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Tracy Santrock-Cary NC Real Estate Realtor

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Anything that can go wrong will go wrong!!

10-12-06
Tracy Santrock-Cary NC Real Estate Realtor

Glitches in any real estate transaction are inevitable. If you are prepared, you won't be so shocked when they do.

Here are some suggestions that may help:

  • Understand That Your Home May Not Be Worth What You Think

The biggest shock most sellers face is what buyers think their home is worth. Sometimes sellers can be pleasantly surprised, but the reality is that markets change, and home values rise and fall. Many subjective factors such as floor plan, condition, updates and drive-up appeal affect home values.

The truth is that buyers will determine the worth of your home, in this market, at this particular time, and that has very little to do with what you need to get out of the home.

  • People Won't Love Your Home Like You Do

You love your home and 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 suit themselves. They may knock out that wall where you have your prize fish tank, tear down that designer wallpaper you had imported from England and gut the kitchen where you spent so many Thanksgivings preparing dinner. All those changes cost money, so they will value your home less as they consider remodeling and decorating costs.

Remember, your home is competing against other homes with updates and features your home may not offer. Your home has to withstand the glare of scrutiny, so you must make it as competitive as possible within your means. Put it in good repair, and make sure it is spotless and clutter-free.

  • Sooner Or Later You Will Lose Your Temper

Your relationship with your buyer will be one of love/hate. The buyer is an adversary because s/he wants to pay the least for your home, while you want to net the most possible.

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.

Stay focused on your goal to sell the home, and keep your cool. Let your agent tell their agent yes, or no. Remember, your home can't close until everyone is happy, so be flexible and willing to compromise.

Don't let your feelings fester. If you are truly uncomfortable about anything, inform your Realtor immediately.

  • Unexpected Showings

Buyers aren't going to operate on your schedule. They may want to see the home at any time of the day or evening.

Your Realtor will ask you to keep your home in show condition. Don't worry that the bed wasn't made. Trust that only serious buyers will be allowed to see your home.

  • Buyer rudeness

Poor manners is rampant in our society. So why be surprised when buyers visit your home and leave their McDonald's cup on your coffee table? Or leave the cabinets and closet doors open wherever they looked? Or miss their appointment, expecting you to reschedule at a moment's notice?

As tempting as it may be to play Miss Manners, it's not worth passing up a good offer because the buyer had to change a dirty diaper and left it in your trash bin.

  • Inspections

Inspections kill more deals than any other single factor besides overpricing. All older homes have some minor and some major problems, so address the problem before it becomes a problem. Get a seller's inspection, and you'll have advance knowledge of any problems that must be fixed. A buyer who sees a favorable inspection report as part of the home marketing materials is more likely to make a fair price offer. (Note: Buyers should always have their own inspections performed.)

  • Last Minute Problems That Delay Closing

Service providers, from lenders to inspectors to closing agents, may cause problems, sometimes without meaning to. In some areas, closings are happening at such a rate that all service providers associated with the real estate transaction are on overload. So schedule all steps in the transaction early. Track the transaction with your Realtor so you know which steps have been fulfilled properly. Have your Realtor nudge anyone along who is late with their piece.

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Buying vs. Renting..Why homeownership is the way to go

09-15-06
Tracy Santrock-Cary NC Real Estate Realtor
Yup, the cliché is true: Buying a home is one of the smartest financial decisions most people will ever make.
Don’t take my word for it. What do I know? Take the Federal Reserve’s. Its Survey of Consumer Finances has consistently found a huge gap between the wealth piled up by homeowners and that accumulated by renters.
Average net worth of homeowners vs. renters
Annual income
Owners
Renters
$80,000 and up
$451,200
$87,400
$50,000 to $79,999
$194,610
$25,000
$30,000 to $49,999
$126,500
$10,600
$16,000 to $29,999
$112,600
$4,240
Under $16,000
$73,000
$500
Source: VIP Forum, Federal Reserve Board

Home ownership builds wealth in two ways: through the “forced savings” of paying down a mortgage, and through appreciation -- the rise in the home’s value over time.

The earlier you get in the game, the quicker you can get that appreciation working for you. The longer you wait … well, the consequences can be stiff.

’You’ll always be poor’
“If you rent, you’ll always be poor,” declares real-estate cheerleader and bestselling author David Bach, author of “Smart Women Finish Rich” and the upcoming “The Automatic Millionaire Homeowner.” “The longer you rent, the less likely you are to buy. You fall further and further behind.”
Those who wait for the current housing boom to crash may be waiting a long time. Prices even in the most overheated markets could plateau or just rise more slowly in the future, maybe even returning to the 6% average annual gain the National Association of Realtors says is the norm nationally. In the Triangle market we've been experiencing very slow and steady gains at 3.75% and only recently have seen 10%+ appreciation in the summer of 2006.

Bach acknowledges buying a home isn’t always the best choice. Sometimes you’re smarter to hold off and rent, postponing the day when you graduate to the ranks of homeowner.

But how do you decide if you’re being prudent or chicken? Don’t expect most “Buy vs. Rent” calculators you find on the Internet to be much help. Outlays for maintenance, repairs, insurance and utilities almost invariably will be greater for a homeowner than a renter, yet many calculators fail to consider the full impact of these expenses. And some expect you to predict events -- like future appreciation or how much your down payment would earn if invested in stocks instead -- that you can’t possibly know.

It’s a crapshoot
When I bought my first house, for example, North Carolina was experiencing its worst-ever real-estate slump. The property lost about 10% of its value in my initial years of ownership, then recovered to post a 20% price gain.
Not bad, huh? Except after considering all my outlays for maintenance, repairs and insurance, and factoring in the tax benefits, I determined that I had barely broken even when compared with the rent I would have paid during those six years.
Had I invested my down payment in an index fund that matched the Standard & Poor’s 500 instead, I could have tripled my money in the same period.

The case has been almost exactly reversed with our current house: The stock market has basically been treading water for the past five years. But our home has steadily appreciated over the past six years in the Cary, North Carolina market.

Tax benefits help, but not for long
Besides asking for the impossible, many “Buy vs. Rent” calculations -- and most discussions of home ownership benefits in general -- exaggerate the potential tax benefit.

Here’s a dose of reality:

At least half of the nation’s homeowners get no tax break. Some own their homes outright, but many don’t pay enough mortgage interest and/or property tax to be able to itemize.

If you do get a tax break, it’s probably less than you think. What matters isn't the total amount you pay in interest but whether all your deductions added together exceed the standard deduction amount.

The standard deduction in 2005, for instance, gives married couples who file a joint tax return $10,000 in "free" deductions, even for those who don't pay a penny in mortgage interest. If you’re a homeowner with mortgage interest and other deductions totaling $11,000 last year, the only advantage you would have over a renter who paid zero interest is an extra $1,000 in deductions. If you're in the 25% tax bracket, the $11,000 you spent garnered you a tax break worth just $250 -- so your write-off is worth about 2% of what you paid.

Even if you get a decent deduction now, that tax benefit will tend to shrink over time. Most mortgages are front-loaded so that you pay less interest, and more principal, with each passing year. At the same time, the standard deduction keeps getting adjusted upward, squeezing your tax break from both directions.

4 keys to profitable home ownership
You’re most likely to win by owning, rather than renting, if the following are true:
· You plan to stay put at least three years and preferably more. In most markets, it can take three to six years for a home to appreciate enough to offset the costs of selling and moving. (Bach thinks anyone who knows he or she won’t be moving in the next year should roll the dice and buy; I’m a little more cautious, particularly in overheated markets where you may need to stay put even longer than five years to ride out a real downturn.)
· You’re psychologically prepared. Home ownership means dealing with whatever comes up -- from noisy neighbors to clogged plumbing. You can’t just call the landlord for help or pack up and move as easily as when you were renting.
· You have some extra savings. Home buyers who spend every dime they have buying a house inevitably are blindsided by repairs, maintenance and all the other costs of owning a home. Then they go into debt trying to keep up their current lifestyle. Smart home buyers make sure they have an amount in savings at least equal to two mortgage payments after the deal closes, and preferably much more.
· You manage your money pretty well. That “forced savings” aspect I discussed above works only if you can keep your hands out of the cookie jar. Otherwise, it’s too easy to drain away your wealth with home equity loans and lines of credit. If you’re the kind of person who lives on credit cards and doesn’t know where the money goes, you’d be smart to clean up your financial act long before you go hunting for a house.
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Invest or not to invest in the Triangle?

09-14-06
Tracy Santrock-Cary NC Real Estate Realtor
I’ve been getting a lot of calls from investors around the country looking to expand outside their current market. As you may be aware there are many areas in the country that have seen a remarkable slow down in the real estate market. To the contrary, certain areas in the Triangle are continuing to see strong growth and low inventories. The main question I’m being asked is where would investors find the best returns?


July sales were down slightly in the Triangle, but overall we have achieved nearly 2% stronger sales year-to-date than 2005. Cary, Raleigh and the Triangle continue to win numerous accolades as the place to start a new business, the place to find affordable housing, the best overall employment & low cost of living, great weather and safest neighborhoods. Our area has been touted as having a terrific business climate and even one of the best places to meet singles. I guess all the downtown urban living trends have paid off.

These awards of national recognition and ratings have been a constant for over 20 years and show no sign of diminishing. It makes a very good case for long term growth. From an investors perspective, let's say the next 5-10 years look very bright for continued growth and prosperity in local Triangle area.

I do recommend high growth areas for maximum gain on residential investing. The bulk of out of state investing has been focused on new home development below 225k. The out of state investor wants to “get in” our market and “get out” fast. That may be just the right approach for some of the new homes neighborhoods. I see out of state investors that never drive across the state line buying many new construction homes on-line.

I recommend a longer approach to investing and would target areas close to new commercial developments such as Southpoint near Southwest Durham , North Hills, West Cary, North Hills, and North Raleigh. I would say almost any home under 300k should be considered if it has premium location. Homes in these areas usually rent well. If the home breaks even from rental income verse mortgage payment – and is poised for maximum appreciation - it's usually a strong investment.

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