Monthly Archives: March 2011

Remodel vs. Buy

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We see it all the time. Homeowners come to us needing more space for their growing family or desiring home features that their current home just doesn’t have.  So the question is should they remodel or buy a new home?  This is a tough question to answer because there are many things that need to be considered.

Interest rates have never been lower (not even in the 60’s).  House prices have also dropped considerably.  In some cases it may very well be better to buy a new home, but that is not always true.  The cost to remodel vs. buy really depends on how much remodeling you would like to do.  If you are on the fence, here are some things to consider:

 

1)  First, do you have the money needed to remodel your home?  If you do not have the money, can you get a small loan to pay for the work?

2) If you have the money, you will then need to find an architect and general contractor to do the work.  Make sure you shop around to find a reputable firm.  Also make sure that the contractor is licensed!  If you start with an architect, they can usually give you an estimate of how much the remodel will cost before you hire a contractor.

3) Remodeling can take a while and can also be very messy, so you have to consider whether or not you are up for the challenge.  Remember that it usually always takes longer than what they tell you due to delays in getting materials, etc.  Projects are rarely completed on time and within budget, so you may also need to be prepared to spend more than what was originally quoted.

4) Once you understand the costs of a remodel, talk with a Realtor to see what the cost would be to buy a new home that has everything you want.  Unless of course, you really want to stay in your home–then it doesn’t matter.

5) Consider cost of remodel vs. value.  What it cost to remodel or improve, is not necessarily what you might get back in return if you sell your home.  In fact, it is rare to get 100% return on your investment, so just keep this in mind when you decide how much money you want to spend on your remodel.

Whatever you decide, remember to be wise in the decision process. Consult as many professionals as you can. Visit with an architect, a real estate agent and loan officer. Now is definitely a great time for low interest rates and competitive contractor bids if you decide to remodel.

Posted by:  Sheri Negri
www.loveforhomessac.com

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Loan Mods

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Did you know that over 80% of loan modifications are in default again within a year?  Borrowers have good intentions, but the problem is that what got them in trouble in the first place still exists.  And coupled with the fact that there are some lenders out there trying to scam borrowers out of their money which they didn’t really have in the first place just causes more issues.   According to DRE Commissioner Jeff Davi, now that so many people are struggling to stay in their homes, foreclosure rescue and mortgage relief scams have risen dramatically.  DRE is issuing consumer alerts to help consumers, but that will only go so far in getting rid of this problem in my opinion.

The other issue is that some lenders make more money off of foreclosures than doing a loan modification, so borrower beware!  The lender may just be dragging you along until it’s too late.  I am not saying this is true in all cases, because there are people who have been successful at doing a loan modification.

That being said, there’s no reason a homeowner can’t complete a “loan mod” on their own if they are cautious. Here are some tips that might help homeowners trying to negotiate a “loan mod” on their own:

(1) Do a reality check on your monthly budget before applying for a loan modification. If juggling credit card payments is the only way you are able to afford your mortgage every month, hoping to drop your mortgage payment low enough to afford all your credit card payments is probably not going to work. If you can’t pay everything, prioritize your debt based on what’s most important to you. If you’ve already applied for a “loan mod,” paying your credit cards from the extra money created by your reduced mortgage payments may lead to a foreclosure if you are denied.

(2) Loan modifications are designed to lower your mortgage payment down to 31% of your gross income. If your mortgage payment is already lower than 31% of your gross, you probably won’t qualify.

(3) If you decide to do a “loan mod,” don’t pay an internet marketing company to do it for you. Your desperation makes you vulnerable to being scammed. Even if you get lucky, there’s nothing they will do that you can’t do for yourself. If you want help, call your local HUD office for the telephone number of a HUD loan modification counselor near you or call 1-888-995-HOPE (4673). They will help you for free.

(4) You might think providing all of the required documentation in a timely fashion is enough, but that just gets your foot in the door.  You and the other few hundred thousand homeowners waiting for the same answer. Assume your bank is overwhelmed, will lose your paperwork and not return your phone calls as a means of controlling the number of “loan mods” it has to actually consider. Don’t take it personally. The clients that succeed have a bulldog persistence and aren’t shy about contacting their bank on a regular basis. Keep a copy of everything you provide the bank.

(5) Don’t get any more than 60 days behind on your mortgage unless you are ready to give up your home if you aren’t approved for a “loan mod.” If your bank insists that you have to be more than 60 days behind before being accepted for a loan modification, ask them to put it in writing and file a complaint. Try to bank the money saved by not paying your regular mortgage payment, or the “loan mod” process may leave you in a worse position than you were before applying.

(6) Keeping in mind that most banks have several “loan mod” programs available, you should make sure you’ve exhausted all the alternatives before accepting “no” for an answer.

Posted by:  Sheri Negri
www.loveforhomessac.com

 

Short Sale vs. Foreclosure

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Many people are getting conflicting information about the pros and cons of doing a short sale vs. foreclosure.   It is our job as Realtors to ensure our clients get the right information to make the best decision possible for their situation.  This means making sure our clients consult with an attorney/CPA prior to engaging with their Realtor as they are experts in their field.  Once our clients have met with an attorney/CPA, we can provide supporting documentation and scenarios to educate them prior to our first meeting.

Knowledge is power, and by this time your client will have all the pertinent information to begin a discussion about how to move forward with their Realtor!  Of course, we can share our experiences of what our previous clients have done that worked, but every situation is different.  I would hate to give advice that negatively impacted my client for years to come!

Posted by:  Sheri Negri
www.loveforhomessac.com

 

Using QR Codes in Real Estate

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I learned about QR codes about a month ago at a NAR seminar here in Sacramento.  I consider myself to be technically savvy, and this was the first time I had ever heard about QR codes.  I finally had the opportunity this week to play around with QR codes, and it was a lot of fun.  And the great thing about this technology is it’s free!

Some of you may be wondering what the heck a QR code is?  Well, it is basically a barcode that can be scanned by a QR code reader from your smartphone.  QR stands for Quick Response.

QR codes where originally created by a subsidiary of Toyota to track vehicle parts.  Now this technology is gaining popularity in many different areas including real estate!

The basic concept of the QR code is that you can link information to a QR code for marketing purposes whether it be text, email, video, website and the like.   How cool is that right???

One of the best uses I see for the real estate industry is placing a QR code on a listing flyer and/or open house flyer to showcase the inside of a home.  QR codes can also help market you as an agent!  Of course, your potential customer must have a QR code reader on their smart phone to take advantage of this technology!  There are a number of QR code readers out there for the iPhone, Andriod and newer Blackberries.  I did a bit of research and ended up loading NeoReader for my iPhone.   Other popular apps I found online include QuickReader, I-Nigma, BeeTag, MobileReader.  There are a lot of them out there, so do your research to find out which one is best for your smartphone.

Helpful hints:
I used goo.gl (a google tool) to generate my QR code because I wanted to link one of my youtube videos to a QR code.  I know there are other tools out there to link text, etc.  Once the QR code is created, you can copy and paste it into anything you want!  I highly recommend taking the time to research and play around with this technology.  You will not be disappointed!

Posted by:  Sheri Negri
www.loveforhomessac.com

Greener Living – 9 Gardening Projects

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  1. DIY Composite Bin – You do not have to throw out your green waste.  Use it as fertilizer instead!  Begin by building a composite pile.  Make sure you have equal layers of greens and dirt waste.
  2. Start Your Own Herb Garden – Organic herbs can be expensive, so start your own herb garden instead!  You can plant herbs in pots and put them in your kitchen, or you can make a small herb garden in your back yard.
  3. Organize Your Gardening Tools – You can repurpose a bucket:  1) Line the bucket with cloth; 2) Tie a colorful and fun gardeners apron around the bucket; 3) Place tools in the bucket and pockets of apron and you are ready to head out to your garden!
  4. Make Planters Using Newspaper – Soy-based ink newspaper becomes biodegradable compost.  You can plant young plants this way until they are ready to be planted in the ground.
  5. Repair a Leaky Hose – Purchasing a hose repair kit can save you money instead of going out and buying a new hose.
  6. Build a Bird Bath/Fountain – http://www.ehow.com/facts_5044241_needed-build-bird-bath-fountain.html
  7. Sharpen Your Gardening Tools – Nothing is worse than dull gardening tools.  Sharpening your tools will make gardening go much faster!
  8. Bring Your Lawn Back to Life – Revitalize your lawn by using just one or two tools. An aerator helps the soil breathe and a power rake gets it ready for seeding.
  9. Build a Garden Edge – Repurpose materials to use as a garden edge like wine bottles, broken pieces of terra cotta pots, etc.  – Get creative!!!!

Posted by:  Sheri Negri
www.loveforhomessac.com

 

 

Tax Tips for 2011

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Below are several common real estate tax tips that may be helpful to you. For more information about these tax incentives and to determine which ones you qualify for, please consult with your tax advisor.

 

•    Mortgage interest. For most people, the biggest tax break from owning a home comes from deducting mortgage interest. Your lender will send you Form 1098 in January listing the mortgage interest you paid during the previous year. That is the amount you deduct on the Schedule A tax form. Be sure the 1098 includes any interest you paid from the date you closed on the home to the end of that month. This amount is listed on your settlement sheet for the home purchase. You can deduct it even if the lender does not include it on the Form 1098.

•    Mortgage Points. When you buy a house, you may have had to pay “points” to the lender to obtain your mortgage or buy down your rate. This charge is usually expressed as a percentage of the loan amount.  And, believe it or not, you get to deduct the points even if the seller paid them for you as part of the deal. The deductible amount should also be shown on your 1098 form.

•    Real-estate property taxes. You can also deduct the local property taxes you pay each year.  In the year you purchase your residence, you likely reimbursed the seller for real estate taxes he or she had prepaid for time you actually owned the home. If so, that amount will be shown on your Hud-1 settlement sheet. Include this amount in your real-estate tax deduction. Note that you can’t deduct payments into your escrow account as real-estate taxes. Your deposits are simply money put aside to cover future tax payments. You can deduct only the actual real-estate tax payments made from the account by your lender. 

Homeowners who take the standard deduction instead of itemizing can deduct part of their property taxes. Joint filers can add in up to $1,000 of property taxes paid to their standard deduction amount. Singles can add in up to $500 of real estate tax payments to their standard deduction amount.

•    Private mortgage insurance premiums. For mortgage loans with a down payment of less than 20% of a home’s cost usually include a premium for private mortgage insurance (PMI), an extra fee that protects the lender if the borrower fails to repay the loan.  PMI premiums can be deducted by home buyers. This write-off phases out as income increases above $50,000 on married filing separate returns and above $100,000 on all other returns.

•    Credits for first-time home buyers.
D.C. CREDIT: First-time buyers of property in D.C. get a federal tax credit of up to $5,000. This tax break phases out as income rises between $70,000 and $90,000 on single returns and between $110,000 and $130,000 on joint returns.
FEDERAL CREDIT: If you went under contract on a property before April 30, 2010 and closed on that property before September 30, 2010, you may be eligible for either an $8000 tax credit for first time home buyers or a $6500 tax credit for move up buyers.  The income limits for the credits are $125,000 for single taxpayers and $225,000 for married couples filing joint returns.  D.C. residents must choose between this credit and the new federal first time homebuyer credit discussed below; they can’t claim both.  For more info on additional requirements and details visit: www.federalhousingtaxcredit.com

•    Home improvements.
Save receipts and records for all improvements you make to your home, such as landscaping, storm windows, fences, a new energy-efficient furnace and any additions. When you sell your home, the cost of the improvements is added to the purchase price of your home to determine the cost basis in your home for tax purposes.

•    Energy credits. Some energy-saving home improvements to your principal residence can earn you an additional tax break in the form of an energy tax credit. To learn more visit: www.energytaxincentives.org/

•    Tax-free profit on sale. Another major benefit of owning a home is that the tax law allows you to shelter a large amount of profit from being taxed if certain conditions are met. If you are single and lived in the house for at least two of the five years before the sale, then up to $250,000 of profit is tax free. If you’re married and file a joint return, up to $500,000 of the profit is tax free if you lived in the house as a primary home for two of the five years before the sale.