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Money Management Through Real Estate Investing

Sat, 17 Jun 2006 00:00:00 PDT

Money Management is a primary concern for most people as they begin to think about the future. The thought wasn't always there in the past regarding your retirement or even your next paycheck. With major corporations disappearing not only with your job but also with your pension, more people are concerned and should be.

There are many means of money management available. You can put all your extra cash in your pillow, you can put it in a box under the floorboards, you might even want to put it in a bank. If you put it in a bank, are you going to put it in a savings account, your checking account, a CD (certificate of deposit) or maybe a money market account. You might want to set up a brokerage account and trade stocks or have a managed fund account.

One of the best means of long-term money management is Real Estate investing. With Real Estate on a constant increase in value, a lot of experts agree that this is one of the best investment strategies. Within the Real Estate investment opportunities, there is an assortment of investment strategies. There are short term strategies such as flipping properties and long term strategies such as buying to rent and selling in 20-30 years to fund your retirement. I've heard of a couple that had 3 children and they heard that buying investment properties was a good way to be prepared for their children's college fund. So they purchased 3 properties with nice homes on them. They took care of the properties for years without consideration of occupying them with renters during this time. Their entire intent was to resell at the time their children were going to college and using the proceeds to pay for their college education.

Before you start to invest, educate yourself. Investments in Real Estate can be costly. You do not want to throw your money away because of ignorance of prudent Real Estate investing decisions. Figure out what your investing goals are and what methods of investing will help you achieve these goals. Do you need to create short term income with your investing strategies or can all of your profits be considered long term. Can you put more into your investment or is it a one time lump investment. How much risk can you stand? Do you need strategies that are less risky. Are your funds limited and maybe you might be interested in investing in Real Estate Investment Trusts (REIT) through the stock market instead?

If you want ownership of the property and your funds are limited, you can look for deals with foreclosure properties. Sometimes you would have to put some work into a property so you need to be prepared. Make sure you can do the work yourself or you have someone that you can go to and you have a reasonable idea of the costs involved.

One of the investment strategies you may not hear of much but nevertheless it is a big investment strategy, is Tax Lien Investments. Basically, when taxes are not paid on a property, the county would assess a tax lien on that property. The Tax Lien is then put up for sale by the county. If you bid on the lien and are awarded the lien, then you would pay the county the amount of tax that is due. The property owner would then have to pay the back tax plus a penalty. This entire amount is then paid to you. Each state sets up the what the amount of the penalty is. In some states, it is 14%. In others, it is 25%. This figure varies from state to state. If the property owner doesn't pay the back taxes and the penalties after 3 years, you can foreclose on the property. Tax Liens take precedence over most other liens.

Michael Russell Your Independent guide to Money Management

Article Source: http://EzineArticles.com/?expert=Michael_Russell

Short Sales

Fri, 15 Sep 2006 00:00:00 PDT

In a typical short sale, the lender agrees to accept net proceeds from the closing, perhaps with some additional consideration from the seller (such as cash or a promissory note) in exchange for releasing its lien. Lenders do not agree to short sales to be generous. In negotiating the short sale the lender needs to be convinced that it will come out better than it would by foreclosing on the property and pursuingthe seller for its losses. Though short sale procedures vary somewhat from lender to lender, most lenders need to be convinced of the following:

Proposed sales price is equal to or higher than the lender would receive for the property after a foreclosure.
Commission under the proposed transaction is equal to or less than te commission the lender would pay if selling the property after foreclosure
Explanation of the seller's circumstances which created the need for te short sale transaction (eg divorce, medical problems, death, birth of a child taking one wage earner out of the work force, loss of a job or job transfer).
Proof that the seller lacks funds to make up the shortfall (copies of financial statements, tax returns for the previous two years and paycheck stubs for the most recent pay periods.

A borrower with minimal assets, little income and a willingness to file bankruptcy has little to lose by providing financial information. However, most candidates for short sales have some assets, a good job with wages that can be garnished or a desire to avoid bankruptcy. Candidates for short sales need legal advice regarding the prudence of submitting financial information to the lender. Refusal to submit financial information to a lender greatly decreases the chances of closing, but does not necessarily rule it out.

While a foreclosure remains on a person's credit report for seven years, a short sale may not reflect poorly on one's credit report. Sellers should ask and possibly negotiate how the lender would report the loan payoff to credit reporting agencies. In many cases, the lending institution will report the loan as "paid in full." It could also show on the credit report as "settled" or "paid" or "short payoff". It depends on the the lender and the seller's ability to negotiate.

The Philosophy of the Long - Term Achievers

Mon, 18 Sep 2006 00:00:00 PDT

Historical data relating to the appreciation of real estate property values throughout the years has always been very comforting. In fact, housing has appreciated consistently an average of 7.5 percent per year over the past 30 years in Canada [source: Canadian real Estate Association], and an average of 7 percent per year in the United States over the same span of time [source: National Association of Realtors]. Which goes a long way to prove how sound real estate is as a wealth-generating vehicle, notwithstanding the several ups and downs the industry has gone through in both countries.

The economic explanation of this brilliant and consistent track record is relatively simple. Housing supply is produced using land, labor, and various inputs such as electricity and building materials, with the quantity of new supply determined by the cost of these inputs, the price of the existing stock of houses, and the technology of production.

As real estate is a fixed and durable commodity and the land underneath is practically indestructible, real estate markets are modeled as a stock-over-flow market. About 98 percent of supply consists of the stock of existing houses, while about 2 percent consists of the flow of new development. What drives the accumulation of wealth in real estate is the perpetual search for more surplus-value, that is the amount of the increase in the value of capital upon investment, i.e. the yield regardless of source or form.

This is by no means unique only to real estate, as stock markets spin around the same principle as well. The difference, however, consists in the fact that real estate markets employ one economic variable that is entirely missing from stock markets: labor. Real estate requires a constant supply of labor force, which can conserve and add value to inputs and capital assets, and thus create a higher value. The rationale behind this is that labor adds value by satisfying demand through production, since when people acquire income they tend to invest it, and the more people that acquire income the more people that tend to invest it.

Therefore, there is a correlation between capital and employment in real estate or, if you will, between income and labor. An increase in levels of consumption sets forth an increase in prices caused by a corresponding increase in demand, in itself generated by a commensurate increase in the income-employment factor.

It follows, therefore, that real estate growth and appreciation of real capital assets are derived by the equilibrium of capital and investment with labor and employment, which is a characteristic unique to real estate. Which, then, explains the consistent track record of real estate as a wealth-generating venue. And which, moreover, further explains why ‘bubbles' are to be found only in the heads of the ‘bubbleologists' - that is all those who spend countless nights thinking about the next economic Apocalypse - but certainly not in real estate.

With all this in mind, one of the oft-touted clichés of real estate investing is that greed is the driving force that causes investors to jump into the market during times of real capital appreciation and expansion, and that fear is what drives the same investors to jump overboard during times of price deflation and decline.

Personally I have never quite subscribed to this line of thought.

To be sure, when we experienced the recent 15 percent per year capital assets appreciation, I invariably stumbled across someone who wished the appreciation was 20 percent. So I guess that can be called ‘greediness'. And conversely, there is no question about the fact that the greatest fear of real estate market participants is to lose money, so there is a huge temptation to abandon the market when there is trouble ahead. But I believe that over time we have all become more sophisticated than this, and that investors have moved beyond the foregoing relatively simple explanation of greed and fear.

Market dips do not cause the panic that once did, not even among all those first-time Buyers or investors who have never experienced a market downturn. In fact, more and more people see periods of price decline as times of opportunity. And conversely, when the feeling is that real estate markets are very close to peak out or that are otherwise dangerously high, investors increasingly display the tendency to temper their expectations and prepare themselves psychologically for the eventual market pullback.

Therefore instead of greed and fear I believe it would be more proper to talk about hope and regret. As our expectations of good rates of return increase as the market increases, so do our hopes that capital appreciation will be even better than anticipated. When real estate begins to lose steam, as it is the case today in many areas, it is regret the feeling we experience when we lose money, even if it is money that we lose only ‘on paper' since we do not intend to sell.

Econometric research, in fact, has long established that consumers put the value of a dollar ‘lost' at least twice as high as the value of a dollar ‘gained'. Put differently, any investor would have to earn two dollars to compensate for the psychological drawback of each dollar lost. To experience regret is not the same as being disappointed. The difference stands in the degree of quantity of the loss perceived by investors. For instance, if a Buyer hoped to make a 15 percent return out of the sale of a real capital asset and only makes 10 percent, he will be disappointed but not regretful. If, on the other hand, the same Buyer will only make 5 percent - or no return at all - he will be regretful.

What separates long-term achievers from the rest of the crowd is the psychological capability to not let market cycles dictate their investment decisions. More particularly, in the ebb and flow of real estate, those who are most successful maintain their strategy throughout market cycles. This is, in ultimate analysis, what distinguishes investors from speculators. The role of speculators in a free market economy is to absorb risk and add very little liquidity to the market place. In fact, more often than not, speculators will reduce market liquidity by inflating prices - the principal effect of speculation.

Investors, on the other hand, play an entirely different role. In theoretical Economics the term ‘investment' refers to the purchase and holding of capital goods, which are not instantaneously consumed - i.e. sold for profit - but, rather, used at a later date. In short-term speculation, the measured risk of the acquisition is considerably higher and, in ultimate analysis, no better option than the leveraged capital appreciation through investment holding.

Luigi Frascati Luigi Frascati is a Real Estate Agent based in Vancouver, British Columbia. He holds a Bachelor Degree in Economics and maintains a weblog entitled the Real Estate Chronicle at http://www.realestatechronicle.blogspot.com where you can find the full collection of his articles. Luigi is associated with the Sutton Group, the largest real estate organization in Canada, and is based with Sutton-Centre Realty in Burnaby, BC. Luigi is very proud to be an EzineArticles Platinum Expert Author. Your rating at the footer of this Article is very much appreciated. Thank you.

Article Source: http://EzineArticles.com/?expert=Luigi_Frascati

What Do Home Buyers Really Want?

Tue, 19 Sep 2006 00:00:00 PDT

While every homebuyer is different, there are some common themes among those that are looking for a new home. Every buyer wants a quality home that they will be proud to live in and won't fall apart within months or even years. Most homebuyers are focusing not only on quantity in the way of square footage, but also quality, as that is what gives a home its worth.

Common Desires

There are some basic things that homebuyers are looking for when they look at a home. Some of the most common are centralized air conditioning, a walk in closet in the master bedroom, a bedroom on the main floor if the home is two or more stories, a patio for entertainment, as well as an oversized garage that will fit multiple cars as well as provide some storage space.

Even these common desires are not straightforward. An air conditioning unit that is 25 years old cannot provide centralized air; most buyers want an efficient central air conditioning unit. A patio needs to truly be an outdoor living space that has had some thought and planning associated with it. And the bedroom on the main floor needs to be big enough for either a master bedroom or a good-sized guest room for either guests or even an aging relative that needs care.

Rooms that Get Noticed

One room that is important to buyers in today's market is the living room. Most buyers are giving up the formal living room and family room split and simply want one, big open floor plan that will allow them to entertain company as well as lounge around and watch movies on a Saturday afternoon. Informal spaces such as this are in because they are more functional.

Another room that will get noticed is the bathroom. Not only do buyers want more than one bathroom, they want them to come fully loaded! Luxury items such as soaking tubs, garden tubs, pricey fixtures, and quality tiling always go over well in the bathroom. Pedestal sinks, claw foot tubs, and a separate shower and tub are also very popular in the bathroom right now and are what most buyers are going for.

The kitchen is also another room that will get more than a once over when a buyer comes in. Stainless steel appliances, high quality wood cabinets, marble or granite counters, kitchen islands, and quality flooring will all go a long way toward selling a home. Buyers see the kitchen as an entertainment area, so if things are in order and are updated a home will likely sell much sooner than if it is not. If the dining area also blends well with the kitchen, this is even better!

The Homes Target Audience

Age really does affect what a home buyer wants in a home. Most realtors will report that those that are less than age 44 usually want a home that is in the suburbs or a subdivision. The home will sell well if it is located near schools, parks, and playgrounds. For buyers over age 45, homes that are one story, less than 10 years old, and on a flat lot with items such as sprinkler systems will appeal to them. Location really is important to home buyers as homes in certain areas may contain features that are important to some buyers but not so important to others.

First time home buyers are also likely to overlook items like pricey fixtures, walk in closets, granite counters, or oversized garages. Typically it is the first time buy that will have a shorter list of must haves, because they are just getting into the market and may be on a stricter budget or just not have a whole lot of experience with offered features. Repeat home buyers will be more likely to have a list of must haves, so a home that is well finished and has all of the items described above will likely appeal to a repeat home buyer.

The type of upgrades one has made to their home or is willing to make to their home will decide who the home will generally appeal to. Of course, home buyers all have their own preferences about what makes a home worth buying, but studies have been done and the general consensus is that older home buyers have a longer list of must haves and items in a home that are very important to them, such as a bedroom on the main floor.

As you can see, homebuyer's want a little of everything, and the specific needs and wants vary widely from buyer to buyer. Generally, a home that is well cared for and offers some modern or updated features will attract many home buyers and if located in the right area, will sell relatively quickly.

Andrew owns a website that provides useful strategies on buying and selling a home. You can visit his website at: http://www.buy-and-sell-house-fast.com/ for more information.

Article Source: http://EzineArticles.com/?expert=Andrew_Webber

Why Room Rentals?

Tue, 19 Sep 2006 00:00:00 PDT

Room rentals? Why would you want to make your home into a boarding house? Maybe you shouldn't. I enjoyed having people living in my house, and most of them became friends. On the other hand, you might not like that arrangement. I hated being a landlord when I owned rentals that were not my home. Each of us is different.

Consider Your Room Rental Options

You don't necessarily have to live with the room-renters, so consider all the options available. You could do any of the following:

1. Rent rooms in your own home and share common space with the renters. This is what I did for several years when I was single, and it worked fine for me.

2. Partition your home so you can rent rooms without sharing common space.You'll need at least two bathrooms, and separate entrances to make this work.

3. Add an efficiency apartment for yourself, so you can have privacy, perhaps still sharing a laundry room with the renters. This is what we did when I married. It also opened up one my previous bedroom, increasing the rental income enough to pay for the new apartment in less than a year.

4. Buy a house just to rent it out by the room. This can be an excellent way to get cash flow out of homes that might not otherwise be such good investments.

5. Sublet a room in the apartment you rent. If this is okay with the landlord, it can be a way to afford a nicer apartment, or to get past financial hard times.

6. Use room rentals as a way to afford a house payment. If you are having trouble buying a home because you can't afford the payments, you can buy a home with extra rooms and rent them out.

Consider The Money In Renting Rooms

The amount you can charge for rent will vary greatly in different parts of the country. Here is what I charged renting rooms in a mobile home in a small town in northern Michigan (a few years ago):

Small Bedroom: $65 per week times 52 weeks equals $3380 per year.

Medium Bedroom: $75 per week times 52 weeks equals $3900 per year.

Large Bedroom: $85 per week times 52 weeks equals $4420 per year.

Potential Annual Income (I had a couple weeks vacancy now and then): $11,700 per year. This was a home that I lived in, remember. I included all utilities in the rent, and I tracked my expenses closely. Including repairs to the heating system, the refrigerator and roof, as well as utilities, garbage collection, cable television, local phone service, property taxes and insurance, my costs the last year I had the house were $3,900 (I had already paid off the $253/month mortgage).

How do you figure profit when you live in the home? Renting rooms in my home probably added $300 or so to the annual costs. Heating was almost the same cost, as was garbage collection, taxes, insurance, cable television, and phone service. A little more wear and tear and a bit more electricity were the only real additional costs. In other words, almost all the extra income was profit. Or if you want to look at it another way, I lived for free and had $7800 income from the home I lived in.

Do you want to have thousands of dollars of extra income every year? What would you do with that money? Think about that, and you have the answer to why you should rent rooms.

Steve Gillman wrote the E-book, Boarding House Profits - How To Make Big Money With Room Rentals. For more information on this and and other useful insider information, visit: http://www.99reports.com

Article Source: http://EzineArticles.com/?expert=Steven_Gillman

What Is A Seller Concession?

Wed, 20 Sep 2006 00:00:00 PDT

A seller contribution is another incentive when purchasing a home. This takes places when the seller of the property promises money towards the buyer's closing costs.

A seller will choose this for several reasons:

1. He or she brought another house and cannot carry the cost of two monthly mortgages.

2. Their employer is relocating him/her.

3. The seller needs the equity for an investment.

4. The seller's home has exceeded the length of time on the market.

During the time of the purchase the buyer should not have to wait until the seller brings this option to the table. Be ready to ask and negotiate unless you prefer for the seller to lower the home sale price instead. The buyer must then calculate which is the most benefiting, the seller contribution vs. lower home sale price.

An inexperienced buyer can feel intimidated to initiate the subject, the best way is to ask the banker or mortgage broker to discuss this option. Some home buyers lack the sufficient funds for the home purchase. A seller contribution can make the major difference.

Benefits of seller contribution:

1.Buyer can place a larger down payment for a lower interest rate.

2.Eliminate the charge of Private Mortgage Insurance(PMI) if applied.

3.Buyer can focus on lowering their current debt and achieve a lower interest rate.

The seller must make sure that the exact amount agreed to contribute is in writing. To make sure there are no troublesome tax consequences check with the lender to be certain because of real estate laws varying state to state.

Wilda Escarfuller is a licensed Real Estate Agent in the state of New York. Her expertise has helped many home buyers to make the right decisions. She understands that while purchasing property is exciting it can place a series of consequences if one does not know the basics. Find more of Wilda Escarfuller's useful info on: http://www.realestatewizard.blogger.com

Article Source: http://EzineArticles.com/?expert=Wilda_Escarfuller

1st Time Homes Buyers

Fri, 03 Nov 2006 00:00:00 PST

When it hits, remember why you decided to buy a house in the first place:

Renting

No tax benefit
No investment in or from the property
No equity
Rent payment can increase
Possibility of eviction

Buying and Owning

Greater stability
Good investment
Equity builds
First home often leads to better home
Greater individuality in decor/space arrangement
Sense of Security

Best Place in America To Live

Sat, 04 Nov 2006 00:00:00 PST

Possessing "so many aesthetic and social attributes that anyone would be happy calling it home, or calling it home to one of their residences," the editors of Robb Report magazine, the international luxury lifestyle authority, have named La Jolla, California as the best place in America to live.

Detailed in Robb Report's July issue, which is scheduled to reach newsstands on June 25, "The Best Places to Live" feature article culminates months of research and dozens of interviews conducted by the magazine's editorial staff "Determining our selections is an arduous process, as our editorial team spends months consulting with experts from all over the United States," explains Brett Anderson, Senior Vice President, Editorial. "The result is selections such as the best island on which to own a home, the superlative setting for rustic living, the preferred place for golfers, the ideal address for skiers, and the seaside community capable of addressing a megayacht owner's every need."

In choosing the stunning San Diego County community of La Jolla, Robb Report's editors cite an extensive list of attributes that led to their selection. From the "gloriously mild Southern California weather" to the "diverse selection of beaches," La Jolla was handpicked form a selection of American cities, towns and other locales best suited for specific tastes and preferences or for pursuing individual passions.

Best Place To Raise A Family
Attracting "well-heeled parents seeking a quiet, safe setting to raise children," Robb Report's editors named Indian Hill, Ohio as the best place in America to raise a family.

In choosing the Cincinnati suburb of Indian Hill, Robb Report lauds the quaintness of this village of 5,900 residents. "About 25 percent of its 19 ½ square miles is village-owned space, and much of the land was donated by locals concerned with preserving Indian Hill's small-town atmosphere."

Most Historical Charm
Praising its “rich history and architectural beauty (while) boasting one of America's largest and oldest historic districts,” the city of Charleston, South Carolina was named as the American city with the most historical charm.

Robb Report's editors cite and extensive list of attributes that led to their decision. They point to the “variety of different architectural styles—Colonial, Georgian, Federal, Classical Revival, Gothic Revival, Italianate, Victorian, and even Art Deco” that can be seen in Charleston, as well as the city's springtime beauty, accentuated by the “blooming dogwood trees and magnolia gardens.”

Each month, Robb Report offers exclusive editorial and stunning photography of automobiles, yachts, private aviation, real estate, fashion, watches, jewelry, travel and epicurean life. The magazine provides a detailed guide to the products, events, issues and passions that capture the attention of today's affluent consumer. For more information, access the publication's Web site, www.robbreport.com.

The Best Places To Live: Categories and Selections

Best Place To Live: La Jolla, California
Cultural Offerings: Manhattan, New York
Skiing: Aspen, Colorado
Dining: Las Vegas
Golfing: Scottsdale, Arizona
Historical Charm: Charleston, South Carolina
Island Living: St. Thomas, U.S. Virgin Islands
Equestrian: Bedminster, New Jersey
Yachting: Ft. Lauderdale, Florida
Raising a Family: Indian Hill, Ohio
Rustic Living: Kula, Hawaii

Is it a good idea to use more than one real estate agent to find a home?

Sat, 10 Feb 2007 00:00:00 PST

Although it may seem that having several agents working for you increases your chances of finding the right property, it doesn't. In fact, having more than one agent working for you usually works the opposite way.

The reason is simple. Agents earn their income through sales. If an agent knows that they are "sharing" a buyer with several other associates, they will devote less time to that buyer than to another consumer they represent exclusively. And for good reason.:

Agents invest a lot of time locating suitable homes for buyers.
They do market research. Drive buyers around.
Contact other agents in search of properties and even help with financing.

Thus, their first loyalty when a hot new listing becomes available is to buyers who are "really serious", the ones who are loyal (exclusive) to them.

Market Speculation with Buzzdash

Fri, 16 Feb 2007 00:00:00 PST

People always ask what I think the Market is going to do. Now I am asking what you think!

Receive a FREE Webpage of your Home when you List or Buy with Denay

Fri, 16 Feb 2007 00:00:00 PST

My new business cards have a special offer on the back: use this card for a FREE webpage of your home. Some restrictions apply to this offer. These restrictions are:

This offer is valid when Denay Trinidad represents you with buying and/or selling Real Estate.
Commission must be a minimum of 2 1/2 % on either buying or selling side.
Expiration on this offer is Sept. 2007.

How does a buyer find the right agent?

Sat, 17 Feb 2007 00:00:00 PST

Obviously, recommendations are an excellent method. Interviewing agents is another. Are they knowledgeable about the market? Are they experienced? Assertive enough to be a good negotiator?

Astute agents will help buyers clarify their criteria, and give feedback on what is financially realistic. If the buyer is new in town, the agent should show them around - walk them through a few homes to give them an idea of what is available, and to get their feedback. Good agents show buyers only those homes that meet their criteria. They do not waste the buyer's time.

Aside from working with an agent, buyers should also keep an eye on the real estate section of the local newspapers. It is always possible for a buyer to find something that is new on the market, and has not, as yet, come to the agents attention.

Finding a home and working with an agent can be a delightful experience for a buyer.

The Key

Find the right agent, and give them as much information and feedback as possible.

Zillow: What's the Big Idea?

Sat, 28 Jul 2007 00:00:00 PDT

You may have heard of Zillow.com or you may have even tried it yourself. Zillow has a web site that gives free estimates and offers various online tools for real-estate buyers and sellers. It makes money from online advertising, selling ads to brokers, banks, contractors, appliance retailers and anyone interested in reaching homeowners and buyers.

The big idea behind Zillow is to make real estate more like a stock exchange, a transparent market where all information about every property is readily available, and as a result pricing is perfect. The problem with building such a system is that "the best information about the real estate market is locked up in people's heads. It's happening in conversations in backyard barbecues."

Zillow tends to work best for midrange homes in areas where there are a lot of comparable houses. It is less accurate for low- and high-end homes because there are fewer of those and thus less data available from comparable sales, known as "comps." Values of rural homes are hard to gauge for the same reason. Zillow says it has estimates on about 57% of all homes. Zillow executives acknowledge that the estimates can be way off in some cases.

The first time you visit Zillow.com: You type in your address to check out the Zestimate, an approximation of your home's market value. It appears in a little pop-up superimposed on a photographic map of your neighborhood.

Next, you realize that the information on your property is incomplete. What about the kitchen upgrade? Your new deck? The landscaping?

The Pros: Zillow lets users try to correct for things computers might miss. For instance, people can use Zillow's "my estimator" tool to account for the value of remodeling or to choose what they regard as the most relevant "comps," (comparable sales) screening out those that aren't really similar homes.The site also accepts listings from homeowners and agents, and includes an a feature called Make Me Move.

The Cons: When vital information is missing, computer programs like Zillow's can stumble . Data fed into the computer, for instance, may not reflect the fact that a house has just been remodeled, destroyed by fire or put into foreclosure. Reported prices can be misleading, too. Sometimes homes are sold between family members for a token price, or sellers offer incentives to buyers, such as help with closing costs, that aren't reflected in the recorded price. Making estimates is particularly difficult in some areas. Some states, including Texas, don't provide public records showing housing transaction prices.

The estimate "is a starting point" for people trying to figure out how much a home should cost, says Amy Bohutinsky, a spokeswoman for the company. "We don't recommend it as the final word."

Resources: Zillow
James R. Hagerty, The Wall Street Journal

How Accurate is a Zestimate?

Sun, 29 Jul 2007 00:00:00 PDT

A Wall Street Journal analysis of 1,000 recent home sales shows that Zillow's "Zestimates" often are very good, frequently within a few percentage points of the actual price paid. But when Zillow is bad, it can be terrible -- off the mark by more than 25% on one in 10 homes. In one case it was off by $2 million.

Overall, Zillow has Zestimated the value of 57 percent of U.S. housing stock, but only 65 percent of that could be considered "accurate" - by its definition, within 10 percent of the actual selling price. And even that accuracy isn't equally distributed.

For example, 85 percent of homes in Los Angeles have Zestimates, and two-thirds have been accurate. But only 53 percent of homes in metropolitan New York have Zestimates, and only half of those are accurate.

In at least one case, questions about Zillow's accuracy have taken on a political charge: A community activist group, the National Community Reinvestment Coalition, accused the site of discriminatory valuations in minority neighborhoods.

Resource: James R. Hagerty, The Wall Street Journal

Barn Again

Mon, 10 Sep 2007 00:00:00 PDT

Restoration of old houses is popular today. Some people are also taking the time to befriend old barns, finding that they hold many secrets and that each one has its own charm and mystery, pleasing proportions, simple natural lines and offers an integrity of design not available in standardized construction.

Historic barns have been relocated to become beautiful and unique homes, places of business, community meeting spaces and storage facilities, as well as traditional working barns. There are as many uses for a relocated barn as there are types of barn.

People are buying barns for $5,000 to $25,000 and turning them into homes; others keep them as barns. Last year, an unwanted barn from Saginaw County, Michigan was sold to a builder who transformed it into a $400,000 house in a wealthy Philadelphia suburb.

Urbanization and specialized farming trends have made large, traditional barns obsolete.Throughout the farmlands of the United States there are white barns, red barns, barns with six-faceted gambrel roofs, and barns with pointed gable roofs, double dormers and geometric decorations, unpainted barns; barns with German or Polish names painted above the doors; barns with green roofs, red roofs, barns with "Chew Mail Pouch Tobacco" yet faintly painted on the side.

Interestingly, the most important part of the barn is the barn frame and the most interesting component of any barn's construction and character. The exterior siding or roofing, as a rule has been neglected for years. Although old barns have withstood heavy snows and strong winds, many for almost two hundred years, many are unexceptional and many more have deteriorated beyond repair. A barn is basically a framework of solid timbers clothed with a replaceable exterior skin that when carefully dismantled and restored, can be given a new location and a new life.

A large attraction of the barn dwelling concept is the idea that no two barns are exactly alike. Thanks to the enormous flexibility of the frame, the possible configurations of personalized living spaces are unlimited. The exciting challenge is to create wonderful living spaces which make the most of the antique posts, beams, rafters, etc. However, just as in planning a conventionally built home, decisions must first be made about your personal needs and preferences. Because your barn dwelling is basically a custom house, there are no floor plans from which to choose. You, as the new owner of an old barn, begin with a large-volume shell, and you must first decide what it will contain..... how many rooms of what size, their relationship to one another and the approximate overall square footage you will require. When your preliminary planning has been done, it will be much easier for you to choose a good barn that is worth the effort of dismantling and reassembling elsewhere, and that best meets your requirements.

Those who wish to include a vintage barn frame in their construction plans must be sure to direct their resources wisely, be very selective about the barns you choose, and seek professional help. There are specialized programs, nationwide, promoting the preservation and use of historic barns, and encouraging preservation as a practical alternative to new construction.

Resources: Barn Again, Washington DC
The Barn People
Dave Ciolek

10 Creative Ways to Afford a Home

Sat, 12 Jan 2008 00:00:00 PST

If your income and savings are making home buying a challenge, consider these creative options.

Speaking from my own personal experience, the use of 4 of these techniques helped make possible home ownership for my husband and me. We purchased our first home using the following 4 creative techniques in 1 transaction: shared equity, seller financing, proposition 58, and refinancing.

Enjoy reading through these options. Call me to discuss and/or plan a creative purchase specifically designed for you. I'll be happy to assist you with additional information. Contact Denay, 619-925-7087 Mobile, 858-459-3851 ext. 206 Business

1. Are you a firefighter, teacher, law enforcement officer or other good citizen? New Housing Assistance programs means being a good neighbor can result in HUGE savings when purchasing a home. Through the 'Good Neighbor Next Door' program, law enforcement officers, teachers, firefighters, and other 'good' citizens can become homeowners for a fraction of the normal cost. Depending on your occupation, HUD offers a substantial incentive of 50% off from the list price of a home to those people who qualify.

2. Speak with Denay about local, state, and national down payment assistance programs. These programs give loans or grants to cover all or part of your required down payment. National programs include the Nehemiah program: the Nehemiah Program has assisted families working with lenders nationwide to provide more than a million in down payment gift funds, and the American Dream Down Payment Fund from the U.S. Department of Housing and Urban Development (http://www.hud.gov).

3. VA loans can be used to buy a home (including a townhouse or a condominium unit in a VA-approved project), to build a home, to simultaneously purchase and improve a home, to improve a home by installing energy-related features, or to buy a manufactured home and/or lot. The VA also has an inventory of VA-acquired property. A Streamline Refinancing Program, allows veterans to refinance at little or no expense. According to the Department of Veterans Affairs Annual Performance and Accountability Report for Fiscal Year 2007, the VA guaranteed 133,300 loans for veterans in attaining home ownership or refinancing their loans.

4. Proposition 58: Proposition 58 allows parents to transfer or sell their property to their children without triggering a tax reassessment if the proper procedures are followed within the time limits. California's current property tax laws (including "Proposition 13") require in general that real property (houses) be reassessed when there is a change in ownership. In California, property tax is 1.25% per year based on the purchase price. For example, if your parents paid $200,000 for their house that is now worth $800,000, they are paying $2500 per year in property tax. If you were to buy the house for fair market value, you would pay $10,000 per year in property taxes. Purchasing your parents home, under "Proposition 58", can be a tax savings for you of $7500 per year!

5. Proposition 193: Transfers of homes from grandparents to grandchildren can avoid reassessment under "Proposition 193."

If you are buying or transferring a home from a family member, I can assist you with the document preparation, title, and escrow documents needed within the required time frame. As your Real Estate Advisor, I can take you through the paperwork and processes to make sure it is a smooth transaction.
Contact Denay, 619-925-7087 Mobile, 858-459-3851 ext. 206 Business

6. Ask the seller to provide financing. In some cases, sellers may be willing to finance all or part of the purchase price of the home and let you repay them gradually, just as you do with a mortgage.

7. Consider a shared-appreciation, or shared equity, arrangement. Under this arrangement, your family, friends, or even a third-party may buy a portion of the home and thus share in any appreciation when the home is sold. The owner/occupant usually pays the mortgage, property taxes, and all maintenance costs, but all investors' names are usually on the mortgage. There are companies that can help you find such an investor if your family can't participate.

8. Seek help from your family. Perhaps a family member will loan you money for the down payment and/or act as a cosigner for the mortgage. Lenders often like to have a co-signer if you have little credit history.

9. Lease with the option to buy. Renting the home for a year or more will give you the chance to save more toward your down payment. And in many cases, owners will apply some of the rental amount toward the purchase price. You usually have to pay a small, nonrefundable option fee to the owner.

10. See if you can qualify for a short-term second mortgage to give you the money to make a higher down payment. This may be possible if you have a good income and little other debt.

If you need additional information or have any questions on these 10 creative home buying options,
Contact Denay, 619-925-7087 Mobile, 858-459-3851 ext. 206 Business

Some paragraph excerpts reprinted from REALTOR® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS®

How to Pick the Wrong Lender

Sat, 12 Jan 2008 00:00:00 PST

How to Pick the Wrong Lender

One day, you're interested in getting a loan. Your plan is simple: Call a number of lenders and see who has the lowest rate. You call the first lender. She or he asks you when you plan on getting your loan. You tell the lender, "in a couple of months". The lender gives you a low rate quote. And, after a number of calls, you find the first lender you called has the lowest rate. When the time comes, you know whom you'll use.

Now fast forward a few months. You call the first lender. The rate is a bit higher than the last time you spoke with this lender. The lender tells you that the rates have gone up a bit. He or she even invites you to check around. Why do that? After all, this lender had the lowest rate quote when you did your first rate search. You get your loan and all is well, right?

Wrong! This lender used a trick that has become a dark part of the mortgage business. You see, the first lender you called knew you wouldn't be getting your loan for a couple of months, so the lender quoted you a rate well below what is feasibly available to you. After you checked around, you discovered this lender's quote was the best. Surprise! You KNOW this lender has the "lowest" rates because it was the "lowest" rate quote the last time you called. This technique is actually taught by unscrupulous trainers and is shameful!

Here's another trick:

You call a lender, get a rate quote, even meet with him or her and complete a loan application with the rate that was quoted shown in your package. Time goes by, your loan process continues and you are now ready to sign loan documents. When you get to escrow, pen in hand, you discover your excellent rate is much higher than you were led to believe. The explanation: Your program got a little more expensive, the rates went up, or whatever. If you want the rate you were quoted, you will have to pay a couple of more discount points to get it. For those of you who do not know, one discount point equals 1 percent of the loan amount. Nice, eh?

There are so many scams a dishonest lender can pull on you; it would take a book to discuss them all! You definitely can be a sitting duck for a lender who has his or her technique down. But what do you do to protect yourself?

Easy! Don't just jump at the lowest rate quoted to you. Heck, anyone can quote a low rate! But if it's not possible, what good is the quote? More important than the rate, you need to know whom you are dealing with. Investigate the lender before using them. Get referrals from friends and relatives based on their actual use of the lender, not based on what they heard or the lender's polished ads.

Another great source (and my favorite, of course!) is your real estate agent. That is, if your agent is someone you can truly trust. Agents regularly work with lenders and these lenders know that if they don't perform, they had better never set foot in that agent's parking lot again, never mind their office. But make sure your agent actually has first-hand knowledge of the lender. Has the agent worked with the lender? How is the lender with clients? Is the lender honest and truthful - even if it's bad news? How timely is the lender? How are the lender's costs? These are important things to know.

Also, be open to someone being honest with you. Don't go searching for the answer that makes you feel good. Sometimes, honesty hurts! If you look for that "good" answer, a less-than-honest lender will sense it and they've hooked you!

Remember, your real estate agent is not only working for your business, but also for your family's business, your friend's business, everything. Your agent would definitely want to ensure you work with quality people who will take care of you as well as she or he would.

Words of Advice

Sat, 12 Jan 2008 00:00:00 PST

What others have to say about why they prefer buying a home rather than renting.

I live in coastal Southern California where prices have been insane for a long times (5 years). Only 15% of the folks who work here can afford to buy here (we get "paid" in sunshine dollars). Luckily my husband and I have owned our homes for long periods of time. We got burned many years ago in the midwest when we were just starting out, and made a decision to own any home for at least ten years after that. Hard for me to say what prices will do here in the short term. In the long haul (10years), they'll go up as this region attracts the wealthy from all over the world. Sad for our kiddies; they'll have to move elsewhere or settle for a condo.Many of us will be happy to see the "flippers" (who drive up home prices for the rest of us) get enlightened in this shakeout.

- Posted by Leslie in San Diego

The point is you need a place to live. So BUY long-term into a safe, stable community that YOU CAN AFFORD. Then build a home with your family and friends and contribute as a productive citizen. If you rent for long periods of time your only making your landlords wealthier. You are missing out on the opportunity to create and pass on wealth to YOUR loved ones instead of the heirs or shareholders of your landlords.
Posted by Eric

Well, first of all, no one ever really "owns" a property until it is paid off, homeowners are really just renting in a sense from a bank or other entity with a few extra rights over over the property. Also, one is technically buying land of which a house is only an "improvement." (unless you buy a condo obviously.) Really what we are discussing with this issue are different sets of rights and responsibilities with respect to property and not "owning" vs. "renting" per se.

I was a "renter" for 10 years before buying a house. Renting was stressful and at times downright maddening. Property management frequently changes hands, rents suddenly go up without any meaningful explanation, and landlord/slumlord is a minor distinction. Also, self-paid improvements to one's apartment are hardly ever compensated by landlords. The reality for the vast number of renters in this country (not just urban professionals and upper-middle class NYC renters) is a crowded, increasingly expensive and exploitative misery.

There is more than economics at issue here, as a home is where you live your life, where you cook, eat, entertain friends, raise children (perhaps) and build memories. Where you live today could be the last place you ever live! Renting certainly serves a purpose for short-term horizons, sudden life changes, moving to a new job, etc. But, when one buys a home one also invests in a community of sorts-you seem to take things like schools, school boards, local politicians and public parks more seriously and you interact with neighbors, mail delivery persons, repair people and others in a different (note not "better") way. We can't forget the social implications of "owning" a property either-the labels "owner" and "renter" have a social meaning that bears investigation / discussion.

It is easy to look at this issue (renting vs. owning) in very simplistic, reductionistic, individualistic economic terms but I would like to see more discussion / reporting on the "qualitative" aspects of renting vs. owning and more on the range of other options available such as communal ownership of property.

- Posted by Joseph Powell

I think one factor commonly ignored in this discussion is that renters rarely if ever save the economic difference between renting and buying. Home buying, while expensive and sometimes not suggested by the basic economics - is forced savings - and savings that would not occur otherwise. Over the long term, while painful, I think most of these buyers are better off financially. And, no, I am not a real estate agent!

My take on homebuying is based on the intangible benefits of homeownership: the long term investment in yourself and your family, and the financial benefits (beyond tax deductions) derived from the homeownership experience.

I grew up in an apartment building in Queens. As a young man I rented. I hated it. I was determined to someday own a home. I taught myself about real estate back when there was no internet, no first time buyer programs, and the MLS was a telephone-book sized list without photographs.

I remember being laughed out of a real estate office by the broker. Then, I found my way into the mortgage business quite by accident during the recession of the late 80's. Five years later, I bought my first home in that same neighborhood and had the last laugh.

I would never say Landlords are evil, or assume that fellow tenants are self-centered, noisy, dirty, and insensitive to their neighbors' quality of life, but I've lived in rental apartments. There're numbers on a page-as indicated in the NYTimes.com article-comparing costs/benefits of renting vs. buying, and there is reality.

If you determine that your quality of life will improve-and I think by extension, so will your financial life, in the long run-when you own a home, then it's the right thing to do.

If you happen to have great neighbors and responsible landlords, if the cost benefits are more favorable, and you can discipline yourself to actually invest that money you're saving by renting, then that's the right thing to do, too.

For my part, I've never advocated the ridiculous notion that buying a home is an investment in the short term sense indicated in the article, and promoted by the NAR economists.

I've always looked to owning a home as something you do for the long term: at least 7-10 years (which used to be the average for American families until this ridiculous "boom" market came along). That's why I've always advised my clients to get 30yr fixed rate mortgages, not 15's, not ARM's, and certainly not those other insane mortgage products that are now wreaking such havoc among American homeowners.

If you want a "piece of the rock," something to call your own, something that will improve your quality of life and enhance your financial one, then homeownership IS a wonderful undertaking at any time during any kind of market.

- Posted by tcurranmortgage