Archive for July, 2016

8 Mistakes to Avoid if You’re Thinking of Building/Remodeling a Home

Have you ever walked into a home (either a brand new one or one that’s been around for 25 years or more) and said to yourself, “I wonder what the builder was thinking when they built this house? Maybe you are thinking of finally building your dream home. Or considering downsizing the one you currently own. Or need to remodel the one you currently live in.

Here are 8 things to keep in mind:

1. Have a vision of what you want your home to look like. The floor plan is just the first step in the process. There a hundreds of thousands of decisions you will need to make. Take just the bathroom – what color tile? What pattern? Will the cabinets match? Faucets? Counter tops? The floor? And that’s just one bathroom!

2. Find the right people – By people, I mean an architect, a builder, sub-contractors, suppliers. Are they licensed and bonded? More importantly, can you get along with them? Do they offer suggestions? Are they difficult to deal with?

3. Visit the construction site often – Be sure that the home/remodeling is being built to your expectations. Ask questions. Make suggestions. Visiting your home every other day is recommended.

4. Building too big of a home – Don’t think about what size you need right now—but what you will need 7 to 10 years from now. A well-designed 3,000 sq. ft. home may work just as well as an ill-designed 5,000 sq. ft. home.

5. Work that you can do to reduce costs – Ask the builder what sweat equity he/she will allow you to do to help reduce costs. Painting the walls or staining the trim. Maybe you have a friend who is a licensed electrician who would charge you less.

6. Think about the upgrades – When a builder provides you with a price to build your home/remodeling, it’s usually based on “medium grade” materials. Take kitchen cabinets for example. What type, color and grade are included? Or should you pay $8,000 extra for solid maple cabinets instead? It depends on your budget and if you can find something that you like in the medium grade so you can use the money for something else. Other than you loving maple wood, there is very little resale value in upgraded cabinets when it comes time to sell. Consider only adding your MUST HAVE upgrades.

7. Think about selling your home in the future – Even if you never plan to sell your home, your descendants may have to do so. Build your home so it’s not a nightmare to sell.

8. Think about monthly mortgage payments – When you have been pre-approved for your mortgage amount there are a few things to consider.
a. What will the interest rate be when the home is completed?
b. How much will extra upgrades add to the monthly payment?
c. How much money will you need after the closing (window coverings, furniture, landscaping)?

What about Working with Real Estate Investors?

Have you ever considered working with the “real estate investor” niche? With real estate information easily obtained online and real estate offices on every corner of the street, when you specialize in this niche, investors will seek you out for your expertise and advice.

Here’s the thing about working with real estate investors—you will usually get ongoing referrals and repeat business, instead of the vanilla, residential real estate transactions where your clients may move every 7 years or so.

So what do you need to know?

• A complete understanding of all aspects of real estate investing.

• Real estate investing has its own “language” – Return on investment. Rate of return. Depreciation. Income to payment ratios.

• Real estate investments are treated differently by the IRS. While you may not be a CPA, learn how the IRS treats investment real estate. How depreciation works. Capital gains taxes. How taxes are paid when a property is sold.

• Join a real estate investment club. Do a Google search and see if there are any in your area; they usually meet to exchange tips and provide education resources to their members.

• Talk with lenders. Find out what types of mortgages are available to investors. The down payment required. Estimated closing costs. The minimum credit score. What it takes to get qualified.

• Finally, walk the talk—invest in real estate yourself.

8 Things Real Estate Agents can do to help with the Appraisal Process

I recently read an article written by an appraiser who said, “Realtors have more control working with an appraiser—more than they think they do. Spending time providing information UP FRONT will reduce the time spent on the back end trying to deal with an appraisal that comes under the sales contract price.”

I’m sharing some of the appraiser’s tips with you.

1. Provide Photos – In addition to the photos of the home that may be on your website, email the photos to the appraiser to review ahead of time. Include additional photos that may not have been posted online. Include a description of EACH photo.

2. Provide a list of recent improvements – And if you can attach the receipts for the work completed or the cost of the improvement, it’s an extra bonus.

3. Provide an Information Packet – If the home is vacant, the appraiser may not even call you to set up an appointment. Leave a folder marked APPRAISER INFORMATION. And if they do call, tell them about the packet and where it’s located.

4. Provide Insider Information – If you have information about the neighborhood that they may not know about, provide that info to the appraiser. For example, maybe a new school has been approved by the city and will be built nearby within the next few years. If you know the reason the buyers have chosen that home, include that info too. Let them know if there were multiple offers on the property, too.

5. Call the appraiser back—immediately—Appraisers typically schedule their trips within certain areas to reduce travel time. When they call, it usually means they have already done some preliminary work and are ready to do the physical inspection.

6. Provide Comps – While appraisers do their own research, it helps to BRACKET comps and supply them with what you used to establish the price. Provide sales that have sold BOTH below and above the sales price. List why each is superior or inferior. Do not rely on “per square foot price.” If known, also include seller-paid concessions.

7. Double Check the Square Footage – Appraisers must also measure the living areas, and if it’s substantially different, it creates a “red flag” and the appraiser may be looking for other things that may be inaccurate.

8. Don’t ever say these sentences –
“You should have no problems appraising this home…”
• “We need a good appraisal on this one…”
• “Let me know if you think the appraisal will come in low so I can get you additional info.”

7 Common Misconceptions about Credit Reports

There are a lot of misconceptions about what information (about you) becomes part of your credit report. Some of it is “urban legend”—passed on from person to person—but not necessarily true. So here are 7 of them that I’d like to clear up for you.

1. MYTH – Your free credit report includes your credit score.
TRUTH – most free credit reports do not include a credit score. You usually have to pay to get one. And, even if you pay, it may not be the type of score that mortgage lenders use. There are many different types of credit scores—for auto loans, home improvement loans, credit card applications, etc.

2. MYTH – Your race, income or medical history appears on a credit report.
TRUTH – Your credit report includes information that is debt related. It does include your social security number, birth date, and address. It COULD also include the name of your employer, and previous addresses.

3. MYTH – Checking your own credit score will decrease your score.
TRUTH – You could check your own credit score every day—and it will have no impact on your credit score. However, if you give permission to a lender to pull a credit report on your behalf, it may decrease your credit score by a few points. However, you get a break if you are “shopping” around for a car loan or a mortgage. If the credit bureau sees that you have many companies ordering a credit report (for the same loan) within a 30-day time period, it only counts as one inquiry.

4. MYTH – If you pay off a past-due account, it will be removed from your credit report.
TRUTH – Time is the only thing that will clear up a negative account, judgment or collection from your credit report. It can take up to seven years for it to completely disappear. However, as time goes on, and you have minimal negative accounts, your credit score will eventually increase.

5. MYTH – The credit report will merge when you marry, or split up if you divorce.
TRUTH – Everyone has their own credit report. Getting married does not cause the information on the credit report to be combined. So, if your spouse has problems on their credit report, it won’t show up on yours. However, if you and your spouse divorce and you have joint accounts—where both of you have signed to be responsible for the loan—it will appear on both of the reports. Just because you split up and the judge says that one (or the other) person is “responsible” for paying the debt, both of you are still obligated to pay the debt.

6. MYTH – If you pay your bills on time, you don’t need to check your credit report regularly.
TRUTH – Your credit report is changing all the time. A creditor may make a mistake and report that you missed a payment. Or a new loan may accidentally be added to your report. Even though you know you pay on time every month, the loan company may not be reporting it correctly.

7. MYTH – The credit bureau is the one who approves or denies your loan.
TRUTH – They are merely a reporting agency—gathering information from your creditors. The lender is the one who makes the ultimate decision based on what’s in the report.

Also, by knowing your credit score, by knowing what’s in your credit file, you can avoid working with unscrupulous lenders who tell you that your credit score is “low” in an attempt to charge you a higher interest rate or unfavorable terms.

Preparing Your Home for a Property Appraisal

You’ve sold your home. Or, you are thinking of refinancing your current mortgage.

One of the things that the lender will require is a property appraisal. While the actual appraisal inspection may take only an hour or two, the appraiser must go back to the office, do the research and write a 10- to 12-page report.

Here are some tips to help the appraiser with additional information—and in most instances a faster turn-around time to complete the report.

• Compile a list of recent improvements. If possible include “before and after” pictures, copies of paid receipts for work completed. If major updates were made, provide a detailed copy of the bid from the contractor.

• Make sure all areas are accessible, including the attic, basement and crawl spaces. This includes the garage.

• If the home is part of a homeowner’s association, include a copy of the fees paid, and the name and phone number of the association president or executive director.

• Straighten up each room. Appraisers are required to photograph each room, and while it may not make a difference to them if the room is messy, there may be an underwriter who is less objective.

• If there are any unfinished projects, make sure they are completed before the inspection.

• If there are any easements, encroachments or unusual deed restrictions, you may want to provide a copy of the list.

A little help from you goes a long way to make sure that the appraisal report is complete and accurate.

Quick Guide to Creating the Perfect Office Space in Your Home

Do you work out of a home office?

Without proper planning and organization, your home office may do more to hinder your productivity than enhance it. Here are some tips from the experts on how to setup the perfect office.

Select the RIGHT Spot – The area in your home should be well lit, with enough room for furniture, file cabinets and other items you use on a regular basis. Windows are great for natural light but can be a distraction. You may want to configure your workspace so windows are behind you or on the side.

Get Connected – Equip the space with enough electrical outlets to support your office equipment, telephone, fax machines and Internet access. Any costs incurred to add outlets or even heating and air conditioning to your office space are tax deductible.

Furniture Requirements – Determine what furniture you will need – desks, file cabinets, printer stands, storage units and office supplies. Measure the space. Measure the furniture and compare to make sure it fits before you move into the space. Layout the locations of each piece of furniture and try several floor plans – on paper first.

Organize – Keep business files in your home office. It’s very tempting to take them with you to another room while working out of your home – but avoid the temptation! That way you won’t waste time looking for files all over your home. Keep the office as neat and clean as possible as you will be more productive if you are organized.

Tax Deductions – The IRS will let you deduct expenses only related to that part of your home that you use exclusively for your regular business. This includes mortgage payment, utilities, furniture, computer equipment and supplies. Be sure to keep records on exactly what you have purchased for your business and you might consider a separate credit card to use exclusively and easily track your expenses.

What Certain Paint Colors Reveal about Your Home

Are you looking to freshen up your home with a new coat of paint? Maybe you’ve just moved and don’t like the color of the walls. Before you choose your paint colors, here’s how colors may affect you and the value of your home.

Blue – Light blue is a color preferred by many people because it’s considered a tranquil color. If you are considering dark blue, save it for a bathroom, bedroom or home office.

Yellow – Light yellow is a universal paint color for almost every room in your home. It’s cheery, high energy and helps you boost your mood.

Green – It’s the color of nature. Light greens make the room feel more spacious. Darker greens complement dark stained woods or white trim.

Pastels – Pinks, lavenders, Easter basket colors are soothing. These are great for children’s rooms.

Red/Orange – These are considered “warm” colors and are used to make a room more intimate or seem smaller. Red is a popular dining room color that creates an intimate atmosphere to stimulate conversation.

Neutral/Brown – These colors represent a conservative feeling if you are unsure what colors will work for you. When using neutral colors, use brightly colored chairs or accent pieces like green plants or colorful window coverings.

Tip: If you are hesitant about painting an entire room just one color, try painting an accent wall a different color. When you enter the room, notice how you feel about the color and what emotions it evokes in you.

Tips to Protect Against Tax Identity Theft

Wow, I just read where the FTC said that tax identity theft has tripled over the last few years!

Identity theft occurs when someone “steals” your personal information (social security number, birth date, name, address, etc.), files a phony tax return and gets your refund.  You’ll never know it until YOU file your tax returns and the IRS claims that they already have one on file from you.

If you complain to the IRS, it may fall on deaf ears as they think they already have a send you your refund check.

This is a certain procedure that you’ll need to follow:

  • Complete and submit IRS Form 14039 – Identity Theft Affidavit
  • Provide proof that the Social Security Number is yours
  • Your complaint will be reviewed, which may take several months
  • If approved, you will receive your refund
  • You will receive a special “filing” number that you must use to file future income tax returns
  • You will receive a “filing number” each year after that from the IRS

You must use that special filing number each year on your returns.  If the person who stole your identity tries to file in the future without the special ID number, your file will be red flagged and investigated – and you can expect your tax refund to take several months again.

How to Protect Yourself:

  • Memorize your SSN and keep it locked up in a safe place
  • Shred all personal and financial documents
  • Never provide your SSN to anyone online
  • If mailing your tax return, take it to the inside of the post office; never drop it in a public mailbox or your home mailbox.

If you have an accountant, CPA or tax service prepare your return, make sure they are licensed, bonded and have encryption software that they use if they file your tax return electronically.

How to Boost Your Home’s Curb-Appeal on a Tiny Budget

Not only does the exterior of your home add value to your home, but it’s also the first picture potential home buyers see when you list your home for sale. So, I wanted to share with you few ways to enhance the curb appeal of your home with some elbow grease, and without spending a lot of money.

Clean Up: Sometimes it’s obvious that you need to dedicate a weekend to cleaning up the exterior of your home.
– Trim bushes
– Plant Flowers
– Weed
– Mow the Lawn
– Rake leaves
– Sweep sidewalks
But, to do the “deep cleaning,” you may want to rent a power washer that can clean the sidewalks and the siding of the home to remove the dirt and dust.

Windows: Next, focus on the windows. Clean them inside and out. You don’t have to buy expensive glass cleaner liquid, just use a mix of diluted detergent and vinegar in warm water. (Google to find several low-cost window cleaning solutions that you can make at home.) Instead of paper towels, use newspapers to dry the windows.

Paint: Instead of painting the entire exterior of your home, focus on the trim, shutters and doors. Focus on accent colors that will make your windows and doors “pop.”

Front Door: No need to replace it (unless you really hate it). You may want to repaint it. If it’s a wooden door, you may want to consider stripping off the old finish, staining it with a wood stain color and sealing it with a clear finish.
– Consider adding molding around the door frame to make the front door seem bigger.
– Replace your house numbers to make them more noticeable—which may cost you about $5 per number.
– Add a wreath or hang seasonal decorations on or near your door to give it that homey feeling.

Update Outside Light Fixtures: You could clean the glass and remove the bugs that accumulate there. But another option is to replace the light fixtures—especially if the metal is pitted and dull. You can usually find sconces for around $20 each at home centers or online. However, make sure that the new fixtures have the same mounting system or you’ll spend $$ hiring an electrician. If you don’t want to replace them, buy some spray paint and paint them black, aluminum, gold or an accent color. A can of spray paint is about $10.

Patio Furniture: If you have a front porch and want to use some patio furniture, it’s best to minimize the amount you place there. Too much furniture makes it look crowded. You may want to replace faded cushions or pillows with colorful ones that accent your house.

Some additional updates….

While these suggestions may cost you a little more money, here are some other updates to consider:
• Install a new mailbox or paint your existing one
• Plant a tree or ornamental bush
• Strategically place flower boxes or potted flowers on your porch or around your home
• Hide your trash bins behind a small fence or build a garbage can shed
• Hide your hose in a pot or storage bench
• Remove “yard art” that does not complement your home (think pink flamingos or wind socks).

20 Magic Questions to Ask Buyers & Sellers

It’s inherent that some salespeople do all the talking – but seldom ask enough questions. The right questions can really work magic.

Here are 20 magic questions to ask when starting to work with clients.

1. What is your main objective when buying a home?
2. What game plan do you have in mind?
3. What is the biggest problem you currently face?
4. What are you doing now to help solve the problem?
5. What other ideas do you have about the home you want to buy?
6. Who else is involved in the decision?
7. What do you like most about the idea of owning a home?
8. What is your biggest fear when it comes to owning a home?
9. If you could have any house that you wanted, what would it look like?
10. Why are you motivated to buy a home now?
11. What has been your previous experience?
12. How would you feel if you did not buy a home?
13. What is your budget?
14. What financing alternatives have you considered?
15. How would buying a home benefit you personally?
16. How can I help you with the home buying process?
17. Is there anything that is keeping you from buying a home?
18. What do you see as the next step?
19. Are you working with a deadline?
20. In a perfect world, what would you like me to take care of for you?

Not all questions may apply, but consider creating a “form” listing all the questions to prompt you to ask them. How about sending out an email version to prospects that call you? Or sending out the form with your promo packet?

Word of caution: Don’t take the answers at “face value”. Sometimes the answer prompts another question. For example, the answer might be that I want to be near a school because my children are in sports! How near? 2 blocks? A mile? Within a 5 minute driving distance? The questions open the door for more dialogue and building trust.

If you are working with many different clients, you can’t remember everything. The added benefit is that it gives you a record of exactly what they say they wanted. If they have changed their mind, you can go back to the form and record the changes.