. Although they usually sell for less, it quite possibly could be the most money you'll ever spend on a single purchase, so it's important to enter the process fully informed.

Here are a few things to keep in mind:

Understand your mortgage options

Generally speaking, you should be able to finance an REO, assuming you have the appropriate qualifications and are creditworthy. However, if the property you're interested in is not in livable condition - usually due to poor upkeep by the previous tenants - traditional financing may not be an option. This means that you may only be able to buy it with cash. It's another reason why your best move is to go through a real estate agent; they can fill you in on all the details that you may miss by going it alone.

Know what you're up against

Because demand currently outstrips supply, you may be in competition with others for the real estate owned property. Some of these individuals may be investors, who buy the listing with cash and then resell it after making various strategic renovations. This shouldn't dissuade you from making an offer, but it's always good to enter the process knowing what you're up against.

Have house inspected

Home inspection is standard operating procedure before buying a house, but it's especially important prior to finalizing a deal on a foreclosure. There may be structural issues that need to be addressed before you sign on the dotted line.

Talk with a trusted real estate agent or lender to learn more about REO properties - they just may be the pricing opportunity that you've been waiting for.


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