John Beckett's Real Estate Blog

If a new house is listed for only slightly more than older ones you’re looking at, is it worth jumping on? Here’s a look at the pros and cons.

Some homebuyers will take nothing less than a new home with an untouched bathtub. Others want a home with character in an established neighborhood.

Personal preferences aside, there are pros and cons to buying a newly built home over a resale, as well as financial implications for each option.

New-home advantages
Rochelle Fitzgerald, a sales associate with Coldwell Banker Residential Brokerage’s Rockwall office near Dallas, says, “There’s no question that some people prefer that ‘new-home smell’ and the idea that no one else’s feet have been on the carpet. On top of that, many people like to personalize their home by picking out everything from the beginning.”

Some buyers focus on the more practical aspect of buying a new home because it typically will require less maintenance than an older house.

“It’s very important to some buyers to have everything new, plus they have the peace of mind that comes along with the builder’s warranty,” says Dan Kruse, broker/owner of Century 21 Affiliated in Madison, Wis.

On the financial side, builders, particularly in a slow real-estate market, offer plenty of incentives to buyers.

“In a sellers market, new homebuyers will often spend as much as 10% or more above the purchase price for optional features,” says Jeff Ristine, broker/owner of Weichert, Realtors: Kingsland Properties near Chicago. “Now many builders are offering free options as an incentive to buyers, such as a finished basement and an upgraded kitchen. Builders are tailoring their incentives to specific buyers, so some will throw in things like initiation fees for a country-club membership.”

New-home disadvantages
In spite of the added builder incentives, real-estate experts say new homes are typically more expensive than existing homes.

“Traditionally, new homes are more expensive because they are being built from the ground up,” Kruse says. “In recent years, some new homes have come down somewhat in cost because the builders have been hurt so badly by the downturn in the housing market. For the most part, though, builders try to keep price integrity and will offer closing-cost assistance or upgrades rather than lower the base price.”

Upgrades and closing costs are typically tied to the buyer using a builder-designated lender and title company.

“I would caution buyers, at least in our market in the Chicago area, to be careful buying a new home because builders are competing against foreclosures and it could be long time before a new home will increase in value,” Ristine says. “Even with builder incentives, you are usually paying a premium for buying a new home, so you need to hold onto it for five years or more to build any equity.”

Fitzgerald says buyers of new homes should expect to own for longer than buyers of existing homes because of differences in price appreciation.

“In a new-home community, if you need to sell within a year or two, you are competing against the other homes that are still being built and can be customized,” Fitzgerald says. “Buyers will choose a brand-new home rather than a 1-year-old home, especially if the builder can offer incentives that a regular seller cannot.”

One other downside is the potential for living amid a construction site for several years, particularly if the builder has slowed development because of the recession.

When to buy a new home
Real-estate agents agree that the best values for a new home come when the development is nearly complete.

“In years past, buyers wanted to get in early to take advantage of pre-construction pricing and a better location within the community,” Kruse says. “But now, buyers want to get in late, so if you have to sell you won’t be competing with newer homes in the development.”

Ristine says buyers should be cautious about buying before a community is nearly complete, because some builders are so financially strapped that they cannot complete their developments.

Existing-home advantages
“The biggest advantage of existing homes is the maturity of the community,” Kruse says. Buyers can look at how well the homes have held their value historically. Plus, buyers willing to purchase a fixer-upper can more easily increase the value of their property than someone with a new home.

Fitzgerald says that buying in an established community allows homeowners to know more about the schools and neighbors before they buy.

Long-term value in new and existing homes
For most homebuyers today, the biggest concern is whether the property will hold its value.

“In 10 years, a new home purchased today is likely to have more value simply because you own a newer home designed to meet today’s standards,” Fitzgerald says. “A new community will have newer amenities, too, including schools and shopping areas.”

Kruse and Ristine believe long-term value depends more on location than the age of the property.

“Value depends on where a home is located and how well the home has been maintained,” Ristine says. “People do like new things, but if a home has been upgraded with a new kitchen and bath, it can compete very well with a new home.”

Ultimately, the decision to buy a new or existing home comes down to what a buyer values more: a maintenance-free, new home or a mature neighborhood.

Read at:  http://realestate.msn.com/should-you-buy-a-newly-built-home

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If you’re considering selling your home, there are a number of factors you should consider regarding the resale value of your property. Some of these issues may devalue your home or scare some potential buyers away entirely, even if your home is an otherwise outstanding property! Consider these eight factors when listing your home.

1. Location, Location, Location
Many real estate television shows repeat this phrase over and over. Buying a home in an area that provides residents with access to services and effective transportation is important – though many buyers don’t wish to live too close to airports and busy roads for fear of noise.

Visual appeal is another concern. Cell phone towers and power lines can be seen as eyesores – or possibly even having potential health hazards. Local school closures can also deter potential buyers who have children or who are considering having children in the near future. Some buyers may be leery of purchasing homes that are on flood plains.

To ensure maximum resale potential, consider how many of these types of issues exist near the properties you’re considering. Remember, though, there’s no way of knowing exactly how a neighborhood will evolve over time.

2. Good Renovations Gone Bad
If your home looks like a DIY nightmare, this can definitely devalue your home. Though putting money into renovations generally increases the value of a home, poorly done renovations can have the opposite effect. If buyers feel that the renovations will have to be redone, there’s a good chance they’ll make a lower offer or keep looking for a move-in ready home.

3. Overly Creative Customization
That bright pink feature wall might have seemed like a good idea at the time, but the truth is that unusual paint choices – both inside and outside the home – can turn buyers off, even if your customization is the cutting edge trend in current home design magazines. Customizing spaces so that they may not be functional to future buyers, like turning the garage into a home gym or a granny apartment, might make some buyers reluctant to buy your property.

The same can be said for unique landscaping choices or renovations that are too high scale for the house. A professional chef’s kitchen or marble bathrooms in a modest home suited to first-time buyers won’t likely provide a good return on investment.

4. Unappealing Curb Appeal
The first thing potential buyers will see is the exterior of the property. If the house appears to be outdated or in poor repair on the outside, people will assume it is the same for the inside. Water features or swimming pools and overly landscaped green space may turn off some buyers since people tend to associate high maintenance yards with expensive upkeep and unnecessary headaches. Old fences and sheds can also devalue your home, especially if they look like they’re in dire need of replacement. Keep the gardens weeded and the lawn mowed so that potential buyers can see how nice the property is, inside and out.

5. Pets Gone Wild
Many people won’t mind buying a home that has had resident animals, but no one wants to live with constant reminders of former owners’ pets. Damage to carpets, walls or a strong smell of animals will put off some buyers – especially those with allergies. Consider letting your pets live elsewhere while the property is for sale. Also, a good cleaning and repairing of any visible damage will help to mitigate the potential devaluation of your home associated with pet ownership.

6. Not-So-Nice Neighborhood
A dodgy neighborhood with a high crime rate or homes on your block that look unkempt can scare potential buyers away. Even if your neighbors have unusual-colored homes or have made strange additions to their homes, this can be perceived by potential buyers as an eyesore.

7. Sinister Reputation
Well-known crimes, deaths or even urban legends associated with your house or neighborhood can decrease the value of a home immensely. Most people don’t want to live in a home where they feel that something awful has happened, much less move in with your alleged resident ghost! Though these kinds of issues may be out of your control, they may certainly have an impact on the resale value of your home.

8. Frightful Foreclosures
Many buyers are leery of purchasing foreclosures that are being sold on an “as-is” basis. The fear is that the home could be a money pit or require a huge amount of repairs before being move-in ready. Some good homes may be available through foreclosures, but it’s important to do your research, ask lots of questions and don’t be afraid to bargain. It’s also crucial that you get a home inspection so that you know exactly what you’re getting into. There’s a good chance that some work will be required when buying a foreclosure, but you may get great value for your money if you’re willing to put in a little work.

The Bottom Line
Neighborhoods change over time, so there’s no way to be totally sure when you buy a property how the area will look in the years to come. However, you should always make your best efforts to address any issues with your property that are within your control. Play up your home’s strong points and get involved with your realtor to ensure that any special features of your home and neighborhood have been highlighted.

Read at:  http://financiallyfit.yahoo.com/finance/article-112746-9669-2-8-factors-that-devalue-a-home?ywaad=ad0035&nc

Buy a house today if you can, but don’t sell one if you don’t have to, says George W. Johnson, a 97-year-old real-estate agent who has been working the Seattle market since 1936. Johnson, who is reluctant to call himself America’s oldest real-estate agent — he says he just learned of a 99-year-old broker in Florida — has seen his share of housing booms and busts since he hung his first real-estate shingle 74 years ago. “I’ve been through a lot of these ups and downs,” he says, remembering the property boom that followed World War II, as well as the deep downturn in the 1970s when Seattle’s biggest employer, Boeing, laid off thousands of workers. through it all, Johnson says he has learned many enduring lessons. Chief among them: After every housing recession, the market has “gone higher than the one before.” You have to have the stomach to hang on through all of the twists and turns, he says.

This market a ‘baby’ compared to days past

Johnson wasn’t always a real-estate guy. He was born to a farming family in South Dakota on Dec. 22, 1912, and moved to Seattle at the height of the Great Depression to attend college and pursue a teaching career. To make ends meet, Johnson juggled three jobs at one time. He delivered milk for a while. “Whatever you could do to get by with, you did it.”  Then, in 1936, he started dabbling in real estate. Unemployment hovered around 30%, soup lines stretched around blocks, homelessness was rampant. “You could have bought the best house in (the Seattle neighborhood of) Ballard for $3,500.” Times were tough. The current real-estate market, Johnson says, is “a baby” by comparison. “In addition to the Depression, we had the drought at the same period, so it was just compounded. You wouldn’t believe the things that happened during that period.” Johnson, a natty dresser who drives himself to work every day — including Saturdays – managed to carve out a niche as a service-oriented agent. When the economy turned at the end of World War II, he opened up his own shop in Ballard, north of downtown. He and his sons have run George W. Johnson Realtors ever since, weathering the ups and downs in the market with confidence that profits are there for the making.  “I’ve lost a lot of money in a lot of things, but I’ve never lost in real estate,” Johnson says. He remembers selling his first house in the 1930s for about $1,500. “It’s probably worth $300,000 now.”

4 real-estate tips from Johnson
You can’t thrive in the real-estate industry for this long without learning some useful lessons along the way. Here are some of Johnson’s pearls of wisdom:

Beware one-company towns: Cities dependent on a single company or industry are more vulnerable to jarring downturns if the economy goes south. The Rust Belt’s old factory towns have made that abundantly clear. The Seattle market turned particularly grim in the late 1960s and early ’70s when Boeing, the aerospace giant, laid off more than 60,000 people in the Seattle area. “Boeing was about the only major company we had other than (the University of Washington),” he recalls. “Now we’ve got a much broader base to help out … it is altogether a different proposition.” Johnson counsels homebuyers to look beyond real-estate values and investigate an area’s fundamental economy before making a purchase.

Don’t get greedy. Johnson blames “plain old greed” for the latest real-estate downturn — people got caught up in the enthusiasm of the moment and banks egged them on with cheap loans. “Everybody was out to buy a house, raise the price, double it and make a quick buck,” he says, shaking his head. “People signed up for stuff that they knew they shouldn’t have and they couldn’t pay (for) and of course the banks helped them.” Johnson is old-school in that way. At the heart of his real-estate philosophy is his fundamental belief in personal responsibility. “You’ve got to be able to hang onto a house until conditions are such that you can make a little money,” he says, emphasizing that each and every potential homebuyer should make an honest assessment of his or her financial potential and should be wary of offers that seem too good to be true. “People aren’t as dumb as the media is making them out to be. They knew what they were getting into,” he says. But he is compassionate for those who have run into honest trouble. “It’s tough on people who lost their jobs and are now losing their homes and that type of thing. It always is,” he says. Their pain, however, is the buyers’ gain.

Timing is everything. “In this market, any young person that hasn’t bought a house ought to buy one,” Johnson says. “A buyers market doesn’t come along that often … you just can hardly help but make money on whatever you buy today at the prices they are.” Johnson says rates are only going to go up over the long term, so borrowing will cost more.

If you don’t have to sell, hang on. Unfortunately, Johnson expects sellers to continue to suffer, at least for now. Buyers, on the other hand, “know it’s a buyers market – they are going to come in with offers below what we’ve appraised it at just because they know a lot of people have to sell,” he says. Despite the continued housing-market struggles, Johnson is confident that the latest downtrend is largely over. ”We are headed up,” he says, “but like I said, I think it is going to be slow. It will take a year or two at least.” And as the market heads up, Johnson hopes to be there helping his customers buy and sell homes just as he has for most of his life – out of a small, family office dedicated to service with a smile. “We’ve done a good job,” he says of his business. “We’ve been careful and honest and thorough and it’s been good service, and I think that will always produce, no matter what business you’re in.”

Read at: http://realestate.msn.com/article.aspx?cp-documentid=25369084&GT1=35006

I just read this article sent to me from the REALTOR MAG which is from the National Association of Realtors. I wanted to pass on this great information.

The seemingly endless run of bad housing news is discouraging some potential home buyers from considering a purchase. But the truth is that the advantages of homeownership have very little to do with investment gains. The best things about owning a home have a lot more to do with personal comfort and satisfaction.

Here are five of them:

· Be your own landlord. The bank can only kick you out if you don’t pay; a landlord can be much less dependable – deciding to sell the property or choosing to live there themselves.

· Paying the principal is forced savings. Yes, it’s possible that home prices will fall further. It is also possible that your 401(k) will lose value. But over the long haul, both are likely to enjoy modest gains in value.

· Fixed-rate mortgages never rise – and eventually you pay them off. With mortgage rates at record lows, people who buy now are locking in real bargains.

· Good schools. Family-sized rentals are harder to come by in areas with excellent public schools.

· Spacious properties in pleasant neighborhoods. Sizable homes in attractive communities are almost always owned – not rented.

Source: The New York Times, Ron Lieber (08/27/2010)

The proliferation of services that help homebuyers and sellers complete their own real-estate transactions is relatively recent, and it may have you wondering whether using a real-estate agent is becoming a relic of a bygone era. While doing the work yourself can save you the significant commissions that many real-estate agents command, for many, flying solo may not be the way to go — and could end up being more costly than a commission in the long run. Buying or selling a home is a major financial and emotional undertaking. Find out why you shouldn’t discard the notion of hiring an agent just yet.

1. Better access/more convenience

A real-estate agent’s full-time job is to act as a liaison between buyers and sellers. This means that he or she will have easy access to all other properties listed by other agents and will know what needs to be done to get a deal together. For example, if you are looking to buy a home, a real-estate agent will track down homes that meet your criteria, get in touch with sellers’ agents and make appointments for you to view the homes. If you are buying on your own, you will have to play this telephone tag yourself. This may be especially difficult if you’re shopping for homes that are for sale by owner. Similarly, if you are looking to sell your home yourself, you will have to solicit calls from interested parties, answer questions and make appointments. Keep in mind that potential buyers are likely to move on if you tend to be busy or don’t respond quickly enough. Alternatively, you may find yourself making an appointment and rushing home, only to find that no one shows up.

2. Negotiating is tricky business

Many people don’t like the idea of doing a real-estate deal through an agent and think that direct negotiation between buyers and sellers is more transparent and allows the parties to look after their own interests better. This is probably true — assuming that both the buyer and seller are reasonable people who are able to get along. Unfortunately, this isn’t always an easy relationship. What if you, as a buyer, like a home but despise its wood-paneled walls, shag carpet and lurid orange kitchen? If you are working with an agent, you can express your contempt for the current owner’s decorating skills and rant about how much it’ll cost you to upgrade the home without insulting the owner. For all you know, the owner’s late mother may have lovingly chosen the décor. Your real-estate agent can convey your concerns to the seller’s agent. Acting as a messenger, the agent may be in a better position to negotiate a discount without ruffling the homeowner’s feathers. A real-estate agent can also play the “bad guy” in a transaction, preventing the bad blood between a buyer and seller that can kill a deal. Keep in mind that sellers can reject a potential buyer’s offer for any reason — including just because they hate his or her guts. An agent can help by speaking for you in tough transactions and smoothing things over to keep them from getting too personal. This can put you in a better position to get the house you want. The same is true for the seller, who can benefit from a hard-nosed real-estate agent who will represent his or her interests without turning off potential buyers who want to niggle about the price.

3. Contracts can be hard to handle

If you decide to buy or sell a home, the offer-to-purchase contract is there to protect you and ensure that you are able to back out of the deal if certain conditions aren’t met. For example, if you plan to buy a home with a mortgage but you fail to make financing one of the conditions of the sale — and you aren’t approved for the mortgage — you can lose your deposit on the home and could even be sued by the seller for failing to fulfill your end of the contract. (Keep in mind that the details of any contract may vary based on state law.) An experienced real-estate agent deals with the same contracts and conditions on a regular basis and is familiar with which conditions should be used, when they can be removed safely and how to use the contract to protect you, whether you’re buying or selling your home.

4. Real-estate agents can’t lie

Well, OK, actually they can. But because they are licensed professionals, there are more repercussions if they do than for a private buyer or seller. If you are working with a licensed real-estate agent under an agency agreement, such as a conventional, full-service commission agreement in which the agent agrees to represent you, your agent will be bound by law to a fiduciary relationship. In other words, the agent is bound by law to act in his clients’ best interest, not his own. In addition, most real-estate agents rely on referrals and repeat business to build the kind of client base they’ll need to survive in the business. This means that doing what’s best for their clients should be as important to them as any individual sale. Finally, if you do find that your agent has gotten away with lying to you, you will have more avenues for recourse, such as through your agent’s broker or professional association or possibly even in court if you can prove that your agent has failed to uphold his fiduciary duties. When a buyer and seller work together directly, they can — and should — seek legal counsel, but because each is expected to act in his or her best interest, there isn’t much you can do if you find out later that you’ve been duped about multiple offers or the home’s condition. And having a lawyer on retainer any time you want to talk about potentially buying or selling a house could cost far more than an agent’s commissions by the time the transaction is complete.

5.  Not everyone can save money

Many people eschew using a real-estate agent in order to save money, but keep in mind that it is unlikely that both the buyer and seller will reap the benefits of not having to pay commissions. For example, if you are selling your home on your own, you will price it based on the sale prices of other comparable properties in your area. Many of these properties will be sold with the help of an agent. This means that the seller gets to keep the percentage of the home’s sale price that might otherwise be paid to the real-estate agent. However, buyers who are looking to purchase a home sold by owners may also believe they can save some money on the home by not having an agent involved. They might even expect it and make an offer accordingly. However, unless buyer and seller agree to split the savings, they can’t both save the commission.

The bottom line
While there are certainly people who are qualified to sell their own homes, taking a quick look at the long list of frequently asked questions on most “for sale by owner” websites suggests the process isn’t as simple as many people assume. And when you get into a difficult situation, it can really pay to have a professional on your side.

Read at: http://realestate.msn.com/article.aspx?cp-documentid=25368603