Tag Archives: finance

How Important is Your Home Value?

How much can you make on the sale of your home? Well that depends. All else being equal, there two things that can nuke your profits: 1) rental invasions; and 2) weak or no HOA. Let’s elaborate.

Each time an investor buys a property on your street, or in your community if you own a townhouse, your property value falls. And with each additional investor purchase, you lose more value. Investors are in the business to make money, so job one is to lowball the offer price, cloaking the low offer behind how convenient it will be to not have to ‘show’ your home and ‘have people walking through your home’. Well sometimes that convenience costs you 40 to 60 grand in real dollars, but you never know it because you’re not a real estate agent and you don’t know that Zillow doesn’t get it right. Also, they will tell you their offer could change after they inspect, and it usually does, downward, even though often zero of those ‘costly repairs’ never get done. You’ve been hoodwinked.

A proliferation of rentals destabilizes the community and creates a transitory situation…like an apartment complex. People come and go, and you might never know who they are and what kind of background they have. When renters move in, they are often coming in from an apartment situation in fact, and their behaviors are often commensurate with that lifestyle. Also, renter rarely treat a rental as well as they would if they had to pay for damage they do to the property.

So, before you buy, find out how many rentals are in that community, PARTICULARLY if you are buying new construction. Some of the production builders make their ‘numbers’ by selling to international LLC’s, and these ‘LLC’s’ are often owned by LLC’s, or multiple LLC’s layers deep, and they buy many homes in each community. So FIND OUT how many units they sell to investors, and whether or not there is a limit. If you buy in a rental community, your property value over time (equity/profit) will suffer.

Now I know the current trend is to ‘rent to own’. This paradigm is set up to benefit the investor, not you. If you buy into this setup, you will likely not be able to save up to buy somewhere else if you want to move, and my guess is, you will want to move. Rental communities are not stable ones. I don’t know, maybe stability doesn’t matter to you, but if your PROFIT does matter, think twice.

If you plan to buy a townhome, ASK HOW MANY rental properties are allowed in the community. If the answer is “we don’t have a limit”, go somewhere else, is my advice. In one townhouse community I know of specifically, investors have lowered property values by about 60K, in part because they succeeded in making a profit for themselves, and in part because the homeowners never knew they were duped.

Now let’s talk HOA. HOAs are there to protect your property value. IF there is NO RENTAL LIMIT provision, then the community will have to vote to install one. If the community votes against it, then they clearly do not understand the impact having too many rentals will have on property values. If your neighbor sells to an investor, they were never a ‘neighbor’. But again, the HOA is there to protect your property value, and to provide services. If your neighbor doesn’t pay for their services, you pay. For them. So while you may ‘hate HOA’s’, they are a benefit. And if you’ve never seen pig pen in a fenced in back yard in subdivision, be careful. That could be your neighbor one day. And if pigs pens are allowed and you are downwind, tell me again how much you hate HOAs. I’ve seen it happen.

Obviously it’s up to you to whom you sell your home. Just know that if an investor approaches you, they plan to make a profit on your home, and most of that profit is coming out of your profit. Hire a realtor or at least have a conversation with one. Unless you have forty grand to toss away.

Brenda Briggs, Premier Advantage Realty

Why Do I Need Title Insurance?

Ok, it’s not usually a BURGER trying to gain unlawful entry into your home. It’s usually a burglar. But you looked, didn’t you? When you think about someone breaking in to your property, the property you own, you don’t usually think of title insurance, do you? Well…two things: 1) do you really own the property?; and 2) are you sure?

Did you know that there are two kinds of title insurance you can get when you buy a property? One type, the mandatory one, is to protect the LENDER. Not you. Interesting that you pay for it, but it’s FOR the lender. To protect their investment. the OTHER kind is not mandatory, but if you don’t have it, you may be at risk. How, you ask? Well let’s look at why title insurance is needed. It is needed to protect you from

  • Errors in public records
  • Unknown liens (e.g., unpaid taxes or contractor bills)
  • Fraud or forgery
  • Undisclosed heirs or ownership claims
  • Boundary or survey disputes

See, we often relax into thinking that title insurance is just to find out where the property lines are. But noooooo. I could add to that list ‘easements’. Your property might have a section which allows someone else free access to drive over it to access ANOTHER property. Or there could be a sewer easement under ‘your land’ that might need to be accessed one day and if you have built a structure there, guess what’s going to happen to that structure? Note that the entity having to access the sewer is entitled to take down that structure and they do not have to replace or pay for it.

Imagine sitting in the recliner in your pajamas, watching TV before you saunter off to bed in your beautiful home, and there’s a Ring doorbell chime. You go to the door and the guy says, I’m the legal heir to this property and I want you out. Oh yeah, it does happen. Why? Because there might be ‘undisclosed heirs’. It usually takes time for them to be told their great, great grandpa’s house was sold, but if they are out there, they could show up and ring that doorbell. OR, the sheriff shows up with an eviction notice, originated by, you guessed it, that undisclosed heir.

So while you are adding up your ‘up front costs’, please include TWO title insurance policies: One for the lender and one for you. If a dispute arises, title insurance pays for legal defense and covers any financial loss — potentially saving you thousands.

Once you buy a home, you want to live in it worry-free. Owner’s title insurance gives you confidence that your investment is protected. So if the BURGER shows up, you can just eat it and go to bed.

Give me a call. I’m a real estate agent and Realtor at Premier Advantage Realty. Find me at brendasellsnchomes@godaddysites.com, or email me, text me, send a carrier pigeon. I’m here!

First Time Buyer and Other Fantasies

Have you thought about what a tough time first time buyers are having these days? Buyers often have to come up with down payment dollars, closing costs, attorney fees and inspection costs, earnest money and sometimes even due diligence fees. As well, buyers often are responsible for hefty real estate agency fees as well. I don’t know about you, but I couldn’t have come anywhere near being able to do that for MY first home. Yes, times have changed, but a dollar is still a dollar.

There are efforts to help first time buyers. There are 100% financing options through USDA, but there are income limits. And there are loan packages with incentive dollars attached, often to be used for closing costs, but those often tie you in to the property for a period of time. I’m NOT a lender, but hopefully this will give you some ideas about what to ask a lender about. Don’t ever be afraid to ask a lender to help you figure out how to use the least money out of your limited funds (if they are limited), because this is what they do every day. And their advice is free.

And guys, make an appointment and go LOOK THEM IN THE EYE while you explore options to get you into your first home and out of the rental gerbil wheel. Remember your RENT can suddenly increase every year, but your mortgage payment will remain stable unless you opt for a balloon loan or an adjustable rate loan product. Balloon loans usually come with a low entry interest rate, as do adjustable rates, but it’s what happens AFTER that you must be aware of and prepare for.

Sellers, if your house isn’t moving and you’re considering a price drop, consider offering a rate buy-down instead. That can make a huge difference for buyers who are shopping payment, which many are.

I’ve said many times, my heart is always with first time buyers. I am always honored to help them with their very first home. If I can help you, I’m at thepremieradvantage.com, and search agents. I’m Brenda and I’d love to meet you.