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Showing posts from September, 2014

Crafting an Acceptable Offer

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An agent was presenting a contract to a single, senior woman who was moving into a retirement home.  It was a full price offer with reasonable terms and timelines but the seller wouldn’t accept it.  When the agent probed deeper, she discovered that the seller was concerned with her dining room table. It had been the first piece of nice furniture that she and her husband had purchased and they had literally spent a lifetime celebrating and making decisions at that table.  It troubled the owner to think that the table would go to strangers who might not appreciate it as much as her family had. The agent told the elderly seller that she knew of a church nearby that had a community room filled with lovely tables like hers.  If she liked the idea, the agent would call the church to see if they’d like to have it.  Once a new home for the table was found, the sale of the home went smoothly.Lower inventory and increased demand in certain price ranges have increased the frequency of multi…

Seller Safety Plan

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September is REALTOR® Safety month when special attention is focused on the security of having a home on the market and the concerns for the well-being of owners is a day-to-day effort.  The following list may help sellers secure their home and minimize risk.Locks – doors and windows should be locked at all times.  Additional locks like deadbolts or safety locks can provide a higher level of security. Home lighting - turn on the lights prior to purchasers arriving to improve the showing.  Not only will they be able to see things better, it could prevent them hurting themselves unnecessarily. Outdoor motion-sensor lights provide additional security. Eliminate the possible hazards – try to identify anything that might cause a person to trip and fall such as loose objects on the floor or floor coverings that aren’t properly secured. Security system – If you have a security system, it should be monitored and armed, especially when you’re away from home.  Most systems w…

Annual Maintenance

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A common expectation of homeowners is to want the components and systems in their home to work when they need them. Periodic maintenance is just as important as having a trusted service provider to make necessary repairs.Victims of Murphy’s Law can attest that their air conditioner goes out on the hottest day of the year or the water heater fails when you have out of town visitors. If the convenience of having things work doesn’t justify maintaining your home’s systems, consider that it can be less expensive than the results of neglect causing repairs or replacement. Replace burned-out, dim or missing bulbs in light fixtures and lamps. Consider switching to LED bulbs. Dryer exhaust vents build up lint even though you may be cleaning the filter regularly. Fire extinguishers need to be recharged or replaced after expiration date. Establish a recurring appointment on your calendar to change filters in your HVAC. Replace missing or damaged caulk around sinks,…

Money Down the Drain

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Private mortgage insurance is necessary for buyers who don’t have or choose not to put 20% or more down payment when they purchase a home.  It is required for high loan-to-value mortgages and it provides an opportunity for many people to get into a home who otherwise would not be able.The problem is that it is expensive and a homeowner’s goal should be to eliminate it as soon as possible to lower their monthly payment and avoid putting good money down the drain. FHA loans made after 6/1/13 that have 90% or higher loan-to-value at time of purchase have mortgage insurance premium for the life of the loan.   FHA loans made prior to 6/1/13, can have the MIP removed after five years and if the unpaid balance is 78% or less than the original loan-to-value. VA loans do not require mortgage insurance. Conventional loans, in most cases, with higher than 80% loan-to-value require mortgage insurance.  The cost of that insurance varies but with a $250,000 mortgage, it could easily be between…

Cash Flow and Equity Build-up

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Many years ago, Las Vegas hotels would entice customers with inexpensive rooms, meals and entertainment so they would gamble.  It may have worked initially but if you’ve been to Las Vegas recently, the bargains are gone.  Hotels expect each division to be a profit center on its own.  As a consumer, I might not like the changes but as an investor, I’d have to be pleased with increased profitability.Years ago, real estate investors used to accept negative cash flow buoyed by tax incentives in hopes of making a big payday due to appreciation when they sold it.   Today’s investors are focusing on tangible, current results like cash flow and equity build-up. Cash flow is the amount of money you have left over after collecting the rent and paying the expenses.  Since rents have gone up considerably due to supply and demand in the last few years and mortgage rates are at near record lows, income is up and expenses are down, making the cash flows attractive. If the cash flow is sufficie…