Trulia: Owning Costs 44% Less than Renting

Home price gains may be outpacing increases in rent, but the cost of being a homeowner is still much less than that of a renter, according to Trulia’s Winter 2013 Rent vs. Buy report.

After factoring all cost components including transaction costs, taxes, and opportunity costs, Trulia found buying a home is 44 percent cheaper than renting, down slightly from 46 percent a year ago.

“Although buying a home is still cheaper than renting, the gap is closing,” said Jed Kolko, Trulia’s chief economist. “In 2013, home prices should rise faster than rents, and mortgage rates are likely to rise in the next year as the economy improves. By next year, buying could be more expensive than renting in some housing markets, even for people with the best credit.”

In the last year, asking home prices showed a 7 percent gain compared to a 3.2 percent increase in rents during the same time period, according to data from the real estate site.

Trulia explained low mortgage rates have kept the cost of owning down; for the analysis, a 3.5 percent mortgage rate was assumed.

The San Francisco-based company also revealed that out of the 100 largest metros analyzed, buying was more affordable than renting in all metros.

In some metros, the cost of buying was much less than the national average. The buy-rent gap was the largest in Detroit, where buying costs 70 percent less than renting. For the next four metros in top five, the cost of owning was 63 percent less than renting; the four metros were Dayton and Cleveland in Ohio; Warren, Michigan; and Gary, Indiana.

Although owning was found to be less expensive in all metros, owners in San Francisco averaged the smallest savings at 19 percent, a steep decrease from the 35 percent savings seen in 2012.

If one were to receive a mortgage rate of 4.5 percent, Trulia noted the cost of buying would be just 9 percent cheaper in San Francisco. However, a rate of 4.5 percent would still make buying more affordable than renting in all metros analyzed.

“People who didn’t buy a home last year may have missed the bottom of the market, but they haven’t completely missed the boat,” Kolko added. “Even buyers who can’t get today’s lowest mortgage rates will still find that buying makes more financial sense than renting in nearly all local markets – so long as they can get a mortgage in the first place.”

Other metros where owning may not be as enticing to borrowers based on savings were Honolulu, where the cost of owning is 23 percent cheaper, followed by San Jose (-24 percent), New York (-26 percent) and Albany (-30 percent).

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Niceville Schools Rank Among State’s Best

Niceville High School and The Collegiate High School of Northwest Florida State Colelge rank among the best schools in Florida for 2012.  On a scale of 1500 points, Collegiate scored 1489 and Niceville scored 1312.  Those scores place Collegiate at fifth and Niceville at 34th out of the 430 Florida public schools.  High Schools scoring 1050 or higher receive an A grade.

Four of the other five Okaloosa County public high schools–Baker, Choctawhatchee, Crestview and Fort Walton Beach received an A designation for 2012.

Mortgage Forgiveness Debt Relief Act Future?

NEW YORK (CNNMoney) — The clock is ticking on a taxbreak that saves struggling homeowners from paying thousands of dollars to the IRS.

If the Mortgage Forgiveness Debt Relief Act of 2007 does not get extended by Congress by the end of the year, homeowners will have to start paying income taxes on the portion of their mortgage that is forgiven in a foreclosure, short sale or principal reduction.

So if you owe $150,000 on your home and it sells for $100,000 in a foreclosure auction, the IRS could tax you on the remaining $50,000. For someone in the 25% tax bracket, that would mean paying $12,500 in taxes on the foreclosure.  Similar taxes would apply for forgiven amounts in short sales and principal reductions.

“People trying to do short sales are freaked out about it,” said Elizabeth Weintraub, a real estate agent in Sacramento, Calif. “They’re telling me they’ll do whatever it takes to close by the end of the year.”

Should the tax break expire, a large number of mortgage borrowers could be affected. More than 50,000 homeowners go through foreclosure each month.Meanwhile, the number of short saleshas tripled over the past three years to a rate of about half a million a year.And, under the terms of the $25 billion foreclosure abuse settlement, roughly one million borrowers may have their mortgage debt lowered through principal reductions over the next couple of years.

“If there ever was a no-brainer in housing policy, this would be it,” said Jaret Seiberg, a policy analyst for Guggenheim Securities.

Yet, Seiberg is skeptical the exemption will get extended. Now that the election is over, he thinks Congress will be heading into a “lame duck” session, with very little legislation moving forward through the end of the year.

In addition, the cost of the exemption could make it a point of contention, he said. The office of Sen. Max Baucus, who heads the finance committee, estimated the cost of a one-year extension at $1.3 billion.

Others disagree. Tom Kolpien, the press secretary forRep. Tom Reed of New York, said Congress will likely act before the end of the year. (Reed is currently pushing for the extension on the House Ways and Means Committee).

“Both parties, both houses of Congress agree it’s good policy and it needs to get done,” said Jamie Gregory, chief lobbyist for the National Association of Realtors, which supports an extension. “The hold up is the process. I’m confident it will get done. I just don’t know how.”

Even if Congress allowed the exemption to expire, not all borrowers withforgiven mortgage debt will take a tax hit. If the debt is discharged in a bankruptcy, no tax is due. And anyone who is insolvent — meaning they have more debt than assets — at the time the debt was forgiven — would not have to pay the tax.

Rental Market Tightens, Prices Rise

By: Krista Franks Brock

Demand in the single-family rental market continues to expand even as inventory tightens, according to the latest MarketPulse report from CoreLogic. Comparing lease rates, supply, pricing, and the ratio between bid prices and asking prices clearly demonstrates an increasingly tightening market.

“[S]ome of the new demand is being driven by former homeowners who have experienced foreclosure,” CoreLogic stated in its report. As a result, markets experiencing the greatest growth in single-family rental demand are the same markets that were hardest hit by the housing crisis, including Florida, California, and Arizona.

Nationally, single-family leases were up 7 percent in August year-over-year and have shown a 12 percent increase year-to-date. The August data is not an anomaly but a growing trend, according to CoreLogic, which reported leasing volumes rising sequentially each month over the last two years.

At the same time, inventory has been decreasing. In August, single-family rental inventory was down 11 percent from a year earlier.

The market held about 2.6 months’ supply in August. A year earlier, supply was at about 3.2 months.

Inventory declined sharply this past summer with a strong rise in closings, according to CoreLogic.

Listings are being rented faster. In August, a listing took about six weeks to rent, down from eight weeks a few years ago in 2009.

After declining for two years, rental prices have been on the rise since 2011, rising 2 percent over the year in 2011 and 1 percent year-to-date in 2012.

CoreLogic expects rental prices to continue to rise throughout the rest of this year and next. Rental prices are generally less volatile than home prices, and home prices have experienced increases of late.

The ratio between listing rent and actual rent paid is another indicator that points to a tightening in the single-family rental market. Two years ago when rental prices were declining and inventory was higher, the spread was about 4 percent. Today it stands at about 2 percent.

“[A] weak labor market, tight underwriting for owner-occupied properties and elevated foreclosures will ensure continued strong demand for single-family rentals,” according to CoreLogic.

For Sale By Owner–I can do it myself and save lots of money!

The house has to be immaculate inside and out,

Potential buyers are beating on your door and calling the number you posted out in the yard

The legal and financial details of the home sale process loom.

Don’t be tempted to handle this situation by yourself; instead, make your life infinitely easier and use a Realtor to help you sell
your home.

The lure of saving money is a strong one.

Most Realtors charge between 6 to 7% on commission. As the seller, this comes out of your proceeds
at closing. I know you’re thinking that there’s no way that using a Realtor is worth anywhere near this much money.

However, it truly is worth every penny; here are the top reasons why you should use a Realtor when selling your home.

1. The Security of Your Family and Home

You cannot put a value on the security of your family and home. You
want your family to be safe in your home without having to worry. But remember
when I mentioned the hoards of potential buyers for your home? If you sell your
home yourself, you have to meet with each one of these buyers by yourself. The
problem is you never know who these people really are. It’s horrific to
consider, but it has happened where people have gone to a home on the premise of
looking to purchase it and instead have committed a crime.

The realtor, with the use of an electronic lockbox, knows exactly who was in the house AND when!  Realtors also get to know their clients, so there are not strangers casing your home.

When you use a Realtor, you don’t have to meet with the potential buyers and expose yourself and your family to possible harm. Instead, each person that enters your home is accompanied by a licensed Realtor.
Because the person is in your home with a Realtor, you and your family don’t need to be there. This mitigates the risk of someone harming you while in your home.

The chance of someone committing a crime against your property, either through theft or vandalism, is drastically reduced by their Realtor being
present.

2. The Value of Your Time

Let’s consider the hassle of dealing with potential buyers. When you sell your home yourself, you’re the sole contact with potential buyers.
If someone wants information, they contact you. This means your phone can be ringing constantly.  You can’t just ignore these calls; if you do, your house will take even longer to sell.

Remember the part about keeping your house immaculate? When you sell your home yourself, this has to be true 100% of the time.

People can and will pull up outside your home and demand to look inside at any time of the day or night. If you ask them to come back at
a more convenient time, you could easily lose a sale.

By using a Realtor, your time is reaffirmed to be as valuable as I know that it is.  A Realtor handles all the phone calls, and is
specially trained in how to answer these calls professionally without compromising the sale of your home. Your Realtor coordinates the showings
with other Realtors, leaving you with specific times for the showings. This will allow you to relax and enjoy the time you have remaining in your home.

3.  The Value of Peace of Mind for the Future

Selling a home is a complicated legal and financial prospect. Sure, you can buy generic forms to fill out for the Purchase Agreement and everything else.   But what assurance do you have that they’re filled out in a way that protects you for the future? After all, you certainly don’t want to deal with a lawsuit five years from now with your buyer saying that you made an error in the paperwork on the transaction.

When you hire a Realtor, they shoulder this burden. Realtors are required to carry what’s known as Errors & Omissions insurance. This
insurance protects you from such little errors. If there’s a problem, the insurance company is who works to resolve the situation, not you.

So don’t succumb to the lure of saving the commission money.

Hiring a Realtor is the absolute best thing you can do as you prepare to sell your home

Biggest Mistakes Buyers Make in a Hot Seller’s Market

In the current seller’s market that exists in many parts of the country, buyers need to perform near perfectly to attain the home of their dreams. Many of the best new listings that come to market are receiving multiple offers . . . and in just a few days on the market. So what can you do as a buyer to enhance your odds of getting your offer accepted?

1)      Get Serious and Work with a Real Estate Agent – while this sounds like a given, many buyers are casually looking and only get serious when they see a home on the internet and start their quest to buy that home from whatever agent they can find. By the time they get mobilized the home is gone!  Here in the Destin, and most of the Northwest Florida market, many homes that are terrific deals have multiple offers almost immediately after going on the market.

2)      Get Ready to Buy – There are great local lenders here in Destin, Niceville, Fort Walton Beach, Crestview, and Navarre markets – be sure to get prequalified or better yet preapproved for your loan. This eliminates any surprises and demonstrates to sellers that you are serious, qualified, and able to close. Have your proof of funds ready to show which is often required.  Especially if you find a foreclosure, they will want this proof of funds to come with the offer.

3)      Operate with a Sense of Urgency – Have your real estate agent set you up a new listings alert and when a hot property comes to market moving quickly is extremely important. If a listing comes to market on a Wednesday, waiting until Saturday to see it because you want to watch TV won’t work. Always assume that other interested buyers are seeing the home on day 1 and making an offer on day 1!

4)      Make Clean Offers – offers that are not clean result in delays and counter offers– delays results in more buyer offers – multiple offers drive prices up and probability of getting your dream home down. If there is something specific that the seller is looking for in your offer do everything possible to accommodate it.

Why Hire A Real Estate Agent?

The typical real estate transaction involves at least two dozen separate individuals – insurance assessors, mortgage brokers and underwriters, inspectors, appraisers, escrow officers, buyer’s agents, seller’s agents, bankers, title researchers, and a number of other individuals whose actions and decisions have to be orchestrated in order to perform in harmony and get a home sale closed. It is the responsibility of your real estate agent to expertly coordinate all the professionals involved in your home purchase and to act as the advocate for you and your interests throughout.

Seven main roles of your real estate agent
A Buyer’s Real Estate Agent:

  1. Educates you about your market.
  2. Analyzes your wants and needs.
  3. Guides you to homes that fit your criteria.
  4. Coordinates the work of other needed professionals.
  5. Negotiates on your behalf.
  6. Checks and double-checks paperwork and deadlines.
  7. Solves any problems that may arise.

Home Staging–Things That Help (Or Hinder)

Silly Staging Ideas Room-by-Room:

Living Room. Displaying photos of people more attractive than family members by hanging frames with manufacturers’ photos still inside, or even displaying photos of celebrities around the room, are not good ideas. Not only silly, this breaks the ‘de-personalize’ staging rule. Remove any photos, diplomas or similar items, as they do nothing but distract buyers.  Look for some tasteful art for staging instead.

Kitchen and Dining Room. Nothing screams ‘staged home’ like a formally set dining room. Less is more! Skip the formal setting and put a simple vase of flowers on the table instead. Clear kitchen counters of all clutter and add a simple bowl of fruit for a clean, open look.

Bedroom. The casually draped throw over the foot of the bed with ‘tea for two’ on top has been overdone, and buyers know you don’t live that way. Invest in some nice bedding, put night tables on either side of the bed and include one long dresser and a tall chest of drawers in the master bedroom. If the room seems crowded with those items, use a double bed instead of a queen or king.

Bathroom.Tassels draped over hand towels, seashells nestled atop a stack of towels wrapped in a bow and champagne flutes on the bathtub are perhaps befitting for a honeymoon suite, but not a family home. Don’t fill the bathtub with blue-tinted water and don’t tie a ribbon around the toilet seat either. These have been done, but don’t make the same silly mistake. Invest in new hand towels, a new shower curtain and remove personal items from countertops such as toothbrushes and makeup.

A buyer won’t buy based on dining room settings or a frou-frou bathroom. After staging your home, you want a clean, de-personalized, clutter-free space. If you’ve done a good job, a buyer won’t be able to tell it was staged at all.

Top 10 Mistakes Home Buyers Make

Mistake #1: Waiting for the market to improve or not buying at all

No one can predict precisely where the market is going, so trying to time your home purchase with the bottom of the market is futile. If you’re financially and emotionally ready to be a homeowner, it’s always a good time to buy. Just think: all the time you spend procrastinating on purchasing a home, you could be building equity, getting tax deductions and enjoying the many other benefits of homeownership

Mistake #2: Making an offer without contingencies

When you’re buying a home, Plan A is always to buy the home on the terms in the original contract. Plan B is to buy the home after renegotiating some of the terms. Plan C is the contingency plan: if there is an irresolvable flaw in the condition of the home, the home doesn’t appraise for the purchase price, or your lender refuses to fund your loan for whatever reason, you can back out of the transaction with no penalty (other than the money you’ve spent on inspections) so long as you have the appropriate contingencies in place. Remember, contingency = the right to bail.

Mistake #3: Not reading the fine print

If you did your homework, you had your trustworthy real estate attorney review all your paperwork and discuss it with you so you don’t get a nasty surprise at closing.

Mistake #4: Forgoing a home inspection

Even if a home looks flawless, it’s a mistake to assume that it’s actually problem-free. All homes have defects — even brand new ones — so getting a professional inspection before making the commitment to buy is crucial. Be sure to attend the inspection so the inspector can explain any issues

Mistake #5: Falling for love at first sight

Buying the first house you like is kind of like marrying the first person you go on a date with: not necessarily a good idea. If you don’t shop around and see what else is out there, you could miss out on a good deal or potentially regret your purchase.

Mistake #6: Buying a house you can’t afford

Just because a lender is willing to loan you a fortune doesn’t mean you should take it. Buying more home than you can afford can quickly lead to financial trouble. As a rule of thumb, your mortgage payment should be less than 28 percent of your gross monthly income. Besides your mortgage payment, be prepared for the additional costs of homeownership, such as insurance, property taxes, utilities and maintenance

Mistake #7: Buying a foreclosure or fixer-upper without doing your research

Some homebuyers are so set on finding a bargain, they overlook the fact that buying a home that needs repairs can be a stressful and expensive endeavor. Before buying a fixer-upper, get estimates on any necessary repairs and renovations and make sure they will pay for themselves in increased property value

Mistake #8: Not researching the neighborhood

What good is having your dream home, if you don’t like the community where it’s located? Before shopping for a home, shop for a neighborhood. Make sure it’s a good fit for your lifestyle — figure out how long you want your work commute to be, how close you want to be to amenities like shopping and nightlife, and which school districts are the best. Even if you don’t have children, living near good schools raises your property value.

Mistake #9: Thinking short-term

The house you purchase should be a place that feels like home to you and your family, but it’s important to remember that it’s also a huge investment. When shopping for a home, it pays to think about resale down the road. Search for homes in sought-after locations, and look for features that future buyers will want, such as central air conditioning and lots of storage space.

Mistake #10: Not getting pre-approved before house hunting

Why get your hopes up looking at $500,000 homes, when you can really only afford a $300,000 home? Before you start house hunting, narrow down your price range by getting pre-approved. Shop for a lender or mortgage broker you can trust. The mortgage pro will review your credit, income, assets and debts, and recommend a mortgage with monthly payments that fit your budget. The result is a good faith estimate, a document that spells out the likely terms of your loan, including the interest rate and closing costs. Not only does this let you know how much house you can afford, it also lets sellers know that you’re serious about buying.

 

Danger List for FSBO home sellers

Terry Murphy, author and Realtor, often assists sellers in marketing their homes after they become frustrated with a “FSBO” effort. Here are Murphy’s top five tips to sellers:

1. Your home may not be worth what you think The biggest shock most sellers face is the true value of their homes, either determined by one or more agents in comparative market analysis (CMA) reports or through actual offers from buyers. The reality is that markets change, and home values rise and fall. Many factors affect home values, and most of them are subjective and difficult to measure.

2. People won’t love your home like you do You love your home and fully expect others to appreciate the same qualities in it that you do, but buyers have their own lifestyles, preferences, tastes and attitudes. The chances of finding a buyer who will want your home “as is” are slim to none. In fact, buyers will look at your home with an eye to how they can make it their own.

3. Sooner or later you will lose your temper The buyer, in order to improve bargaining leverage, may pick your home apart. Many of the buyer’s complaints and requests for repairs will be legitimate, but some may not. In fact, some requests can be outrageous.

4. Unexpected showings Buyers aren’t going to operate on your schedule. When your home is put on the market, you won’t have just your own Realtor showing your home, you may have dozens of Realtors and their clients wanting to see the home at almost anytime of the day or evening. There is no reason for an unaccompanied buyer to be in your home for any reason. Just say no.

5. Buyer rudeness Every day, we each experience rudeness in society. People don’t RSVP in time for the party; they don’t write thank-you notes anymore; they get in the express line with at least 20 items; and they are turning road rage into a national pastime. So why be surprised when buyers visit your home and leave their sweaty McDonald’s cup on your coffee table? Be ready for some rudeness.