Posted by: jimlyons | October 17, 2013

Hot Home Trends


Whether you’re looking to buy  a new home or you’re thinking  about making some home  improvements that will pay you back when you decide to sell your current home, it’s always good to be aware of the trends in home layouts and design that are rising in popularity. Here are just a few of the latest and greatest developments in home layouts:

Outdoor

  • Open it up. Homeowners are increasingly leaning toward converting their square footage from small, compartmentalized rooms and hallways to more open, useful rooms that flow and avoid wasted space.

  • Go gourmet. The foodie revolution is bringing families out of the dining room and into the kitchen. Functional yet luxurious kitchens that marry style and utility are becoming focal points for gathering and entertaining. Islands with seating are popular, and stone tile, induction cook tops, and sophisticated metal appliances are surging in demand. Homeowners who update their kitchen are finding ways to make those updates while staying within the kitchen’s original footprint in order to retain coziness. Meanwhile, walk-in pantries are also hot. Since more people are eating in, families need increased food storage where traditional staples share shelf space with gourmet products.

  • What’s old is new again. Remodeling with reclaimed or recycled materials has reached an all-time high. Installing new flooring? Think about finding wood from a nontraditional source. Home building centers are increasingly stocking reclaimed materials and there are websites that specialize in recycled building materials.

  • Go green. Environmental awareness is on the rise and with it, the advent of eco-friendly appliances and fixtures. Energy efficiency is becoming more mainstream as homeowners shore up their insulation, install new windows, and purchase new, high efficiency appliances. Low-flow faucets save on water waste, and home gardens are allowing cooks to save some money on groceries and go organic.

  • The future is now. Even a couple of decades ago, who would have imagined how much we would rely on smartphones and tablets in our everyday lives? Homes are incorporating this technology via apps that can control garage doors, security systems, and even climate control remotely. For tech-savvy families, “command centers” for the home are on the rise as homeowners seek a central docking area for charging multiple devices.

  • Customize the master suite. While master suites have enjoyed popularity for a while now, times are changing as master bathrooms phase out bulky bathtubs and opt for sleek and accessible showers instead. Some master baths now incorporate the elements of a home spa, such as a sauna compartments. And master suites are on the move. As the nation’s population ages, accessibility is a new emphasis. Don’t be surprised to see more and more master suites on the main floor.

  • Keep it in the family. Guest suites and in-law space are in high demand as more families turn to multi-generational living to save adult kids money or take care of aging family members.

  • Secondary living space. While formal parlors or sitting rooms are a notion of the past, “family rooms” are becoming media centers. And the new media room is often a teen lounge or hangout with projection systems, video games, and on-demand films and programming.

  • Take it outside. Outdoor living is all the rage right now as busy families opt for “staycations.” Outdoor kitchens, fire pits, swimming pools, and living areas are the new summer hangout space, where people can congregate outdoors just footsteps from home.

With cozy living replacing high-upkeep, homeowners are increasingly seeking quality over quantity. Square footage may be shrinking, but usable space has never been more desirable. With that in mind, new home buyers and existing homeowners can work within a more manageable space … while still enjoying all the most desired comforts of home.

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Posted by: jimlyons | October 14, 2013

Impact on Net Worth


Home Ownership’s Impact on Net Worth

HomeownerVsRenter

Over the last five years, home ownership has lost some of its allure as a financial investment. As homeowners suffered through the housing bust, more and more began to question whether owning a home was truly a good way to build wealth. A recent study by the Federal Reserve formally answered this question.

Some of the findings revealed in their report:

  • The average American family has a net worth of $77,300
  • Of that net worth, 61.4% ($47,500) of it is in home equity
  • A homeowner’s net worth is over thirty times greater than that of a renter
  • The average homeowner has a net worth of $174,500 while the average net worth of a renter is $5,100

Bottom Line

The Fed study found that homeownership is still a great way for a family to build wealth in America.

Posted by: jimlyons | October 12, 2013

10 WAYS TO IMPROVE YOUR OUTDOOR LIVING SPACE


From Gazebos to Koi Ponds

Having an awesome outdoor retreat has become popular in the past few years, with more and more people improving these spaces with outdoor structures, pools areas, and additions.

Homeowners invest over $6.2 billion yearly for outdoor improvements.

Here are the top 10 ways to improve your outdoor living space and add value to your home!

Written by Realty Times on Tuesday, 03 September 2013 19:00

Posted by: jimlyons | October 9, 2013

You Need a Professional to Sell or Buy a Home


Superman

 Many people ask us whether they should hire an agent to sell their home or whether they  should first try as a For Sale by Owner (FSBO). In today’s market, we believe this is an easy  decision: you need an experienced professional!

 You need an expert guide if you are traveling a dangerous path. The field of real estate  is loaded with land mines. You need a true expert to guide you  through the dangerous  pitfalls that currently exist. Finding a buyer ready, willing and    able to pay fair market  value for your home at a time when lending standards are so  stringent is not an easy task.  Finding reasonable financing can also be tricky when interest rates are volatile like they have been over the last several months.

You need a skilled negotiator

In today’s market, hiring a talented negotiator could save you thousands, perhaps tens of thousands of dollars. Each step of the way – from the original offer, to the possible re-negotiation of that offer after a home inspection, to the possible cancellation of the deal based on a troubled appraisal – you need someone who can keep the deal together until it closes.

Realize that when an agent is negotiating their commission with you, they are negotiating their own salary; the salary that keeps a roof over their family’s head; the salary that puts food on their family’s table. If they are quick to take less when negotiating for themselves and their families, what makes you think they will not act the same way when negotiating for you and your familyIf they were Clark Kent when negotiating with you, they will not turn into Superman when negotiating with the buyer or seller in your deal.

Bottom Line

We believe that famous sayings become famous because they are true. You get what you pay for. Just like a good accountant or a good attorney, a good agent will save you money…not cost you money.

Posted by: jimlyons | October 7, 2013

Selling Your Home in the Fall.


WHAT YOU SHOULD KNOW ABOUT SELLING YOUR HOME THIS FALL

When people think of buying or selling a home, they often associate springtime with sales. It’s true that spring is the busiest time of the year for real estate, with a surge in homes entering the market, and more buyers emerging to begin a home search. But did you know that fall is the second busiest time of the year for home sales?

Fall This fall is a particularly good time to think about putting your home on  the market if you’ve been considering a move. It’s a seller’s market right  now, with fewer properties available for buyers to choose from. And less  inventory on the market means that you have a greater chance of  making a sale. Meanwhile, though mortgage interest rates have been  rising, they are still very attractive. Savvy buyers are going to want to lock  in those rates before they climb any higher.

Fall is a particularly lovely time to sell a home. With shorter days and  cooler weather, it’s easy to make your home seem cozy and inviting to a  prospective buyer. If you have children, fall can be a great time to show  your home since the kids are back in school during the daytime and it’s  easier to keep rooms picked up. As with any other season, before you list  your home, it’s a good idea to clean and de-clutter each room. Sort  furnishings and belongings into the following categories: keep, toss, store,  and donate. De-personalize rooms by removing family photos and knickknacks and make your home a warm canvas open to a prospective buyer’s imagination. If necessary, do some repainting in warm, neutral colors.

Because of the change in weather and the dwindling hours of daylight, there are a few extra steps to take in the autumn months to ensure that your home will present well at showings. Step up your yard work efforts and make certain to clear fallen leaves and other debris regularly – it might be necessary to do a little of this sort of upkeep daily depending on the type of foliage you have in your yard and neighborhood. Take care that the front steps and walkways are clear for any buyers who might come by.

Fall is a beautiful season, so capitalize on its bounty. It isn’t difficult to place a few hanging baskets or planters of cheerful yellow mums to greet guests and buyers alike. A fall wreath transforms a front door into a warm welcome. Ears of Indian corn and pumpkins and gourds also speak to the season – as with everything, be tasteful and don’t overdo.

Inside your home, make sure there is plenty of warm lighting to showcase your home’s highlights and cheer up the shorter days. It’s a perfect time of year for the most welcoming of scents, like cinnamon, apples, and pumpkin, all of which make a home seem inviting.

If you’re thinking about selling this fall, there’s no time like the present to contact your real estate agent to get the ball rolling. Good luck!

Written by  on Friday, 04 October 2013 13:57

Posted by: jimlyons | September 30, 2013

Capital Gains and Your Home


SELLING YOUR HOME MAY BE TAX FREE

 

taxesThe real estate market has certainly picked up. Interest rates are still quite low and people are buying. In fact, we are starting to see duplicate and triplicate offers for many homes.

That means that homes are selling, so let’s look at the tax consequences.

Your home may not always be your “castle”, but if it is your principal residence, there is one very significant tax benefit when you decide to sell. 

The Taxpayer Relief Act of 1997, signed by President Clinton on August 5, 1997, terminated both the roll-over and the once-in-a-lifetime exemption, which were the existing tax benefits at that time. In its place, the law substituted a more beneficial approach for American homeowners.

When you sell your home, married couples can exclude from their taxable income up to $500,000 of gain. Individuals filing separate returns can exclude up to $250,000. Unlike a deduction, which allows you to take a percentage off your gross income (based on the tax rate bracket in which you fall) the exclusion means that the profit you make up to the statutory ceiling is not even included in your income for tax purposes.

There are two important conditions:

  • You must have owned and used the home as your principal residence for two out of five years before the sale. If you are married, although both husband and wife must meet the “use” test, only one of you must meet the “occupancy” test. Marital status is determined on the date the house is sold. In the event of a divorce where one spouse is given ownership pursuant to a divorce decree or separation agreement, the use requirements will include any time that the former spouse actually owned the property before the transfer to the other spouse.
  • The exclusion is generally applicable once every two years. However, if you are unable to meet the two year ownership and use requirements because of a change in employment, health reasons or unforseen circumstances, then your exclusion may be prorated.

The IRS has issued regulations which will guide you if you are faced with having to sell before the two years are up. There are what is known as “safe harbors” – in other words, if you fall within the guidelines, you are safe to take the partial exclusion.

These safe harbors include:

  • Change in employment: if the primary reason for the sale is a change in the location of employment – and the new job is a least 50 miles farther from your home than your location.
  • Health: if your doctor recommends a change of residence, either to obtain or facilitate the diagnosis, cure or treatment of disease, illness or injury, or to obtain or provide medical or personal health care. The recommendation must be to a qualified individual, which can be the homeowner, parents, grandparents, children, in-laws or even uncles, aunts, nephews or nieces.
  • Unforseen circumstances: if you could not have anticipated an event before you purchased your house, you may also be able to claim a partial exclusion. While this is fact specific – and in many cases you will have to get a special ruling from the IRS – there are some safe-harbors which the IRS will recognize. These include: an involuntary conversion of your house, natural or man-made disasters resulting in a casualty to your home, divorce or legal separation, and multiple births resulting from the same pregnancy.

If you are eligible for the partial exclusion – either because you meet the safe harbor tests or get specific approval from the IRS – this exclusion is equal to the number of days of use times the quotient of $500,000 divided by 730 days. Note that 730 days is 2 full years. If you are single – or do not file a joint tax return – change the $500,000 to $250,000.

This new law applies to all principal residences: single family homes, condominium units and cooperative apartments. If your boat or your mobile home is your principal residence, the law is also applicable if three things are present: sleeping quarters, a toilet (sailors call it a “head”), and cooking facilities.

While the new $250/500,000 exclusions are great for most taxpayers, there is one important fact to remember when calculating the profit you have made. Real estate appreciated prior to1997. Many homeowners utilized the “great American dream” over the years, and continued to sell and “buy up.” The profit that was made on each sale was deferred under the roll-over concept. When you sell your last house, you can exclude up to $500,000 of profit, but you have to look carefully at all of your numbers to determine exactly what profit you made.

Let us take this example: in 1965, you purchased a house for $50,000. In 1975, you sold it for $150,000, and purchased a new house for $200,000. For purposes of this example, we will ignore such items as home improvements and real estate commissions, although these are expenses which can – and should – be taken into consideration in determining profit. Based on the old “roll-over” concept, you deferred $100,000 of profit ($150,000 – $50,000), the basis in your new home is now $100,000. You determine your basis by subtracting the profit from the purchase price.

In 1987, you sold your home for $400,000 and purchased a new house for $500,000. Now, again because of the roll-over, you deferred profit of $300,000 ($400,000 – 100,000). The basis of your new $500,000 is now $200,000. You will no doubt question the $100,000 number, since you purchased your second house for $200,000. But because the basis of that house was only $100,000, profit is computed by subtracting the sales price from the basis of the house (and not just its purchase price).

Here is where the problem starts. If, for example, you plan to sell your house next year, you must keep track of your basis. If you are married and file a joint tax return (and have lived in the house for at least two out of the past five years), you will not have to pay any capital gains tax unless you sell your house for more than $700,000.

What if your spouse has died? If you do not remarry before the house is sold, the IRS takes the position that you have owned and lived in the property (the “use and occupancy” test) during any period when your spouse owned and lived in it. And even if you are now filing a single tax return, you still can exclude up to $500,000 of your gain if (a) you have not remarried, (b) the sale takes place no more than two years after your spouse’s death, (c) your and your spouse met the use test at the time of death, and (d) you or your spouse met the ownership test at the time of death.

So, for those of us who bought our principal residences many years ago and took advantage of the appreciation over the years, we may have to pay capital gains tax, even after we take advantage of the appropriate exclusion. Currently, the federal tax rate can be up to 20 % and depending on the jurisdiction in which you live, you may also have to pay the local State tax.

For more information and instructions on how to handle these tax issues, go to the IRS website (irs.gov) and downloadPublication 523 entitled “Selling Your Home”.

Credit to: Written by  on Friday, 27 September 2013

Posted by: jimlyons | August 27, 2013

14,767 Houses Sold Yesterday! Did Yours?


calendarsThere are some homeowners that have been waiting for months to get a price they hoped for when they originally listed their house for sale. The only thing they might want to consider is…

 If it hasn’t sold in this hot market, maybe it’s not priced properly.

After all 14,767 houses sold yesterday, 14,767 will sell today and 14,767 will sell tomorrow. 14,767!

That is the average number of homes that sell each and every day in this country according to the National Association of Realtors’ (NAR) latest Existing Home Sales Report. NAR reported that sales had increased 17.2% over the year before. According to the report, annualized  sales now stand at 5.39 million. Divide that number by 365 (days in a year)  and we can see that, on average, almost 15,000 homes sell every day.

We realize that you want to get the fair market value for your home. However, if it hasn’t sold in today’s surging real estate market, perhaps you should reconsider your current asking price.

Posted by: jimlyons | August 26, 2013

The Cost of A Home: Last Year, This Year and Next Year.


Money PicThe cost of a home is determined mainly by two components: price and mortgage rate. Today, we want to show how the monthly cost of purchasing a median priced home has changed over the last twelve months and how it might change over the next twelve months. For the first two examples, we will be using the National Association of Realtors’(NAR) Existing Home Sales Report to establish median price and Freddie Mac’s Primary Mortgage Market Survey to establish mortgage rate. We also assumed a 20% down payment in all examples.

LAST YEAR

The median priced home in the country was selling for $187,800. The 30-year fixed mortgage rate was at 3.5%. Here is what it would cost to buy a home last year:

Last Year

TODAY

The median priced home in the country is selling for $213,500. The 30-year fixed mortgage rate is at 4.5%. Here is what it would cost a purchaser to buy a home today:

This Year

The monthly cost increased by: $190.78!

NEXT YEAR

Projecting into the future in real estate can be rather tricky. To establish future pricing, we depended on the over 100 housing experts surveyed for the Home Price Expectation Survey who called for an approximate appreciation rate of 5% over the next twelve months. For the interest rate, we took the average of the projections from the Mortgage Bankers’ Association, Freddie Mac and Fannie Mae. Here is what these experts project will be the approximate cost of a home a year from now:

Next Year

The monthly cost will increase by about: $97.32!

Bottom Line

From a financial perspective, why wait if you are thinking about buying?

KCM contributed to this blog.

Posted by: jimlyons | August 22, 2013

Boomerang Homebuyers Get a Shorter Ride Home


Great Article and fantastic news for those homeowners that lost their homes during the past housing crisis. As this article points out, the loss of the home has to be tied to a specific economic event. Check out the links inserted in this article for additional information and qualification requirements.

by JIM SAHNGER on AUGUST 22, 2013

Today, we are honored to have Jim Sahnger as a guest blogger. Sahnger is a 20 year veteran in the mortgage industry and is widely recognized for his expertise. His thoughts have been noted in Bankrate.com, Wall Street Journal, MarketWatch, Business Week and Investor’s Business Daily. – The KCM Crew

Fresh StartHUD recently announced that people who lost their home through a foreclosure, short sale or bankruptcy, may be eligible to finance a home again in as little as 12 months. This is a reduction from the previously required minimum of 36 months from the date of the “most recent event.”

Released August 15, HUD provided guidelines under “Back to Work – Extenuating Circumstances” meant to ease the path for home ownership for many.

Boomerang  home buyers, as they are now known, will need to document that the reason they were unable to make their payments was due to a specific Economic Event.  This impact of this event must have resulted in a decline in income of 20% or more for at least six months.

Some boomerang home buyers who experienced a bankruptcy and simultaneous foreclosure have discovered that the two events may not be recorded at the same time. In cases where the property did not transfer back to the lender at the time of the bankruptcy, the period for the 36 month minimum waiting period as was required by HUD, did not start until the title transferred back to the lender.  In some states, the time for transfer could be months or even years after the discharge of the bankruptcy.

Extenuating Circumstances

Extenuating circumstances for the purpose of these guidelines are as follows. The borrower(s) must have experienced a decline in income of 20% or more for a period of at least six months. This could have been due to a job loss or a loss of income tied to earnings like commissions or other customary bonus or incentive income.

Demonstrated Cure

With any situation of extenuating circumstances, a boomerang home buyer must be able to document that the event was isolated in nature and not likely to reoccur again in the future. The borrower must also be able to document that they have regained economic stability through timely payments for a minimum of 12 months.

The timely payment history will include rental/mortgage payments, installment payments, and/or revolving payments for the 12 months preceding the mortgage application. There also should not be any new collection accounts.

In addition to re-establishing acceptable credit, the borrower(s) will be required to complete Housing Counseling.

Eligibility Requirements for Documenting Loss of Income

In the event of a loss in employment, the lender will need to document the event by a written Verification of Employment evidencing the termination date, public information documenting the closure of the business if applicable and/or documentation of unemployment income.

The lender will also need to substantiate the loss of income through the verification of tax returns, W-2s and tax transcripts.

Important Definitions

HUD announced several key terms that must be reviewed in accordance with this program.

Economic Event: an occurrence beyond the borrowers control that resulted in a Loss of Employment, Loss of Income or a combination of both which resulted in a loss of Household Income of 20% or more for a period of six or more months.

Onset of Economic Event: the month of the start of or loss of income

Recovery from an Economic Event: the re-establishment of acceptable or satisfactory credit. Satisfactory Credit equates to no derogatory credit for any mortgaged or leased property in the 12 months preceding the mortgage application. This also includes any installment or revolving debt for the same period.

Borrower: “Borrower” includes all parties including primary and/or co-borrower as listed on the loan application.

Borrower Household Income: the income of all parties on the application or Household Members as listed from the previous Economic Event and derogatory credit.

Housing Counseling: Counseling from a HUD-approved housing counseling agency related to home ownership and meets acceptable requirements.

Other Requirements and Information

HUD establishes a base line for lenders to underwrite and approve mortgage applications. Some lenders may choose to require baseline standards that exceed the minimum guidelines listed here with regards to time from short sale, foreclosure or bankruptcy.

Lenders may also choose to enact additional overlays with requirements to evaluation acceptable credit regarding payment history, collection accounts and/or judgments.

In the event a prior defaulted mortgage was endorsed by FHA, the lender will need to request a waiver which may require additional time for processing. For anyone this pertains to, they would be wise to alert the new lender to this as soon as possible in the loan process.

Boomerang homebuyers whose prior hardship was economically driven should be excited by this announcement from HUD. For many, it is now recognized the worst is behind them and the time to buy a new home is here.

*Additional Resource: HUD Approved Housing Counseling Agencies

Posted by: jimlyons | August 19, 2013

Supply and Demand


The KCM Blog – House Pricing is Still about Supply and Demand


iStock_000009109354XSmallKnowing how much inventory is for sale is crucial to determining where home values are headed. Pricing of any item is determined bysupply and demand: how many items are available in relationship to how many want to buy that item. The reasons for the strong year-over-year home appreciation numbers we have been seeing is simple to explain: demand for housing is up and the supply of homes for sale has been at historic lows. But that is beginning to change.

The months’ supply of available housing inventory, as reported by the National Association of Realtors, has increased from 4.3 months this past January to the current number of 5.2 months. And it seems inventory will continue to increase as we move forward.

Last week, Realtor.com released their National Housing Trend Report which looked at the movement in inventory levels of homes for sale across the country. Here are two major findings of the report:

1.) Dramatic year-over-year inventory declines have evaporated.

Nationally inventories in July are only 5.24 percent below the level of a year ago compared to being down 16.47 percent year-over-year in January.

2.) Inventory declines decrease in local markets.

The number of markets with decreases in year-over-year inventory declined from 125 in June to 118 in July. This suggests that fall inventories in some markets may return to levels of a year ago.

In the report, Steve Berkowitz, CEO of Move, Inc. explains the impact of these findings on home values:

The recovery is entering a new phase where inventory shortfalls are no longer the driving force behind changes in housing prices in many markets. Larger inventories, especially in the hotter markets that experienced rapid price increases in the spring, are expanding buyers’ choices and helping to moderate price increases.

Don’t get carried away with recent news headlines when pricing your home. Let a real estate professional explain what the above information means to the current value of your house.

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