Lee Morof's Real Estate Blog

The purchase agreement is a vitally important document that outlines the provisions, terms and conditions for the transfer of property.

It should be read carefully and any ambiguities should be clarified prior to signing. It is a legally binding contract between the buyer and seller.

The purchase agreement may vary depending on the location. Most real estate agents use a form that has been approved by a state Realtors® Association.

The seller may have a different version that was drawn up by an attorney. It should not be assumed that they are all the same.

Typically, the purchase agreement will include an inspection period. This allows the buyer time to verify the conditions stated on the purchase agreement. Three of the most important stipulations in the contract are listed below.

All Owners Must Sign the Purchase Agreement

In most cases, the purchase agreement should be signed by the legal owner of the property.

If there is more than one owner, each owner should sign the agreement. In many states, both parties in a married couple have an interest in a property even if the title is held in one party’s name alone. Therefore, the purchase agreement should be signed by both parties of a married couple.

In the event the property is being sold by a corporation, verify that the person signing the agreement is authorized to commit the corporation to the sale.

List All Fixtures to be Transferred with the Sale

The purchase agreement should list all items that are to convey with the property. “Fixtures” are considered items that are attached to the property.

Legally, they should be included with the sale, but more than a few buyers have been dismayed to find the property stripped of countertops, appliances and window coverings. Any fixtures and personal property that are part of the sale should be included in the purchase agreement.

Verify Zoning Ordinances

The purchase agreement may contain various stipulations. One should include the right to cancel the contract if zoning prohibits the use of the property as planned.

Zoning ordinances may restrict the use of buildings or land. This may prove to be an obstacle for someone who intended to include a workshop on the property. The buyer should be able to withdraw from the contract if they discover that zoning prohibits the intended use.

These agreements can be complicated, so be sure to check with a local real estate agent if you’re unsure about how to proceed.

Size matters when you are buying a new home. Whether you plan to expand your family, need more room for your stuff, or are concerned with resale value, you want to get the most space for your money.

Also, if you want to add a feel of luxury to your home, one of the best ways to do it is to create open spaces rather than cramming all your furniture in rooms so tiny you can barely walk around without knocking something over.

Traditionally speaking, the larger a home is, the more it costs. If there are two newly built houses side by side in a subdivision, the bigger one is likely to cost more. However, there are some tricks to finding spacious houses that are affordable.

Choose Emerging Neighborhoods

Houses in this year’s trending neighborhood are at their peak prices. Clever buyers look for neighborhoods that are in the process of being gentrified, buying at the bottom rather than the top of the market, to get more house for their money.

Fix It Up

Houses in perfect condition, that show well, sell for a premium. If you want to get more house for your money, choose something that needs a bit of TLC. A house that has pink walls and orange shag carpet might appear just too ugly to consider when you first view it, but it might just need a few coats of paint and some new carpet to become a spacious dream home.

Do Some Finishing

Unfinished areas such as attics and basements can be finished to create additional living spaces. The basement could become a family room and the attic an extra bedroom or study. An unfinished space can become the extra bathroom you need to make morning more manageable.

Consider an Addition

Contractors can add rooms to a house. If you have a large lot, you can build an extra wing. With a one story ranch house, it may be possible to raise the roof and add a second story.

The more stuff you have, the smaller your home appears. Reduce clutter and invest in smaller condo size furniture to give even the smallest home the appearance of spaciousness.

If you’re thinking about putting the house on the market, or are simply curious about its value in the current economic atmosphere, it’s essential to get an honest assessment of its value. An overly inflated figure won’t hold up and will only turn potential buyers away.

It’s best to get a fair assessment in order to ask a reasonable price or avoid over-extending oneself when it comes to taking out a home equity loan. Consider these three key tips to get a true assessment of a home’s value.

Identify Positive Features About The Home And Property

When seeking an appraisal for a home, it’s important to look at the big picture. While the neighborhood and specific location are important, as well as the size and condition of the home, it’s also essential to tally up any improvements or upgrades. Any recent renovations are a plus that are sure to give a boost to a home’s value.

Outbuildings and swimming pools add more positives that will increase the initial value of a home. The most important thing any homeowner can do is to stay on top of repairs and give the property a facelift periodically to keep things fresh. This will be taken into consideration during an appraisal.

Pay Attention To The Competition

Whether homeowners try to estimate their home’s value on their own or bring in the professionals, it’s important to pay attention to the surrounding real estate. Take a close look at other properties in the area and their price tags when they come up for sale. It’s especially helpful to look at properties that compare in size and condition. From that point, the most expensive and least expensive homes should be tallied as well, providing a price range for the concerned individual’s home.

Think About Present Circumstances

Be sure to consider if the area is in a recession or showing a period of strong economic growth. If a home is located in an area that is booming, this will inflate the value of the home. It is all part of the law of supply and demand. When buyers are coming in droves, home sales will be ripe for the picking and homeowners can ask a higher price.

However, if the population is dwindling and people are migrating elsewhere because job opportunities have fallen, there is a much greater chance that the home’s value will decrease. For those who want to sell, the best bet is to strike when the iron is hot and put the house on the market during a period of economic strength. If the economy is failing, it may be necessary to wait or cut ones’ losses.

Act Now To Learn More

There is no better time than the present to contact a name you can trust in real estate. Discover all the ins and outs of assessing your home’s value, discuss your options, and find out ways to boost your property’s potential as you seek a reliable assessment.

Much to the frustration of taxpayers all over the country, the tax-filing season begins in January and runs through April 15 of each year. The year 2020 brought us many changes, including an extension on filing taxes. Taxes this year are due on July 15th. Are you ready?

As the current tax season approaches, it presents an opportunity to help tax-payers clarify their responsibilities and remind them of certain important tax deductions that may be available.

Filing Responsibilities

Every person in the United States is required to file their tax returns by July 15 so long as they have some form of qualifying income. Based on filing status, income and available deductions, tax-payers must file a 1040EZ, 1040A or 1040 (long-form for itemized deductions).

Qualifying income is generally defined as, but not limited to wages, commissions, miscellaneous income (rental, interest), investment income and alimony. These forms of income are reported on a periodic basis to the IRS and State governments by employers, banks, contract employers and/or other responsible parties.

The most common tax receipts that must be sent to tax-payers by January 31 are W-2s and 1099-Misc forms.

Calculating Taxes

While the IRS requires individuals to report all forms of income, they also allow certain living costs to be used as deductions to offset income in order to arrive at a “taxable income” number on which tax liabilities are calculated.

If a tax-payer’s deductions fail to exceed the combined statutory standard deduction,, they will want to file the 1040EZ or 1040A. If itemized deductions exceed this number, the 1040 becomes preferable.

Mortgage Interest Deduction

For a majority of tax-payers, the largest tax deduction available is usually mortgage interest paid on secured debt where the primary residence and in some cases second homes or rental property serve as collateral. In most of these cases, all interest paid during the year is deductible.

If the mortgages are large enough, the total interest paid will typically push the tax-payer into position to itemize deductions. It is important for tax-payers to read the rules related to mortgage interest deductions as they tend to be somewhat complicated.

Other Important Deductions to Consider

Once a tax-payer qualifies to itemize deductions, many other living expenses become deductible. Other prominent deductions include property taxes, charitable contributions, childcare costs, qualified moving expenses, certain work related expenses and certain medical expenses.

Prior to using any deduction, it is incumbent on the tax-payer to review deduction guidelines in order to determine applicability.

Whether this is your first big purchase, or your family is moving to a new location or looking for more space, buying a home has its share of ups and downs.

It’s perfectly normal to feel anxious about whether or not you’ve found the right property. Here are some things you can do to make yourself feel more secure with your decision.

Do The Math

You’ve probably already done this, but it’s okay to go over it a number of times to be sure. Factor in your household income and all the bills you expect to pay every month. Add everything up.

It sounds like a stressful activity, but when you look at the numbers and realize that buying a home is actually doable, it can be a liberating feeling.

When you know for sure you can make it as a homeowner without getting underwater, you will feel more confident.

Meet The Neighbors

If you haven’t had the chance to knock on a couple of doors yet, you should spend some time saying hello to people in the neighborhood.

The more you can get to talking with families that are just like yours, the more you will be able to picture yourself as a member of the community. If you have kids, find out if there are other kids the same age nearby. That will help to ease their anxiety about moving as well.

Ask Your Agent

Don’t feel like you are being overly cautious if you ask your real estate agent your lingering questions. Make sure you’re getting a good price for the area, and make sure you know about any issues with the condition of the property. You should be able to trust that they’re excited for your decision, not just for making the sale.

Familiarize Yourself With The Neighborhood

Take a drive and figure out which stores you’re nearest to, the route you can take to get to work, and which other amenities you might take advantage of. Home buyers often underestimate how important living in a safe neighborhood with plenty of accessible businesses can be. The more you can imagine yourself living at your new address, the better you will feel.

Remember, never sign the papers on a new home unless you feel one hundred percent secure in your buying decision. If you need more answers, pick up the phone and call a real estate agent you can trust and who can walk you through every step of the process.

As a homeowner, there are numerous situations in which someone might need a home service professional. On the other hand, this can also create a sense of vulnerability because people might not know who to choose. In order to find the right home service professional, there are a few tips that people need to follow.

Confirm Credentials

Credentials and experience are great markers of a home service professional’s training and track record; however, it is still important to confirm these credentials. Be sure to ask the contractor for references regarding his or her prior work.

Then, take the time to confirm these references. This will help homeowners make sure they are getting the right person for the job. If the past contracts went well, the future ones are likely to meet expectations as well.

Talk About Licensing And Permits

Home service professionals need to have the right licensing and permits for the project. In some cases, it might be the responsibility of the homeowner to collect these permits. If someone doesn’t have the right permits for the job, this could lead to a ticket. This might also impact the home’s value when it comes time to sell it. A contractor should be able to help homeowners work through these issues.

Ask About Insurance

All contractors need to have insurance for their work. In some cases, problems might arise as the project unfolds. This could lead to expensive home repairs. Contractors are supposed to have insurance to cover the cost of these repairs. If not, the contractor is opening himself or herself up to a lawsuit. Ask to see the contractor’s proof of insurance upfront before the project starts. This will provide an extra layer of protection.

Get Everything In Writing

Finally, all expectations need to be written down. While some contractors might not like to have their words set in stone, professionals who are confident in their ability to deliver should not have a problem with this. This is particularly true when it comes to price quotes. Make sure that all guarantees are received in writing and kept organized. Any agreements on behalf of either the client or contractor need to be tracked. This way, everyone is held accountable.

Last week’s scheduled economic reports included readings on pending home sales, Case-Shiller Home Price Indices, and labor sector reports on private and public-sector job growth. Data on construction spending was also released. Weekly readings on mortgage rates and jobless claims were also released.

Pending Home Sales Jump in May

Sales of homes for which purchase contracts were signed rose by 44.30 percent in May and was the highest month-to-month increase recorded since the report’s inception in 2001..Pending home sales are sales with signed purchase contracts but aren’t closed.

Lawrence Yun, chief economist for the National Association of Realtors® said,  “This has been a spectacular bounce-back and also speaks to how the housing sector could lead the way for a broader economic recovery.” This positive news could be dampened by rising infection rates for the Covid-19 outbreak as some states reversed decisions to re-open additional parts of their economies.

Case-Shiller: Home Price Growth Rises in April

The Case-Shiller National Home Price Index reported that home prices grew by 0.10 percent to 4.70 percent on a seasonally-adjusted annual basis. This reading lagged behind the worst part of the Covid-19 outbreak and analysts cautioned that home price growth would fall in the future. The Case-Shiller 20-City Index reported the top three cities for home price growth were Phoenix, Arizona, Seattle, Washington, and Minneapolis Minnesota. The geographical disparity between these cities differs from recent years when coastal cities dominated home price growth rates.

In related news, the Commerce Department reported improvement in construction spending in May. Construction spending fell -2.20 percent in May as compared to -3.50 percent in April.

 Mortgage Rates Hit All-Time Low; Jobless Claims Ease

Freddie Mac reported the lowest mortgage rates reported since the inception of their Primary Mortgage Market Survey. Rates for 30-year fixed-rate mortgages averaged 3.07 percent and were eight basis points lower. Rates for 15-year mortgages dropped by three basis points on average to 2.56 percent. Rates for 5/1 adjustable-rate mortgages dropped by eight basis points on average to 3.00 percent.

Discount points averaged 0.80 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages. 

New jobless claims fell to 1.43 million claims filed from the prior week’s reading of 1.48 million initial claims filed. Ongoing jobless claims rose from 19.20 million claims to 19.30 million continuing jobless claims.filed. New and continuing jobless claims were far above pre-coronavirus levels.

Job Growth Reports Mixed as Unemployment Rate Falls

ADP reported 2.37  million private-sector jobs added in June as compared to May’s reading of 3.07 million private sector jobs added. The federal government’s Non-Farm Payrolls report showed 4.80 million public and private sector jobs added in June as compared to 2.70 million public and private sector jobs added in May.

What’s Ahead

This week’s scheduled economic reports include readings on job openings and weekly reports on mortgage rates and jobless claims.

Renovating a home is not only a way to increase the family’s standard of living but it can also be seen as an investment. There are multiple ways for someone to increase the value of their home and renovations are one of the most straightforward. At the same time, some investments offer a better return than others.

Those who are thinking about selling their home in the future should strive to get every dollar possible. Renovations can make this happen.

Garage Door Replacement

When people think about renovations, they don’t often think about the garage. Some people don’t even include their garage in their square footage because it might not be heated; however, replacing the garage door can provide a major investment return.

In some cases, the value of the garage door itself may double with a simple replacement. While some people dread the prospect of replacing a damaged garage door, even upgrading a working one can lead to a significant return!

Manufactured Stone Veneer

Stone is a popular building material because it provides a sleek look in addition to being versatile. Therefore, it should come as no surprise that a stone veneer will also provide a major investment return. For those who spend around ten thousand dollars on a stone veneer, the value of this investment may nearly double. This provides a great way to not only upgrade the home but also increase its resale value.

Entry Door Replacement

A home’s doors are incredibly important because not only do they a measure of security but also they also draw someone’s eyes. Replacing an entry door may provide an investment return of close to 90 percent. Because this job can be handled quickly by a trained professional, this can be a quick upgrade for those looking to boost the value of their home before selling it.

Plan for Warm Weather Renovations

With the weather starting to heat up, many individuals and families are looking to plan their renovation projects for the summer. Think about the projects wisely as they can have a significant impact on the value of a home. Renovations should be viewed as investments as well as upgrades for the family’s standard of living. 

One of the first decisions you will need to make when selling your home is what price you want to sell it for. This is also one of the most important decisions you will make. Here are some reasons why the first listing price affects the entire outcome of their home sale.

A Too-High Price Can Exclude Your House

Some home sellers mistakenly think they should grossly overprice their home in order to leave plenty of room for bargaining during the negotiation stage. While a certain amount of bargaining does often occur, falsely inflating the value of your home inadvertently excludes your property from online search results.

It is estimated that 80% of homebuyers search online for houses to buy. Those buyers enter price search parameters that they feel they can comfortably afford. If you overprice your house, your listing won’t even show up in the search results of people who likely would be able and willing to pay you the actual value for your home.

Essentially, you are removing your house from their radar screen, making it invisible to an entire group of qualified buyers.

Properties With Price Reductions Appear Distressed

Another reason it is important to price your home correctly is because if you overprice your home and then have to drop the price due to a lack of interest, your house now appears to be a distressed property.  When you see items heaped together in a bin with “price reduced” on the side, don’t you assume they are damaged goods.

It is the same with a house listing that’s labeled “price reduced.” It does not matter if your house is a mansion. With a price drop, buyers will automatically assume something is wrong with it.

The Appraisal May Ruin Your Deal

Even if you succeed in luring someone who’s willing to overpay for your house, you still need to go through the appraisal process so your buyers can secure financing. When the appraisal comes back with a much lower figure, the buyers will have difficulty obtaining a loan because lenders won’t pay over-market prices. Your whole deal could fall apart at the last minute due to a failure to price right when selling your home.

Real estate agents make pricing suggestions based on hard data, like recent comps in the neighborhood. Your best bet is to rely on your real estate agent for advice about pricing your home right to sell.

Case-Shiller’s National Home Price Index showed little change in April as home prices rose by 0.10 percent to a year-over-year average of 4.70 percent. The 20-City Home Price Index showed corresponding home price growth of 0.10 percent to 4.00 percent year-over-year.

Ongoing influences on home price growth before the coronavirus pandemic included short supplies of available homes coupled with high demand for homes and low mortgage rates. While closures and shelter-at-home restrictions in many markets slowed buyer and seller activity,  real estate analysts said that home-buyer desiring to buy larger homes to accommodate working at home helped maintain home prices. Homeowners relocating to less congested areas also helped with stabilizing home-price growth in April. 

Case-Shiller 20-City Index: Home-Price Growth Rates Increases in 12 Cities

The three top cities in April’s 20-City Home Price Index were Phoneix, Arizona with a year-over-year home price growth rate of 8.80 percent; Seattle, Washington reported 7.30 percent yearly growth in home prices. Minneapolis, Minnesota reported home-price growth of 6.40 percent.

Home price growth rates increased in 12 of 19 cities reported. Detroit Michigan did not report to the 20-City Index for the second consecutive month. The coronavirus pandemic continued to grow and spread throughout the U.S during May; some states that opened their economies quickly are now reconsidering as Covid-19 cases rise at faster rates. Changing data and emerging responses to the spreading virus are expected to impact home price growth in the coming months according to whether the coronavirus spreads or diminishes.

FHFA Home Price Index: Home Prices Increase Despite Coronavirus Pandemic

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, reported 5.50 percent home price growth year-over-year in April compared to the March reading of 5.90 percent year-over-year growth. FHFA expects home prices to continue rising as real estate markets return to normal. With spring and early summer home sales impacted by coronavirus-related restrictions, Lynn Fisher, deputy director of research and statistics for FHFA, expected sales to pick up during the summer months.

As coronavirus infection rates increase, further restrictions and closings are anticipated and could negatively impact real estate markets and home prices soon.