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Virginia Beach Real Estate Blog

Judy Reed


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These 5 Questions Will Tell You If You’re Ready to Buy a Home

by Judy Reed

There are many good reasons to own the roof over your head, but there are many tradeoffs as well. Here's how to decide if the time is right for you. 

The housing market boom and bust taught us many lessons, including that home ownership isn’t such a “no brainer” after all.

No doubt, there are plenty of good reasons to own the roof over your head, both emotional and financial. But there are many trade-offs as well. With the added control comes a laundry list of responsibilities. With the stability of staying put comes a loss of flexibility. And with the opportunity to build equity comes the risk of losing money.

In fact, homeownership in America is at its lowest rate since 1995. It was recently just 65%, according to the Census Bureau, down from 69% in 2004. Although tighter lending standards, economic uncertainty, and in many cities high home prices are partly to blame, many would-be buyers are staying on the sidelines by choice. Which often makes sense.

Here are five questions to ask before you make the leap into ownership.

1) Is my financial house in order? 

If you’re already struggling to pay your bills, buying a home will only compound your money woes. Ideally, you’ve saved at least 10% for a down payment – keep in mind you’ll have to pay private mortgage insurance if your down payment is less than 20% — and that’s in addition to saving for retirement and building an emergency fund.

“If you’re not in a position to save for a down payment, you probably aren’t in the position to buy your own home,” says John Vento, a New York-based CFP and CPA, and author of Financial Independence (Getting to Point X): An Advisor’s Guide to Comprehensive Wealth Management. “You have to prove you have the discipline and ability to save. One of the big problems that led to crash of 2008 is we forgot about this principle.”

2) Am I sticking around for a while?

The old rule of thumb was that buying made sense if you planned to stay put for at least three to five years. These days, many financial planners are recommending an even longer window. “I say at least seven years because the transaction costs of buying a home are signification,” notes Vento.

When you buy, there are the costs of securing the loan, closing on the sale and moving, not to mention all of the miscellaneous items (fresh paint, new curtains) that can easily add up to thousands of dollars. When it’s time to sell, you’ll lose a big chunk – 6% is typical – in real estate sales commissions. Given the historical rate of home price appreciation, says Vento, it will likely take at least five years to break even when all is said and done.

As important as the numbers, is whether you’re ready to tie yourself down to a particular home in a particular city. “Depending on what you do for a living and the job market in your area, you may be better off continuing to rent,” says in Charlotte, NC planner Ann Reilley Gugle.

3) What is the after-tax cost of owning?

If you’re on solid financial ground and ready to make a longer-term commitment, the next step is to get a realistic estimate of what you can expect to spend, and how that breaks down monthly.

You can get a basic estimate by plugging the home price minus your down payment into a mortgage calculator like this one. Most calculators also allow for property taxes and homeowners insurance. If you live in an area where taxes or insurance are higher than the national average, however, plug in numbers based on what’s realistic for your market.

This is a good starting point, but it doesn’t tell the whole picture. On the plus side, a small (albeit, initially tiny) portion of your mortgage will go toward principal. “That’s a forced savings plan,” says Vinto. There are tax advantages too. If you itemize your deductions – as many homeowners do – your mortgage interest and property taxes are deductible. Down the road when you sell, moreover, you can realize up to $250,000 in profit (double that if you’re married) before you owe capital gains tax.

4) And what are the hidden expenses?

There are many additional costs of homeownership that unseasoned buyers tend to overlook, says Gugle. Four out of five buyers of new homes, including condos and townhomes, can expect to pay homeowner association fees. This additional levy – which pays for costs of shared infrastructure and amenities – can add hundreds of dollars to your monthly expense, and it’s not uncommon for owners to get hit with special assessments for projects not covered in the regular budget.

Most single-family home owners will need to budget – money and time – for routine maintenances costs, as well as big-ticket projects, such as paint jobs and new roofs. “You have to be ready to take on all the things that come with ownership,” adds Gugle. “It’s not for everyone.”

5) What’s happening in my market?

Economists may talk about real estate in national terms, but the market varies greatly from one city to the next, even from one neighborhood to the next. Although home prices in most U.S. cities are still relatively affordable, some cities (i.e. San Francisco) have seen their home prices bounce back to near boom-time highs.

Then again, in many cities, the rental market is as competitive, if not more competitive.

Nationally, half of all renters are spending more than 30% of their income on housing, according to the Joint Center of Housing Studies of Harvard University, up from 38% of renters in 2000. For renters, an improving economy is a Catch-22; as their incomes go up, so too does their rent.

Therein lies one big benefit of owning the roof over your head: Assuming you plan to stay put for a while and lock in a fixed-rate mortgage, your costs should remain relatively stable from year to year; in time they’ll actually go down. For many buyers, that’s all the reason they need to get off the fence and into the housing market.

On the fence about putting your home on the market this fall?

by Judy Reed

July New Home Sales Soar to Eight-Year High

A recent new home sales report for July showed that sales of newly built homes increased 12.4 percent since June, and rose 31.3 percent year-over-year. This surge marks the highest point in almost eight years.

“New homes are being purchased at a furious pace, and it could give the housing market the added push it’s been waiting for,” says Quicken Loans vice president Bill Banfield. “With more new homes purchased by move-up buyers, it provides an increase in housing choice for first time buyers looking for their starter house.”

Data released found that the new home sales seasonally adjusted annualized rate for July was 654,000, the highest pace of sales since October 2007. Actual new homes sold so far this year are up 13 percent over the first seven months of 2015. This July’s new home supply remains tight at 4.3 months of supply.

The median sales price of new houses sold in July 2016 was $294,600; the average sales price was $355,800. The seasonally adjusted estimate of new houses for sale at the end of July was 233,000. This represents a supply of 4.3 months at the current sales rate.

“It’s great to see evidence of much-needed growth and a shift toward more affordable prices in July’s report,” says Chief Economist Jonathan Smoke. “It’s also good news that we are finally seeing builders shifting toward more affordable price points. And given the limited number of homes currently for sale, we can be confident that the decline in new home prices is a result of market shift and not discounting by builders."




Preserve Curb Appeal During Summer Storm Season

by Judy Reed

curb appeal

Along with the natural beauty of summer comes rumbles of thunder, high winds, flashes of lightning and heavy rain —all of which wreak havoc on properties. Wind can completely uproot saturated trees and break branches when summer storms hit. A hazardous tree that is sick or damaged can cost potential homebuyers thousands. Not to mention the severe impact on the landscape—one of the biggest contributors to a home’s value.

Identifying common defects in trees before a storm hits is crucial to preserving precious curb appeal. Homeowners can prevent damage to their property in a few simple steps.

Branch Out 

Look for clear signs of damage. A tree with an abundance of dead branches has a higher potential to be impacted by stormy weather.  Deep splits and cracks that extend through the bark and into the trunk signal signs of severe damage. In advanced stages, decay, wood cavities and cankers can create hazardous conditions. Weak branch unions that are fused by bark also signal declining tree health.

Poor Architecture

When it comes to stormy weather, heavy tree canopies act as sails that catch wind. Branches and heavy limbs could barrel toward the home if not properly cared for. Poor tree architecture is characterized by excessive leaning or branches growing out of proportion with the rest of the crown. Odd growth patterns may indicate general weakness or structural imbalance.

Get to the Root of It

Without a strong root system, trees are more likely to blow over in stormy weather. Look out for nearby construction that may sever large roots or compacted soil that doesn’t allow for healthy root growth.

The solution to keeping happy and healthy trees is simple: proper care and tree maintenance. Regular pruning thins the tree canopy, allowing wind to blow through it instead of against it. Pruning also removes potentially hazardous dead or weak branches.

Landscape inspections are crucial when it comes to increasing curb appeal. Schedule a consultation with a certified arborist to evaluate tree species, soil conditions, wind exposure, defects, overall health, and to determine a tree’s hazard potential.

Feeling Like Packed Sardines?

by Judy Reed


by Judy Reed

Purchase A Bigger Home With NO MORTGAGE PAYMENTS!

by Judy Reed

Drowing In Your Mortgage?

by Judy Reed

4 Steps to Take Now for a Faster Home Sale Next Year

by Judy Reed

A home sale typically comes as a result of a life change or a major decision. These decisions don’t usually happen overnight, providing homeowners with years to plan for a successful home sale. By using your time wisely, you will maximize your home’s value when you want to list and sell.

On your way to this point, you should be open to spending money in preparation. Investing in strategic home improvements will help facilitate a quicker and more profitable sale.

Selling a home is a large financial and emotional transaction — likely the largest in a lifetime. This makes strategic planning and counsel vital. Here are some steps you should take a year or more before you plan to list your home.

Connect with a local real estate agent

Real estate agents shouldn’t just show up, list a home, hold an open house and move on. Instead, they should be valuable assets to you years before listing. Connecting with a local agent and developing a relationship well in advance allows you to start learning the market and transitioning from the mindset of a homeowner to that of a seller.

A good agent will provide helpful information, advice and assistance on an ongoing basis, in hopes of working with you on the eventual sale. Work with an agent who can connect you to local resources like inspectors, painters and other service providers.

An agent can also assess your home’s condition and suggest small to medium-sized improvements that will help boost your home’s value. Prioritize these projects for the months or years leading up to the sale.

Have a formal property inspection

For a few hundred dollars, you can have a licensed property inspector assess the home’s major systems and components. You can take this step up to two years before you will list your home.

Why would you want to have someone come and point out your home’s flaws before selling? Because it’s better to know about any issues upfront so you can address them before your potential buyer discovers them.

Additionally, you can put a financial plan in place to pay for any needed fixes. Dry rot on your back deck could cost $500 to remedy now, but you’d be better off handling it now than having a buyer see it as a major decking/structural issue and request $5,000 when you are weeks away from closing and your back’s against the wall.

Make improvements

A year before you will list, spend the extra time and money ensuring that your home both appeals to mainstream buyers and passes a potential buyer’s property inspection.

If your agent suggests cosmetic fixes like laying new carpet, painting cabinets or cleaning the yellow grout in the bathroom, put a plan in place to tackle each of the projects. Waiting to the last minute will be too stressful, plus you won’t get the enjoyment out of the cosmetic fixes.

If you know your roof is at the end of its life, it might be more economical to replace it so that you can advertise a new roof. Today’s buyers want homes that are move-in ready. They don’t have the time or resources to take on projects. The more issues you can resolve for them, the more successful your sale.

Get a home warranty

A home warranty is like a one-year insurance policy that addresses your major (and minor) appliances and most systems. If something breaks, you can call the home warranty company, not the appliance repair technician or plumber. For a small co-pay, they will come out and repair or replace the item swiftly.

If your home has some issues, a home warranty is a great way to address them without having to spend weeks or months shopping around, getting bids for work and seeing through each repair. A warranty works well when you list the home and are too busy to call around getting bids.

Moving is tough, in and of itself. Add prepping a home for sale and your move becomes more emotional and stressful. Planning ahead can help you address issues in advance.

Don’t wait until the last minute, or you risk leaving money on the table. Meet with an agent early on and put a timeline in place to get the most of your home’s sale — fast.

Pros and Cons of Buying a Foreclosed Home

by Judy Reed

Five years ago, a home buyer could spot a bank foreclosed home a mile away. They were abandoned structures, stripped of all appliances and fixtures, with unkempt landscaping and falling down “For Sale” signs.

Today, banks often renovate their REOs (also known as bank real estate owned) before listing in hopes of selling to end users, not contractors or investors who will capitalize off the bank’s loss.

Banks know the market has improved, and they aren’t as desperate as they used to be. They want to minimize their loss on each sale — not simply sell as quickly as possible. This creates some potential risks and rewards for home buyers considering purchasing a foreclosed home.

To help you make a smart decision, here are some pros and cons for buying a foreclosed home in today’s market.

PRO: They are still cheaper

Today, bank foreclosed homes are typically about five percent below a comparable house in the same location that is not a foreclosure. In previous markets, they were often in horrible condition and about 15 to 20 percent below market.

While many new buyers set out in search of the deal that comes with these sales, many REOs should be left to more experienced home buyers.

CON: Foreclosed homes can be very risky

Even though they are priced higher today, REOs still come with baggage. Many banks will invest money to make the listings look nice and get the prices up. In return, they are less flexible on price and less eager to sell in general.

Behind the scenes, these are still risky sales. You don’t know about the history, and there are no disclosures about leaky roofs, mold or crime. And you are forced to buy the home “as is,” without any recourse if things go wrong.

Investors were once fine with this risk, but they are less interested today because the “deals” are gone.

CON: Many are not in prime locations

Many of today’s foreclosed homes are in less desirable parts of towns or school districts. If you see an REO and the price looks good, remember that it may not be the foreclosure that makes it such a great bargain. It could be location, and you don’t want to get stuck unloading a home in a bad location in a few years. Foreclosed homes in good locations will sell quickly.

CON: Banks aren’t people

Consider that you are negotiating with a spreadsheet. Unlike a typical seller who may care about your situation, your personal background or market history, banks don’t. Your offer is likely submitted electronically and placed into a cell on a spreadsheet for an asset manager to consider. If the numbers don’t work, expect a big rejection. Never get your hopes up.

Buyers today can’t assume that a bank-foreclosed home is a good deal. While you can still find a needle in the haystack, they are fewer and farther between.

Banks want top dollar out of their foreclosure inventory. They are sellers just like anyone else. They watch the market and read the headlines. Foreclosed homes will be priced slightly lower than the market, but they are still as-is, take it or leave it with some risk associated.  


Displaying blog entries 1-10 of 38