After moving from Nashville, Tennessee to Portland, Oregon, Branden Harvey shares his experience of moving from one side of the country to the other. From talking about the good, the bad, and the ugly of moving and how Homes.com can help you, Branden gives you advice for making the leap.
Imagine finding your dream home, then, a week before closing the deal, losing your jobâand the house. House hunting during the coronavirus pandemic is no picnic.
COVID-19 has caused seismic changes not only to real estate markets, but also to the lives of home buyers hit with layoffs, furloughs, and other financial challenges. Just ask Katerina Rieckel, a digital strategist, knitwear designer, and first-time home buyer who, with her husband, was set to close on a glorious farmhouse in upstate New York in March.
But about a week before sealing the deal, Rieckel was laid off, which meant that she and her husband, a claims adjuster, could no longer afford the place.
As a part of our new series, “First-Time Home Buyer Confessions,” we asked Rieckel to share her story, and the hard-won lessons she wants to share with other first-timers.
Let her experiences show that even unemployment doesn’t need to spell the end of a house huntâalthough it may require you to dust yourself off after a loss and try, try again.
Location: Troy, NY House specs: 1,544 square feet, 3 bedrooms, 2 bathrooms List price: $249,900 Price paid: $245,500
2020 has been a wild one. How did you end up buying a home in the middle of a pandemic?
We started looking for a house a year ago, about halfway through the summer. At the time, both my husband and I had recently got new jobs, so the first issue we ran into was getting pre-qualified for the mortgage without a long track record at those companies. We also both felt pressure, as our jobs were very new.
What were you looking for in a house, and what was your budget?
We were looking for a house in the country that was move-in ready, private with at least 5 acres. We started off with a small budget, max $200,000, which made our choices more narrow.
Our search continued well into the winter, and around January 2020, we finally saw a house that was all we ever dreamed of and more. It was over our budget, at $229,000, but it had been listed for over a year, so we felt there was a good chance we could get it for less than the asking price.
What did you love about this house?
It was a beautiful, slate-blue farmhouse sitting on top of a hill, surrounded by woods. The house was warm and inviting, with chickens running around, as well as a big diving pool, and a workshop in the basement connected with a two-car garage. We got along with the owners really well, and we were going to keep the chickens. Everything went very smoothly, until just over a week before closing.
So what went wrong?
It was March, and COVID-19 hit hard. The digital marketing agency I worked for had clients pause their work for unknown time. I was laid off, which meant we couldn’t afford the house anymore, and had to back out of the deal.
I was crushed. We didn’t know what was going to happen, and the country was under a lockdown. We had plans for my parents to come visit us in our new house, but instead, I ended up with no job, no house, and I couldn’t see my family, since they live in Europe.
In the summer, I was very fortunate to get my job back. So we resumed our house hunt and began to search for a new contender.
When you started the search again, how had COVID-19 changed the market?
The housing market in upstate New York got totally crazy. I heard there were houses being sold within hours. The market was just incredibly competitive, and not many houses were being listed, as a lot of people didn’t want to let strangers in their house during the pandemic.
We saw about seven to 10 houses in person, but they usually ended up disappointing us, with some strange arrangements. For example, one house had around 25 acres, but half of that acreage was on the other side of the road, behind other people’s houses, which made it almost impossible to use.
With such a competitive market, how did you end up finding the right house?
Finally, around halfway through the summer, I saw a house listed that I hadn’t noticed before. I called on it right away and set up a showing that evening.
The real estate agent told me we were really fast, as he had just relisted this house. Someone had been buying it, but backed out of the process because of personal reasons.
How did you know this house was the one?
The house had over 10 acres, it was in the country, and about 35 minutes to Troy. It was move-in ready, but definitely needed upgrades, as it looked like it got stuck in the ’80s.
Even though we didn’t like the style that much, we felt instantly comfortable and decided to put in an offer that same evening. It was partly due to the pressure of the market, but in the end, we are really happy we made this decision.
What surprised you most about the home-buying process?
Nothing prepares you for the amount of aggravation you have to go through. Buying a house is like getting a second job for about three months.
What’s your advice for aspiring first-time home buyers?
Don’t trust the photos! The photos got me a few times. For example, a lot of times, the photos of the house are taken so that you can’t see the neighboring houses.
You think, “Wow, that looks so private!” Then you drive there, and you realize there’s a house sitting right next to it. Since privacy was very important to us, we got disappointed a few times by this. We started doing drive-bys first, before going in with a real estate agent, whenever possible.
Anything else home buyers should look out for?
Call the real estate agent and ask a lot of questions before you even go see the house, like what the property and school taxes areâvery important around here.
You also want to know what kind of heating the house has, as electric bills can really add up over the winter.
The driveway can also be a huge issue, which is why I think the first house we were buying was for sale for such a long time. It had a pretty steep driveway, which was definitely an all-wheel drive kind of thing in the winter.
We also changed who we were financing with while we were going through closing. We needed someone well-informed about the economy, who knew what they were doing and was ready to act fast.
Our first mortgage broker didn’t tell us as soon as interest rates started to go upâand basically sat on the information for a while. This is when we stopped trusting this person and went to work with a bank instead.
Maybe the best advice is not to fall in love with a house too quickly, since there can be so many setbacks that you will not see coming.
The post ‘I Lost My Jobâand My Dream House’: How This First-Time Home Buyer Bounced Back appeared first on Real Estate News & Insights | realtor.comÂ®.
My husband and I have been married for 25 years. We do not have children together, but he has children from a previous marriage.
We are retired now, and he bought property in Florida for us to live in. My name is not on the deed of the property, and he has not made a will yet. I keep complaining to him about it.
If he should die without a will, will his adult children and grandchildren be entitled to the property and house? Hopefully, you will be able to answer this question and set my mind at ease.
Your husband appears to have control issues at worst or, at best, problems with being direct and transparent. This is not the way to deal with a family property, especially after 25 years of marriage. If your husband wants his children to inherit his estate when he is gone, he should discuss it with you like a man (or woman), face to face, and you should outline a plan for your future together. But this game of cat and mouse, where he makes unilateral decisions about your future, is not a respectful or helpful way to conduct a 25-year marriage.
Not knowing if youâre going to have a place to live after your husband dies, assuming he predeceases you, creates a constant feeling of unease. The whole point of saving for retirement and being fortunate enough to retire comfortably is that you can see out your final years together with the knowledge that you will both be financially secure. Only one person in this relationship knows what that feels like â and, given that you have raised this issue with him, he is aware that you do not enjoy that same peace of mind.
Florida is an equitable distribution state and, for the most part, divides property 50/50. Hereâs the legal interpretation fromÂ Schnauss Naugle LawÂ in Jacksonville, Fla.: âIf the decedentâs homestead property was titled in the decedentâs name alone, and if the decedent was survived by a spouse and descendants, the surviving spouse will have the use of the homestead property for his or her lifetime only (or a life estate), with the decedentâs descendants to receive the decedentsâ homestead property only after the surviving spouse dies.â
You will have the right to live in this property for the remainder of your life. If you divorce, however, anything purchased during your marriage is considered marital property, and even though this home was purchased in your husbandâs name only, it would be divided 50/50. In Florida, âequitable distributionâ is mostly treated as âequal distribution.â According to this interpretation of family law in Florida byÂ Arwani Law: âEven if he purchases the car with his own money and puts the car title in his wifeâs name, it is still considered marital property.â
And as most lawyers will tell you, a lack of communication is one way of buying a ticket to divorce.
The post My Husband Bought a Retirement Property, but Only Put His Name on the Deed. Will His Adult Children Inherit This Home? appeared first on Real Estate News & Insights | realtor.comÂ®.
Deciding to move is a major decision and location is one of the most important aspects you should consider when planning a move. Whether it’s a new neighborhood, a new city, or a new state–once you get there, you want to make sure your new community truly makes you feel welcome.
Is 2021 the year you’re going to buy a real estate investment property? If you have your sights set on flipping a house for a big profit, you likely know how much work is involved. Sure, popular real estate reality shows like “Flip or Flop” and “Flipping Across America” make fix-and-flip investing look like a feasible endeavor, but you’re wise to the magic of TV, right?
The truth is that flipping a house is rife with challenges, from financial setbacks to breakdowns in communication with your construction crew. Plus, low interest rates mean properties are flying off the market, especially in up-and-coming neighborhoods.
So how can house-flipping newbies compete today? By learning from those with more experience. We spoke to successful home flippers about what they wish they had known when starting out. Hopefully their tips below will help you minimize pain and maximize profits.
1. Stick to your maximum allowable offer
Our experts all agree that buying a fix-and-flip investment should not be an emotional decision. There are certain formulas that every house flipper needs to calculate in order to make a profit.
“Real estate investing is a numbers business, and if the deal doesn’t make sense when you crunch the numbers, you should be able to walk away,â says Hayden Lyon of Cowtown Home Buyers, a real estate investment firm in Fort Worth, TX.
âStick to your maximum allowable offer. Going above your MAO is just asking for trouble,” says Ryne Lambert, co-founder of Sell My House, a real estate investment firm in Green Bay, WI.
The general rule when determining your MAO is not to pay more than 70% of the property’s after-repair value, or ARV, minus repair estimates. For example, if the property’s ARV will be $150,000, you would subtract the costs to flip (including the cost of a loan, repairs, and other fees) and then multiply that number by 70%. That will give you the MAO you should make on the property.
However, Lambert recommends a more exact formula: âWe calculate MAO as ARV minus rehab estimates, selling costs, and minimum gross profit,â he says. âOur detailed formula makes our offer more competitive for sellers while still providing us a nice profit.â
2. Build a buffer into your renovation budget
Anyone whoâs undertaken repairs on their house or an investment property knows things rarely go as planned. Permit delays, bad weather, and unforeseen expenses can all throw a wrench in the worksâand revise your bottom line.
That’s why Lambert advises new investors to build a buffer of up to 25% into their rehab estimate.
3. Donât always go with the cheapest contractor
Finding the right contractor can help keep renovation costs in checkâbut right does not always mean the least expensive.
âWhen I was new, I thought in order to keep as much profit margin in the flip as I could, I needed to choose the lowest contractor bid,â says Jonathan Faccone of Halo Homebuyers, a real estate consultant in Bridgewater Township, NJ.
âYou do have to manage costs prudently, but going with the lowest contractor bids usually end up costing you more in the long run,” says Faccone. “Be cautious about choosing the cheap price and, instead, go with the contractor who offers the best quality and most professional work for your money.â
4. Make sure the contractors have a clear scope of work
You may be able to head off issues with contractorsâincluding plumbers, electricians, and general contractorsâby ensuring they present a clear scope of work for the project, experts advise.
âThe scope of work usually includes working with the city to obtain permits, ordering materials and equipment, and confirming the house plans. This section will save you a lot of time and money on the back end of the project,â says Shawn Breyer of Breyer Home Buyers, a real estate investing firm in Atlanta.
Most importantly, start building relationships with contractors in the areas where you invest, so you know whom you can trust for any project.
5. Provide a quality product
As fast as homes are selling today, the market is filled with many discerning buyers.
âOften, the ultimate buyer of a flip expects the home to compare with existing homesâor even new constructionâin quality and value,â says Greg Kurzner, a Realtor Â® for ERA Atlantic Reality in Alpharetta, GA.
Lyon agrees: âFocus on value-add renovations and amenities. Research shows buyers want a nice kitchen and bathrooms. Of course, everything should be functional and up to code, but you want to create an instant emotional connection for potential buyers.â
6. Get your own finances in order before you start
Several investors pointed out the importance of running your blossoming home-flipping company as a businessâbecause it is. That means tracking all of your expenses so you can make better decisions for greater profits. Be extremely organized, and document every purchase order, utility bill, and closing fee that’s involved in the project.
Itâs also important to have your own financial house in order before you start.
âIf all goes well, youâre about to start making money in large chunks. If you lack proper discipline, youâll wind up worse than when you started,â says Billy Ross, CEO at RFTA Properties, a residential real estate investment company in Winter Park, FL.
7. Expect to put time and money into marketing
James Fitzgibbons of Ledge Real Estate Solutions, in Windermere, FL, says he wishes he had spent more time in his early years learning how to market homes efficiently.
âWe have a wrapped car that we drive around town,â he says. âWeâve driven for dollars, and weâve used direct mail marketing. Today, we advertise online through Google and Facebook. All of these methods have potential if done right.”
The post 7 Insider Secrets About House Flipping To Put You on the Path to Profitability appeared first on Real Estate News & Insights | realtor.comÂ®.
The best way for first-time home buyers to come up with a down payment for a home: save for one, of course! But sometimes you’re in a hurry. Maybe your dream house just popped up on the market, or youâve simply had it with being a renter. Whatever the reason, youâre ready to buy a house, now. But while your credit is good and your career is stable, you still need to come up with that big chunk of change for a down payment.
Watch: 4 Things You Can Give Up to Make a Down Payment
Never fear: There are plenty of ways to amass a sizable down payment fast. Check out these tactics, along with their pros and cons.
1. Dip into your 401(k)
If you’ve been socking awayÂ money in your 401(k), it is possible to borrow from that for a home loanâand get that cash in handÂ fast.
âMost 401(k) plans allow you to borrow up to 50% of the vested balance, or up to $50,000, and it takes about a week,â saysÂ Todd Huettner, owner ofÂ Huettner Capital, a residential and commercial real estate lender in Denver.
ButÂ it will cost you:Â If you take funds out of your 401(k) earlyâthat is, before you’re 59Â½ years oldâyouâre going to take a 10% penalty on that withdrawn money. And it counts as gross income, which can bump you into a higher tax bracket.
Check out this Wells Fargo calculator to see what your penalties would be.Â In addition to penalties, most companies requireÂ you to repay that vested money over five yearsâor sooner if you quit or get axed.Â SoÂ be sure your career is stable.
2. Crack your IRA
DiggingÂ into your IRA usually carries the same 10% penaltyÂ of breaking open your 401(k) piggy bank, with one major difference: The penalty doesn’t apply toÂ first-time home buyers. And unlike a 401(k), you donât have to repay what you take out of an IRA.Â However, the withdrawal is still taxable.Â Plus thereâs the matter of not repaying yourself, which can hurt your long-term retirement. So if you take out a sizable chunk,Â restoring this nest egg to its former level will take you manyÂ years.
3. Hit up your boss
Let’s get real: You donât want to stroll into your bossâ office and demandÂ help buyingÂ your house. But youÂ canÂ ask ifÂ your company has an employer-assisted housing program.Â Think about it: Companies hate employee turnover, so what better way to keep you around than pitching in to help you buy a home? It’s a win-win: Home loans are often low- or zero-interestÂ and areÂ usually structured to be forgivable over a period of time, often five years, whichÂ further encouragesÂ employeesÂ toÂ stay put.Â The downside? Not all employers offer it. Hospitals and universities most often do, so be sure to ask to avoid overlooking this readyÂ source of financial assistance.
4. ExploreÂ state and city programs
Local assistance programs abound to help you scratch up cash for a down payment. Offered by either your state, your city, or nonprofits, these programs oftenÂ partner with banks, who hope toÂ gain clientele they might pass over otherwise:Â Bank of America, for instance, recentlyÂ launched aÂ searchable database of local programs.Â Wells Fargoâs partnership with NeighborhoodLIFTÂ offers down payment assistance up to $15,000.
The catch?Â You’ll need to qualify. For NeighborhoodLIFT, for instance,Â your household income has to beÂ no more than 120% of the median in your area.
5. Get a gift from family or friends
Understandably, many home buyers turn to their family for help buying a home, and for good reason:Â There are no limits on how much a family member can “gift”Â another family member, althoughÂ only a specific portion can be excluded from taxes ($14,000 per parent).
But it’s not just as easy as that. Gifters, even family, will need to provide paperwork in the form of aÂ gift letter. And if the gifter is a friend, it gets even more complicated. For example, you’ll have to wait about 90 to 120 days before you can use any of those funds.
The post 5 Speedy Ways to Come Up With a Down Payment appeared first on Real Estate News & Insights | realtor.comÂ®.