Lee Morof's Real Estate Blog

Buying or selling a home is unquestionably one of the biggest and most important transactions in a person’s life, financially and otherwise. The ins and outs of the entire process can be overwhelming, particularly for first-time homebuyers or sellers. There’s mortgage loan paperwork to manage, open houses to attend, inspections and appraisals to coordinate, not to mention all the different people involved.

While it may seem daunting, rest assured that everyone who plays a role in real estate transactions is essential. Two of the key players involved are also two of the most commonly confused: Listing agents and selling agents. Though their titles sound extremely similar, they have two very different jobs. Here’s a closer look at what their differences are.

Listing Agents

Much of the confusion about listing versus selling agents likely stems from the fact that listing agents are frequently also referred to as seller‘s agents. Regardless of which title is used – listing agent or selling agent – this person exclusively represents the seller in a home sale, working solely in his or her best interest.

Listing agents spend their time primarily working with the homeowner trying to sell the property and typically have very little if any, interaction with potential buyers.

Some of the responsibilities listing agents have are:

• Staging the home and marketing it for sale
• Fielding and reviewing offers on the property

Selling Agents

The person who exclusively represents the buyer in a real estate transaction is the selling agent, also commonly called a buyer’s agent. While the listing agent is working on behalf of the person selling their home, the selling agent represents the homebuyer and seeks to get them the best available home at the best price possible. 

Tasks a selling agent may help potential homebuyers with include:

• Researching homes and monitoring the MLS, looking for homes that meet the buyers’ criteria
• Help buyers to prepare and submit an offer

Whether you are the home buyer or seller, finding an agent who is a good fit, understands your needs and wants in a home, and who has your best interest at heart is crucial. 

For most people, their home is the most valuable investment they are ever going to make. Therefore, it should make sense that people will want to improve its value over time. In this case, people are going to need to invest in power tools. Those who are interested in home improvement projects need to know about the five most important power tools available in today’s market.

A Power Drill

While this might seem obvious, many people do not own a power drill. This is almost always at the top of the list of the best power tools on the market. It is a versatile tool that can handle everything from hanging pictures to putting in a fence. People need to make sure they know about the various options for drills on the market and find the one that is right for their needs.

A Jigsaw

A jigsaw is a unique but versatile saw that can help people with a variety of home improvement projects. This type of saw is great for helping people cut shapes and curves as well as straight lines. Try to find a jigsaw that has a variety of orbital settings. This will provide the user with added accuracy and speed.

A Circular Saw

This is another saw that is important for homeowners to have. This is great for heavier cutting jobs. They have the ability to cut through thick materials easily. There are both cordless and corded options and they pack a punch. Cordless varieties are a bit heavier but they provide the user with access to tight spaces

A Cordless Screwdriver

Traditional screwdrivers can pose a bit of a challenge and get uncomfortable over time. This is where a cordless screwdriver is helpful. This removes a significant amount of effort and makes projects go by more quickly. These screws can be used to both tighten and loosen screws.

A Rotary Tool

Finally, a great power rotary tool is a must. This is used to help people with cutting, grinding, sanding, and more. This is great for performing a variety of tasks around the home and can help people with numerous accessories. Do not overlook the value of a powerful rotary tool.

The “Golden Girls” trend got its name from the popular television sitcom about four elderly women who live together to share expenses. It is becoming a popular way in real life for elderly adults to share homeownership and it has many benefits.

The cost of assisted living is quite high. The median cost in the United States for assisted living is $4,051 per month. In many parts of America, that amount makes a substantial mortgage payment. Rather than pay that high price to live in an adult assisted-living community, many able-bodied elderly are choosing to pool their resources and live together in a large home that they own together.

Buying A Home To Share

The homes that work well for this are those that have many bedrooms, each with a private bath, and are on one-level. Three- or four-bedroom homes are ideal because the cost of the home and the operating expenses can be shared among three or four elderly adults to reduce each person’s cost compared to what they would spend if they were alone.

It Is Fun To Share

The communal areas for a shared-living arrangement are the main living room, dining area, and kitchen. Many find that by sharing the cost of a home, among like-minded peers, that the quality of life is very nice. The pooling of resources usually creates enough money to pay for the expenses and to pay for in-home personal assistance as needed. Most importantly, loneliness is reduced, which sometimes leads to serious depression in the elderly who live alone.

Many baby boomers are now entering retirement. Estimates are that seven out of 10 will need some form of assisted living care. Females still live longer than men on average, so that is why this trend is more about elderly women living together than men. However, the concept works just as well for both sexes.

Multigenerational living is also becoming popular for the same reasons. It costs so much to own and maintain a home that it is not as easily accomplished by households with one or two workers who contribute to pay for the expenses. Most situations benefit from having a third or a fourth contributor, which reduces the average contribution for all.

Get Competent Legal Advice

When considering any shared ownership of a home, it is very important to use the services of a competent legal counsel to draw up the ownership agreement. Shared homeownership is a type of partnership and benefits from having a “buy-sell” provision in the agreement that allows any remaining co-owners to buy out the portion held by a co-owner who dies or otherwise becomes physically unable to continue living in the home.

Summary

Most baby boomers had roommates when they went to college to share expenses. Embracing a “Golden Girls” strategy to share home ownership is like returning to a style from the younger times. It is wise to be very careful about who is chosen to form a home-ownership partnership; however, with proper legal documentation and prudence in choosing who to live with, this can be a very satisfying way to spend your golden years.

One might wonder if the continued improvement in the access to online information about properties for sale has removed the need for working with a qualified real estate agent or broker. It has not.

The trends reported by the National Association of REALTORS® (NAR) are interesting. Buyers are finding a home to purchase by searching online in larger numbers than before. In the NAR survey of homebuyers, the home was found online by the buyer for more than half of the homes purchased, with only 28% of the homes purchased suggested to the buyer by a real estate agent.

Even so, NAR also reports that 87% of buyers made their home purchase with the help of a real estate agent or broker. This trend is increasing. In 2001, only 69% of home buyers bought a home with the involvement of a real estate agent or broker. Why the upward trend of working with a real estate professional when buying a home?

The explanation is surprising. One is the cost of buying a home that is for sale by owner (FSBO) may be very close to the price of the same type of home bought with the help of a real estate agent. An FSBO home sale may put a little more money in the pockets of the seller but little of that savings on the real estate commission goes to the buyer. Moreover, the FSBO process creates a disadvantage when trying to market a home without a real estate professional’s help. These trends are making FSBO properties decrease.

Additionally, using a real estate professional may help the transaction go more smoothly. A real estate agent handles the buying and selling of properties all the time. A homebuyer does this less often and therefore may not have the skills to manage a real estate transaction effectively.

Summary

When buying a home, it is the preference of the vast majority of buyers to work with a real estate professional. The process is likely to be easier with less chance of costly mistakes. The price paid for the home will likely be around the same as trying to close a deal without the benefit of using a real estate agent.

For sellers of a home, working with a professional real estate agent comes along with advice about market pricing, how to stage a home for better resale value, and the benefits of using effective marketing strategies that get the home seen by more prospective buyers.

For buyers and sellers, it becomes clear that working with a real estate agent is vastly preferable. This is why so many are using the services of a licensed professional to buy or sell a home.

Some clever millennials are teaching the older boomers a new way to invest in real estate, which goes by the name of “house hacking.”

What Is House Hacking?

House hacking has nothing to do with computers, although you may go on the Internet to find candidates for real estate investments suitable for hacking. The goal of house hacking is to acquire a multifamily rental property, live in one part of it and rent out the other parts for enough rental income to cover most, if not all, of the expenses of owning the property.

Live Rent-Free

As the on-site manager of a property that you own, you do not have to pay any rent. If you are clever, and the rental market is robust in the area that you choose for house hacking, then the rental income from the other units in the multifamily property will be sufficient to cover the property’s expenses. Then, you live rent-free.

Finding A Hackable Property

Multifamily properties, up to four units, are the best candidates for house hacking. A two-story townhouse that divides into two separate living spaces, a duplex, a triplex, or a small apartment building may be suitable.

Cash Flow

Calculate the cash flow from the portions of the property that rent to others. If the rent covers all the expenses then the property is said to have a positive cash flow. That is the goal. Have some funds set aside to cover any downtime when a unit is vacant between renters.

Financing

Owner-occupied properties qualify for lower financing rates than non-owner-occupied properties, which are held purely for investment.

Landlord Headaches

As the owner/landlord you will deal directly with any tenant relations and problems. If a pipe breaks in the middle of the night, you are the one who will have to deal with the problem. Be sure to screen tenants thoroughly and maintain the property. Some do not like dealing with tenants; however, if you are careful when selecting tenants and handle any problems professionally, this work provides an excellent experience for understanding further real estate investments to build up your portfolio.

Summary

House hacking came about especially for those from the younger generation of millennials simply because buying a property is very challenging on one income and even difficult on two incomes. If you consider the payment of rent by others as part of the total income that supports a property, the math may work out better. When the numbers work out, you may have found an investment opportunity with house hacking. Work with a qualified real estate agent who specializes in multifamily properties for the best results.

Some simple home improvements increase the attractiveness of a home and may help with a sale. If you are getting ready to sell your home or if you just want to beautify it a little, here are some low-cost tips for home improvements to consider.

Go Green

Adding indoor plants is nice and improves interior air quality. If you have the room for it, consider a vertical garden. A vertical garden may use the entire ceiling-to-floor area of one wall. With the proper type of grow lights, it is possible to create the feeling of a lush tropical forest inside the home.

You can grow a herb garden in a window box, so you always have fresh herbs for cooking. Flowers, which make a lovely fragrance, are wonderful for aromatherapy to create positive feelings. Hang a sprig of fresh eucalyptus in the shower for a spa-like experience.

Water Elements

A water fountain or birdbath in the garden is a pleasant touch. Use a solar-powered water pump so there is no need to connect it to electricity. It will attract birds that are enjoyable to watch.

A small fountain in the home will have a soothing effect from the sound of the falling water. The Chinese art of Feng Shui recommends having some water elements in the home for a more peaceful living space. It can be something as simple as a desk or tabletop water fountain to have a nice effect.

Wall Decor

To spice up a room and give it a fresh look, consider changing the wall decor. Give the wall a fresh coat of paint or new wallpaper and hang new things on it in an attractive way.

Throw Rugs

Colorful throw rugs are helpful to cover a worn area of old carpet. Rugs improve the look of a room without the expense of replacing the carpet. In a larger room, a throw rug may create a space for a certain use, such as a sitting or dining area.

Add Some Color to the Front Door

One quick and easy technique to give a dreary home exterior a bit of curb appeal is to power wash the siding on the front and then paint the front door a dramatic contrasting color. A superbly-colorful front door is very attractive and welcoming.

Summary

With a little imagination and a modest budget, it is possible to make attractive home improvements that have appeal. Just try some of our suggestions and make improvements that you enjoy.

Many homeowners enjoy DIY, or Do-it-Yourself, home improvement projects. There’s nothing quite like the pride of knowing you used your own hands to put together or improve something.

With the explosion of social media sites such as YouTube, Pinterest,and TikTok, spending a weekend on DIY projects seems easier than ever before. After just a couple of minutes spent searching, you can find a step-by-step tutorial, before and after photos, or a time-lapse video of any project imaginable. Anyone can do this! Right?

Not so fast. In some cases, it may not make sense to DIY. How do you decide whether it will be worth the elbow grease or if you should leave it to the professionals?

To DIY Or Not To DIY

Building, fixing, painting, or any other -ing isn’t always easier or more affordable, despite what HGTV would have you believe. As you consider whether or not to take a project on yourself, here are some things to consider. 

• Cost – Calculate the cost of materials you’ll need for your project, factoring in tools and equipment. If the job requires some you don’t already own, you’ll have to rent or buy them, which can be quite costly. However, if you already have some of the necessary materials or you can borrow tools from someone, going the DIY route may make sense. 

• Time – As Greek philosopher Theophrastus said, “Time is the most valuable thing a man can spend.” Even if a DIY project offers substantial cost savings, it’s important to factor in the time you’ll have to spend on it. Consider whether saving money is a worthwhile trade-off for your time.

• Skill level – No matter how many tutorials you study, some things are better left to truly skilled professionals. If you don’t have any experience working in electrical, you shouldn’t attempt to do a project that requires running wires. Knowing your limitations and when to hire someone can save you time, money, and stress.

Potentially saving money is certainly not the only thing to consider when it comes to DIY projects. Before deciding to take it on, ask yourself if you’ll truly enjoy the project and whether or not you have the necessary skills. 

If you are in the market for a new home or interested in listing your current property, be sure to contact your trusted real estate professional.

To refinance or not to refinance, that is the question. How do you know when it is an appropriate time to refinance? Many factors influence this decision, besides just the cost of the mortgage loan. Here is a checklist to follow when considering a refinancing opportunity.

Check Your Credit Score

Refinancing is similar to getting the original home loan. The lenders will run a credit check and verify your current income. Your total debt level and your credit history are both important. If you have some “dings” on your credit record, you may be better off staying with the existing mortgage rather than attempting refinancing.

The opposite is also true. If your credit score has significantly improved since the time when you took out a mortgage, you may benefit from refinancing.

Be aware that every time you ask a lender for loan approval, and the lender runs a credit check, the credit inquiry will lower your credit score. It is highly advisable to check your credit history first before applying for any mortgage financing. If there is anything that is not correct in your credit file, then dispute the bad information to improve your credit score.

To get the best rates on mortgage financing, aim for a credit score of above 740, with a debt-to-income ratio of below 75%. The rule of thumb is that for every 20 points that your credit score goes up you will benefit from lower rates.

Private Mortgage Insurance

Another consideration on the checklist is whether you pay private mortgage insurance (PMI). PMI is usually a requirement for a low down payment loan. If the equity value that you have in the home increased significantly since the time you bought it, the PMI may no longer be necessary. Sometimes a lender will accept a new appraisal of the home and recalculate the PMI requirements. Ask your lender if they allow this. If they do, you may be able to get rid of the PMI without refinancing.

If a lender will not remove the PMI requirement, and the equity value of the home is substantially higher, then refinancing may be beneficial, if the new loan does not require PMI.

Closing Costs

Covering the closing costs is a mathematical calculation. The amount saved on the monthly mortgage payment needs to be larger than the closing costs on a refinancing loan. The amount of savings depends on how long you plan to own the property. For example, if the closing costs are $3,600 and your monthly saving on the mortgage is $200, the break-even, where you save more than the closing costs, is 18 months later. You should plan to own the property for at least 18 months for this refinance to make financial sense.

Cash Out

Sometimes the benefits of refinancing also include the possibility of taking cash out from the refinancing loan to use for other purposes. If this is the case, consider the savings on the cost of those funds if borrowed elsewhere.

Summary

Those are the things to think about when considering refinancing. Work with a qualified real mortgage broker to get advice if you are not certain about the best thing to do.

If you are in the market for a new home or interested in listing your current property, be sure to contact your trusted real estate professional.

Under the Jumpstart Our Business Startups (JOBS) Act, which was signed into law by President Obama on April 5, 2012, the Securities Exchange Commission (SEC) relaxed the rules about advertising investments. This allowed the trend of crowdfunding to expand dramatically giving real estate investors more opportunities for pooled-funds investing.

What Is Polled-Funds Investing?

A pooled investment fund takes in money from a group of investors to use to acquire real estate for larger amounts than each investor’s money would support. Prior to the passage of the JOBS Act, these pooled investment funds were only accessible by large investors through private placements and private real estate investment trusts (REITs). The minimum investment might be up to $250,000 or more. High-net-worth individual investors and institutions were the only investors capable of the buy-in to gain access to these investments, which usually offered better and more stable returns.

After the JOBS Act came into being, the advertising of these pooled investment funds was possible under the new law. The phenomena of crowdfunding came out of this. Money from many investors creates a larger investment fund managed by a professional team, intending to obtain strong performance results.

Better Investment Opportunities For The Smaller Investor

These new investment opportunities allow the smaller investor to participate in a greater diversity of real estate than they could achieve on their own. Moreover, an investor can create a pooled fund to acquire a property with the help of other investors. To use this technique to buy real estate, it is helpful to work with a qualified real estate agent or broker who understands this concept of pooled investment funds.

Due Diligence Required

Not all investment pools succeed in producing decent returns for investors. The SEC is no longer regulating these polled investments carefully. This means that the challenge of due diligence falls on the individual investor. Before investing, it pays to conduct exhaustive research about the pooled investment fund, the cost of the fund management fees, the expertise of the fund’s management, and their past investment-performance history. Always remember past results are no guarantee of future performance and never invest any funds that you cannot afford to lose.

Summary

The relaxing of SEC regulations in 2012 allowed many opportunities for pooled investments to flourish. While there is the possibility of strong returns on investment, there is also some risk. Investors considering a pooled investment fund, such as a crowdfunding deal, should conduct thorough due diligence and get advice from a qualified REALTORS® in the market where the property will be located before making any investment.

If you are in the market for a new home or interested in listing your current property, be sure to consult with your trusted real estate professional.

Recent advancements in technology continue to disrupt the real estate market. This includes the use of “Big Data” for data mining, artificial intelligence combined with machine learning, augmented and virtual reality, use of drones, blockchain technology, and the ongoing deployment of 5G.

The Use Of Big Data

Consumers have access to more information about real estate market conditions because of the collection and online presentation of the results of data mining “Big Data.” For example, it is easy to learn if a market is a buyer’s or a seller’s market by searching for the median number of days a house will be on the market before it sells in a certain area.

Artificial Intelligence And Machine Learning

Artificial intelligence (AI) combined with machine learning works with data mining of Big Data to make the information more actionable. Real estate investors can set up search parameters to look for the exact type of properties that they want and let the AI software do the grunt work to find the investment opportunities.

Machine learning allows AI chatbots to learn correct responses to inquires from the questions previously asked. AI chatbots provide customer service 24/7 non-stop to handle leads and make sure to neglect no one.

Augmented And Virtual Reality

Virtual reality allows interested buyers to do a digital walk-through of a property and be able to imagine what it looks like. Augmented reality is used by some REALTORS® to digitally stage a home, listed for sale, by using digital furniture in the virtual walk-through. This furniture is selectable based on a potential buyer’s taste. Staging a home digitally is far less expensive than using real furniture.

Use Of Drones

The exciting use of drones captures a beautiful fly-over and fly-around a property to show what it looks like on the outside and its surrounding environment.

Blockchain Technology

Blockchain technology, which is the type of software used for cryptocurrency, will have an application for digital verification and signatures in real estate transactions. This technology allows the reduction of all the massive paperwork for a title closing to a secure, digital format.

Deployment Of 5G

The 5G mobile technology allows the connections to a smart device that can broadcast information about a property listing to the local environment. This allows for digitally-assisted home viewing, which is responsive, interactive, and for a potential buyer to ask questions about a property.

Summary

Technology continues to make the search experience when buying more effortless and more pleasant. The promising news for REALTORS® is that even though around half of the homebuyers find a property online that is of interest, the vast majority (93%) use a real estate agent to close the transaction. Technology is making the process easier; however, smart buyers still work with a qualified real estate agent to buy a home.