Tips for Hiring a Remodeling Contractor

  1. Get at least three written estimates.
  2. Check references. If possible, view earlier jobs the contractor completed.
  3. Check with the local Chamber of Commerce or Better Business Bureau for complaints.
  4. Be sure the contract states exactly what is to be done and how change orders will be handled.
  5. Make as small of a down payment as possible so you won’t lose a lot if the contractor fails to complete the job.
  6. Be sure that the contractor has the necessary permits, licenses, and insurance.
  7. Check that the contract states when the work will be completed and what recourse you have if it isn’t. Also, remember that in many instances you can cancel a contract within three business days of signing it.
  8. Ask if the contractor’s workers will do the entire job or whether subcontractors will be involved too.
  9. Get the contractor to indemnify you if work does not meet any local building codes or regulations.
  10. Be sure that the contract specifies the contractor will clean up after the job and be responsible for any damage.
  11. Guarantee that the materials that will be used meet your specifications.
  12. Don’t make the final payment until you’re satisfied with the work.

Source: National Association of REALTORS®

Common First Time Home Buyer Mistakes

  1. They don’t ask enough questions of their lender and end up missing out on the best deal.
  2. They don’t act quickly enough to make a decision and someone else buys the house.
  3. They don’t find the right agent who’s willing to help them through the homebuying process.
  4. They don’t do enough to make their offer look appealing to a seller.
  5. They don’t think about resale before they buy. The average first-time buyer only stays in a home for four years.

Source: Real Estate Checklists and Systems, www.realestatechecklists.com.

How to Calculate Capital Gains

When you sell a stock, you owe taxes on the difference between what you paid for the stock and how much you got for the sale. The same holds true in home sales, but there are other considerations.

How to Calculate Gain

Your home’s original sales price when you bought it (not what you brought to closing). 
Additional costs you paid toward the original purchase (include transfer fees, attorney fees, and inspections but not points you paid on your mortgage).+
Cost of improvements you’ve made (include room additions, deck, etc. Improvements do not include repairing or replacing existing items).+
Current selling costs (include inspections, attorney fees, real estate commission, and money you spent to fix up your home to prepare it for sale).+
Add the above items to get your adjusted cost basis:=

 

The final sale amount for your home. 
The adjusted cost basis figure from above.
Your capital gain:=

 

A Special Real Estate Exemption for Capital Gains
Up to $250,000 in capital gains ($500,000 for a married couple) on the home sale is exempt from taxation if you meet the following criteria: (1) You owned and lived in the home as your principal residence for two out of the last five years; and (2) you have not sold or exchanged another home during the two years preceding the sale. You may qualify for a reduced exclusion if you otherwise qualify but are short of the two-out-of-the-last-five-years requirement if you meet what the tax law calls “unforeseen circumstances,” such as job loss, divorce, or family medical emergency.

Source: National Association of REALTORS®

Questions to Ask When Choosing a Condo

Condominiums, townhomes, and properties located within a homeowner association offer certain perks, but it’s important to consider them in your decision process.

How much storage is available?

Some properties include storage lockers, but there may not be attics or basements to hold extra belongings.

How’s the outdoor space?

Your yard may be smaller than you’d find in a traditional single-family home, so if you like to garden or entertain outdoors, this may not be a good fit. But if you dread yard work, it may be the perfect option.

Are amenities important?

Many properties offer swimming pools, fitness centers, and other facilities that would cost much more in a single-family setting.

Who handles maintenance and security?

Property managers often hire professionals to care for common areas and perform in-unit repairs. Keyed entries and doormen may regulate access to your home when you’re not there (good news if you travel).

Are there required reserve funds and association fees? How much are they?

Although fees generally help pay for amenities and provide savings for future repairs, the HOA or condo board determines these fees, and you’ll have to pay them even if you’re not in favor of the improvements.

What are the association rules?

Although you have a vote on future changes, association rules can dictate how you use your property. Some condos prohibit home-based businesses; others prohibit pets or don’t allow owners to rent out their units. Read the covenants, restrictions, and bylaws carefully before you make an offer.

What’s the average vacancy rate?

It’s never too early to be thinking about resale. The ease of selling your unit may depend on what else is for sale in your building, since units are similar.

How many units are owned by investors?

Some lenders require a certain percentage of the building to be owner-occupied and may not be able to offer you financing if the ratio is too low.

Can I meet other residents before making an offer?

You will share space and decision-making duties with your neighbors when part of a homeowner association, so it’s important to make sure you can work together. If possible, try to meet your closest prospective neighbors before you decide on a place.

Source: National Association of REALTORS®

How To Prepare to Buy a Home

Talk to mortgage brokers.

Many first-time home buyers don’t take the time to get prequalified. They also often don’t take the time to shop around to find the best mortgage for their particular situation. It’s important to ask plenty of questions and make sure you understand the home loan process completely.

Be ready to move.

This is especially true in markets with a low inventory of homes for sale. It’s very common for home buyers to miss out on the first home they wish to purchase because they don’t act quickly enough. By the time they’ve made their decision, they may find that someone else has already purchased the house.

Find a trusted partner.

It’s absolutely vital that you find a real estate professional who understands your goals and who is ready and able to guide you through the home buying process.

Make a good offer.

Remember that your offer is very unlikely to be the only one on the table. Do what you can to ensure it’s appealing to a seller.

Factor maintenance and repair costs into your buying budget.

Even brand-new homes will require some work. Don’t leave yourself short and let your home deteriorate.

Think ahead.

It’s easy to get wrapped up in your present needs, but you should also think about reselling the home before you buy. The average first-time buyer expects to stay in a home for around 10 years, according to the National Association of REALTORS®’ 2013 Profile of Home Buyers and Sellers.

Develop your home/neighborhood wish list.

Prioritize these items from most important to least.

Select where you want to live.

Compile a list of three or four neighborhoods you’d like to live in, taking into account nearby schools, recreational facilities, area expansion plans, and safety.

Source: National Association of REALTORS®

How To Buy in a Tight Market

Increase your chances of getting your dream house in a competitive housing market.

Get prequalified for a mortgage.

You’ll be able to make a firm commitment to buy and your offer will be more desirable to the seller.

Stay in close contact with your real estate agent.

Your agent will be on the lookout for the newest listings that meet your criteria. Be ready to see a house as soon as it goes on the market — if it’s a great home, it will go fast.

Scout out new listings yourself.

Browse sources such as realtor.com and local real estate listing sites. Set up alerts for the neighborhoods and characteristics you’re looking for. Drive through your target neighborhoods, and if you see a home you like for-sale, send the address and listing agent’s name to your agent, who can schedule a showing for you.

Be ready to make a decision.

Spend plenty of time in advance deciding what you can afford and must have in a home so you won’t hesitate when you have the chance to make an offer.

Bid competitively.

Your first inclination may be to start out offering something less than the absolute highest price you can afford, but if you go too low in a tight market, you will likely lose out.

Keep contingencies to a minimum.

Restrictions such as needing to sell your home before you move can make your offer unappealing. Remember that, if the market is tight, you’ll probably be able to sell your house rapidly. You can also talk to your lender about getting a bridge loan to cover both mortgages for a short period.

But don’t get caught in a buying frenzy.

Just because there’s competition for a home doesn’t mean you should buy it. And even though you want to make your offer attractive, don’t neglect inspections that help ensure the house is a sound investment.

Source: National Association of REALTORS®

How to Prepare for House-Hunting

Know that there’s no “right” time to buy.

If you find the perfect home now, don’t risk losing it because you’re trying to guess where the housing market and interest rates are going. Those factors usually don’t change fast enough to make a difference in an individual home’s price.

Don’t ask for too many opinions.

It’s natural to want reassurance for such a big decision, but too many ideas from too many people will make it much harder to make a decision. Focus on the wants and needs of the people who will actually be living in the home.

Accept that no house is ever perfect.

If it’s in the right location, the yard may be a bit smaller than you had hoped. The kitchen may be perfect, but the roof needs repair. Make a list of your top priorities and focus in on things that are most important to you. Let the minor ones go. Also, accept that a little buyer’s remorse is inevitable and will most likely pass.

Don’t try to be a killer negotiator.

Negotiation is definitely a part of the real estate process, but trying to “win” by getting an extra-low price or refusing to budge may cost you the home you love.

Remember your home doesn’t exist in a vacuum.

Don’t get so caught up in the physical aspects of the house itself that you forget about important issues such as noise level, access to amenities, and other aspects that also have a big impact on your quality of life.

Plan ahead.

Don’t wait until you’ve found a home to get approved for a mortgage, investigate insurance, or consider a moving schedule. Being prepared will make your bid more attractive to sellers.

Choose a home first because you love it; then think about appreciation.

A home is still considered a great investment, but its most important role is as a comfortable, safe place to live.

Source: National Association of REALTORS®