Appraisal Myths and Realities consumers should be aware of

Appraisal Myths and Realities

The following are Appraisal Myths and Realities consumers should be aware of.

Myth #1:  The homeowner pays for the appraisal and therefore, owns the appraisal.

Reality:  If federal money is involved in the transaction – Fannie Mae, Freddie Mac, HUD, VA, or other programs, – then by federal banking regulations, the lender must be the client of the appraiser.  The entity that orders the appraisal is the client, not the person delivering the appraisal fee for the client.

Myth #2:  If a homeowner has an appraisal done with one lender, they should be able to use the same appraisal report with a different lender.

Reality:  Other lenders cannot use the report for lending purposes until they establish the client/appraiser relationship.  The appraiser will need to get permission (a release) from the original client and any/all subsequent clients before reappraising the property for the new lender.  In addition, if the effective date of the appraisal has changed, the appraiser must research any new market conditions and update the existing appraisal report, which could mean drafting an entirely new appraisal.

Myth #3:  The homeowner put $10,000 in improvements into the home so the appraisal should be at least $10,000 higher.

Reality:  Example: If you could buy a box of Tide for $100 or buy a box of Tide for $10, which would you buy?  This is the same logic that can be applied in the marketplace.  When two homes in the same neighborhood are for sale and one under duress is selling for considerably less, the home that is listed higher is now overpriced for the market.  Once the house under duress sells at the lower price, the now becomes the market value for competing homes in the area.  Remember, appraisers use the principle of substitution by determining what other homes in the market area can be purchased for the same price.

Myth #4:  The licensing of an appraiser ensures his or her competency.

Reality:  Licensing does not necessarily ensure the competency of an appraiser.  The Fannie Mar and Freddie Mac Selling Guides require lenders to review the appraiser’s education and experience.

Myth #5:  Communication between an appraiser and a real estate agent is prohibited.

Realty:  Absolutely not.  The appraiser cannot talk about value of the property.  However, they can obtain factual information about the property from the real estate agent.

 

Are we heading toward an era of small brokerages in San Antonio?

are we heading toward an era of small brokeragesAre we heading toward an era of small brokerages in San Antonio?  Just recently the 2014 Swanepoel TRENDS Report noted that there is a trend moving away from the small mom and pop real estate brokerages and more agents are working for the large real estate firms across the country.  However, the New York Times posted an article on “The Ascent of the Little Guys” stating that the credibility of the smaller firms are growing in popularity due to the attention to agent training, customer service, and low agent-to-manager ratios.

While large real estate brokerages with thousands of agents still dominate the market, I can’t help but wonder whether the clout of the smaller firms is a question buyers and sellers should consider when choosing a real estate agent.  As consumers decide between a highly visible company with lots of agents and resources, they should also consider the idea of a smaller firm that caters to a niche market and to the client’s needs.  For example, downtown living, condo specialists, luxury lifestyles, etc.  In addition, smaller brokerages in San Antonio are more creative and nimble.  They can be more responsive and customer service oriented in a changing market.

“One of the main things that any small business — whether an independent bookstore, a corner toy store or a neighborhood hardware store — would have customers believe is that service is better and personal attention greater at a little firm. Whether that is true in real estate depends — because the company name may be ubiquitous, but the client’s relationship is usually with a single person.” –HILARY STOUT, New York Times

The owners of Texas Dream REALTORS do not hire any agent looking for a place to hang their license.  We have a small professional team that services our clients for sales, staging, photography, contract to close, listing management, marketing, quality control, make ready services, and technology.  We know that you are busy, work hard, fight traffic, and have a life.  Therefore, we come to you and proudly have a paperless company that makes our agents accessible and your transaction smooth and successful.

Buyers Are Liars. Fact or Fiction?

buyers are liars

Buyers are liars.  Fact or fiction?  In several sales professions, namely, car sales and real estate sales, you will hear sales people say that buyers are liars.  Normally, you would never hear me compare these two professions, but figuring out what a buyer really wants is something we have in common.

It is usually spoken by a resentful salesperson, as in, “Can you believe that guy? He told me he was going to show his wife, but, well, you know—once they walk out the door, they’re gone. Buyers are liars.”

Another scenario I hear about from more seasoned salespeople is that they have a pre-determined notion that the buyer is not telling them the truth.  “If the buyer says they want an open floor plan on a cul-de-sac, with a view, don’t believe it.  Buyers are liars.  One of those might be true, but the others they’ll compromise on.”

In my opinion, buyers mix their “must haves” with their “wish list” and it takes a true professional salesperson to determine what they can compromise on and what they cannot.  Many times buyers don’t know what they really want, they just saw it somewher and think they have to have it.

Salespeople hold a lot of power by virtue of expertise and this can be intimidating during the sales process.  Buyers need to feel like they are making an educated decision without being sold to.  Therefore, many buyers attempt to control the situation by limiting what they disclose to the salesperson.  They want to avoid getting screwed over, so they resort to what feels low-risk.

Buyers are liars.  However, usually it is the salesperson’s fault.  Taking the time to get to know the buyer’s lifestyle, personality, and how they make decisions is imperative to closing the sale.  Texas Dream REALTORS are trained to get to the point of mutual admission so that each party feels they are bringing something to the table in an effort to reach a common goal…homeownership.

What does a ‘Good Deal’ mean exactly?

What does a 'good deal' mean exactly

Often times I meet people who tell me they just want to get a good deal when buying or selling their home.  What does a ‘good deal’ mean exactly?  For a long time, I figured my clients just wanted to walk away with more money in their pockets.  However, after a recent trip to my hair salon, I realized that a good deal could mean different things to different people.

I told my hair stylist I wanted to remain blonde, but wanted to add golden and copper highlights for winter.  He said, “Okay.  What color is golden to you?”  I showed him a picture of a celebrity’s hair in a magazine that I thought would look nice and he said, “Honey, that’s not golden, that’s light brown with honey-colored highlights.”   I digress…

As I sat there with my head wrapped in foil, I couldn’t help but wonder how many times I was not clear on what was most important to my client’s needs when they said they wanted a good deal.

What does a good deal mean exactly?  Does it mean you want to buy a home for less money than it’s worth?  Does it mean you want more upgrades?  Does it mean you want more closing costs or a lower interest rate?  Or does it mean you want a colonial, not a ranch style house?  Would a good deal mean closing in two months versus two weeks because the kids will be on spring break?  I could go on and on.

Since my salon experience, I am determined to dissect and investigate what a good deal means to each of my clients.  If I were to ask you what a good deal means to you when buying or selling your home, could you answer me?  Is your idea of a good deal different from your spouses?  Because what is golden to me, could be light brown with honey-colored highlights to you.

Tax and Home Records Checklist: What to Keep and For How Long

By: Dona DeZube

Want to rest assured you have all the documents you need when you need them, but not be awash in paper? Read on.

Unless you’re living in the 123-room Spelling Manor, you probably don’t have space to store massive amounts of tax and insurance paperwork, warranties, and repair receipts related to your home. But you’ll definitely want your paperwork at hand if you have to prove you deserved a tax deduction, file an insurance claim, or figure out if your busted oven is still under warranty.

Except for tax paperwork, there’s no official guideline governing exactly how long you have to keep most home-related documents. Lucky for you, we considered the situations in which you might need documents and came up with a handy “How Long to Keep It” home records checklist.

First, a little background on IRS rules, which informed some of our charts:

  • The IRS says you should keep tax returns and the paperwork supporting them for at least three years after you file the return — the amount of time the IRS has to audit you. So that’s how long we advise in our charts.
  • Check with your state about state income tax, though. Some make you keep tax records a really long time: In Ohio, it’s 10 years.
  • The IRS can also ask for records up to six years after a filing if they suspect someone failed to report 25% or more of his gross income. And the agency never closes the door on an audit if it suspects fraud. Just sayin’.
HOME SALE RECORDS
Document How Long to Keep It
Home sale closing documents, including HUD-1 settlement sheet As long as you own the property + 3 years
Deed to the house As long as you own the property
Builder’s warranty or service contract for new home Until the warranty period ends
Community/condo association covenants, codes, restrictions (CC&Rs) As long as you own the property
Receipts for capital improvements As long as you own the property + 3 years
Section 1031 (like-kind exchange) sale records for both your old and new properties, including HUD-1 settlement sheet As long as you own the property + 3 years
Mortgage payoff statements (certificate of satisfaction or lien release) Forever, just in case a lender says, “Hey, you still owe money.”

Why you need these docs: You use home sale closing documents, receipts for capital improvements, and like-kind exchange records to calculate and document your profit (gain) when you sell your home. Your deed and mortgage payoff statements prove you own your home and have paid off your mortgage, respectively. Your builder’s warranty or contract is important if you file a claim. And sooner or later you’ll need to check the CC&R rules in your condo or community association.

ANNUAL TAX DEDUCTIONS
Document How Long to Keep It
Property tax payment (tax bill + canceled check or bank statement showing check was cashed) 3 years after the due date of the return showing the deduction
Year-end mortgage statements 3 years after the due date of the return showing the deduction
PMI payment (monthly bills + canceled check or bank statements showing check was cashed) 3 years after the due date of the return showing the deduction
Residential energy tax credit* receipts 3 years after the due date of the return on which the credit is claimed (including carryforwards**)

Why you need these docs: To document you’re eligible for a deduction or tax credit.

*Energy tax credits for alternative energy sources; credit expires at the end of 2016.

**Tax credits that you carry forward from one year to a future year, such as when you don’t have enough tax liability to offset the entire amount of the credit. (You can’t deduct more than you earn.) Only certain tax credits can be carried forward. Check with your tax pro about your particular circumstances.

INSURANCE AND WARRANTIES
Document How Long to Keep It
Home repair receipts Until warranty expires
Inventory of household possessions Forever (Remember to make updates.)
Homeowners insurance policies Until you receive the next year’s policy
Service contracts and warranties As long as you have the item being warrantied

Why you need these docs: To file a claim or see what your policy or warranty covers.

INVESTMENT (LANDLORD) REAL ESTATE DEDUCTIONS
Document How Long to Keep It
Appraisal or valuation used to calculate depreciation As long as you own the property + 3 years
Receipts for capital expenses, such as an addition or improvements As long as you own the property + 3 years
Receipts for repairs and other expenses 3 years after the due date of the return showing the deduction
Landlord’s insurance payment receipt (canceled check or bank statement showing check was cashed) 3 years after the due date showing the deduction
Landlord’s insurance policy Until you receive the next year’s policy
Partnership or LLC agreements for real estate investments As long as the partnership or LLC exists + 7 years
Landlord insurance receipts (canceled check or bank statement showing check was cashed) 3 years after you deduct the expense

Why you need these docs: For the most part, to prove your eligibility to deduct the expense. You’ll also need receipts for capital expenditures to calculate your gain or loss when you sell the property. Landlord’s insurance and partnership agreements are important references.

MISCELLANEOUS RECORDS
Document How Long to Keep It
Wills and property trusts Until updated
Date-of-death home value record for inherited home, and any rules for heirs’ use of home As long as you own the home + 3 years
Original owners’ purchase documents (sales contract, deed) for home given to you as a gift As long as you own the home + 3 year
Divorce decree with home sale clause As long as you or spouse owns the home + 3 years
Employment records for live-in help (W-2s, W-4s, pay and benefits statements) 4 years after you make (or owe) payroll tax payments

Why you need these docs: Most are needed to calculate capital gains when you sell. Employment records help prove deductions.

Organizing Your Home Records

Because paper, such as receipts, fades with time and takes up space, consider scanning and storing your documents on a flash drive, an external hard drive, or a cloud-based remote server. Even better, save your documents to at least two of these places.

Digital copies are OK with the IRS as long as they’re identical to the originals and contain all the accurate information that was in the original receipts. You must be able to produce a hard copy if the IRS asks for one.

Tip: Tax season and year’s end are good times to purge files and toss what you no longer need; that’s often when the spirit of organization moves us.

When you do finally toss out your home-related paperwork, use a shredder. Throwing away intact documents with personal financial information puts you at risk for identity theft.

This article provides general information about tax laws and consequences, but isn’t intended to be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice.

Read more: http://members.houselogic.com/articles/how-long-to-keep-tax-records/preview/#ixzz3KkmcUInj

What Makes Your Home Hard to Show

What makes your home hard to sellSellers, here are some tips on what makes your home hard to show.  If you want to sell your home quickly, avoid these What Makes Your Home Hard to Show no-n0’s:

No-no #1)  Restricted showing hours.  Generally, buyers have a window of when they can go house shopping.  If you have restricted hours or need a lot of advanced notice, your home may drop off the list.  If a buyer’s agent cannot get access to your home, they cannot sell it.

No-no #2)  Combo lock boxes.  I hate combo lock boxes.  If a home has a combo lock box, it tells me several things.  One, the seller’s agent is not member of MLS or was too cheap to buy a real lock box.  Two, combo lock boxes are a royal pain in the you-know-what to get into.  And three, combo lock boxes get rusty and hard to get into over time.

No-no #3)  Smells.  Most buyers can get past messiness or some clutter.  No buyers can get past smells.  With cigarette and animal smells being the most obvious,  even good smells can be bad.  You could have the best floor plan in the neighborhood, but smells will make your home hard to show.  Get rid of the wall plug-ins and for goodness sake please no Febreze!

No-no #4)  Tell a story.  Why did you buy your home in the first place?  What is it about your home that you love so much?  Be sure to highlight those areas.  Buyers can’t see your awesome game room if there is laundry all over the pool table or can’t walk into the “walk-in closet”.

No-no#5)  Overall condition.  If your home needs many updates and a lot of TLC and has several large projects that are obviously waiting to be completed, there is a very good chance that your home will be hard to show, and ultimately sell.  Projects equal money and you could cost yourself more money off the sale price than the projects are worth.

Are you really a home buyer or are you just a contender?

 are you really a home buyer Are you really a home buyer or are you just a contender?  How do you know if you are a really a buyer or just a contender in today’s Austin market?  We get calls all the time of people wanting to see properties because they are “in the market to buy a home.”  My first response is usually, “How do you know you are a buyer?”

To be a true home buyer in the Austin market, you must meet the following criteria:

  1.  Stop looking for homes on bad websites.  Zillow, Trulia, and the 60+ alike are NOT ACURATE sources of information.  In fact, 14% of current Austin single family homes are not listed on these syndicated websites.  In addition, approximately 36% have outdated and/or incorrect information.  If you are a serious buyer, then you would not reduce your search to these tire-kicking websites.
  2. Get your finances in place.  I’m not talking about a pre-qualification letter.  I mean find a mortgage lender that will help you get comfortable with what your monthly payment is and prepare you to close on a home within 30 days from contract.  If you are a serious buyer, you would know exactly what your maximum price range is.
  3. Find a good Realtor®.  Most buyers don’t realize that there are real estate agents and there are Realtors®.  There is a difference.  Real estate agents are not members of their local and national associations, often do not have access to the Multiple Listing System, and most importantly, do not abide by the National Association of Realtors® Code of Ethics.  You are investing in one of the largest purchases in your lifetime.  A serious buyer invests in a Realtor® who is going to look after their best interests.
  4. Be prepared to make an offer on the first day of viewing homes.  The word on the street is correct.  Inventory of available homes in Austin have dropped right along with the weather. The homes your Realtor® is showing you are what are available within your criteria.  Currently, there is only 2.5 months of available homes for sale and homes stay on the market for an average of only 48 days.  A serious buyer is ready, willing, and able to take a home off the market.
  5. Increase your chances in a multiple offer situation.  Believe that other buyers want the same house you want.  This is not the time to low-ball.  This type of seller’s market changes the way you make offers on a home.  If you are a contender, you make an offer on a home and wait for the counter offer.  If you are a serious buyer, you compete for a home with your offer.  This includes whatever is left of short sales and foreclosures.

At Texas Dream REALTORS® we qualify our clients according to these criteria before beginning the buying process.  Why?  Because we are in the business to help our clients buy and sell their home.  We know what is involved in the buying process and set the right expectations up front.  This ensures that our clients get the home they want and the transaction goes as smoothly and our clients are happy.

“I recently purchased my home in Austin, TX through Kelea Piper at Texas Dream Realtors. I was a first time home buyer and very unsure of what to expect. I had the most amazing experience with Kelea and TDR! Everything about the process was smooth and seamless- from the beginning of the showing/selection experience to the full closing process. I always felt that Kelea had my best interests in mind and went above and beyond. Kelea is extremely knowledgeable, helpful, and professional every step of the way. I had a TON of questions since it was my first home and she made me feel very comfortable and fully educated. I highly recommend Kelea and Texas Dream Realtors to anyone looking for a top quality home buying experience. Whether it is your first home or your 5th, Kelea fully delivers on expectations plus rises above them consistently! Thank you for helping me find my dream home in Austin!”

Christina Onori, Austin Tx

Are Popcorn Ceilings a Deal Breaker? Don’t let popcorn ceilings ruin your home search.

are popcorn ceilings a deal breaker

What’s the big deal about popcorn ceilings?  Most comments I hear are:

  • “They’re dated.”
  • “They are hard to paint over.”
  • “They are dust catchers.”
  • “They are just plain ugly.”

Are popcorn ceilings a deal breaker to you?  Don’t let popcorn ceilings be a deal breaker in your next home search.  Instead of breaking the bank to try to remove popcorn ceilings, or crossing it off your list, here are a few ways to lessen their visual appearance.

#1.  Change the lighting.  Usually, people who hate their popcorn ceilings have lighting that shines upward toward the ceiling.  These are light fixtures that are flush mounted to the ceiling and cast a lot of shadows.  A better option is to change your fixtures to directional fixtures that point down instead of out.

#2.  Choose bulbs that cast a softer light or use table lamps or sconces that give a more dramatic effect to the eye.

#3.  Paint.  We’ve all seen stains and dirt on ceilings and popcorn ceilings do not hide it well.  The only way to lessen the effect of popcorn ceilings is a fresh coat of white paint.  (Of course, you will want to address why the stain was there in the first place too).  Some people ask if it is ok to paint a different color other than white.  My answer is no, however, I’m sure after you get over the initial shock painting a different color, it will be just fine.

#4.  Stop looking at them!  More often than not, you do not remember the ceilings of the last few homes you were in.  Most people only remember dirty or stained ceilings, so if you take the right steps, your ceilings are a non-issue.  Make an effort to point attention to furnishings and other exciting things in your home than your ceilings.

 

2014 Texas Home Trends: What’s in and What’s Out?

2014 Texas Home Trends: What's In and What's Out?

While retail designers already know what color your bathing suit will be next summer, designer forecasters have already determined how you will be decorating your home.  Here is what the 2014 home trends will be for next year’s buyers and sellers.

The housing crisis, ongoing war, and lack of economic confidence affects our national mood and, therefore, translates into our style and trends.  The 2014 Texas home trends are shifting.  Our color tastes for the past few years have been every shade of neutral; safe, easy, and traditional.  For big-ticket items, neutral seems like a good idea.  However, now that the Texas real estate market has spiked again, pops of color are making their way back on the scene.  Spice cabinet colors like cinnamon and mocha are trending along with eco-conscious colors like green and a wide range of gray; especially in Texas markets.

But ,what about our obsession with granite countertops?  With a strong demand and falling prices of granite, I don’t see a change in countertop choices for some time.  However, there are some really great alternatives such as marble, wood, concrete, and tile that have gained popularity moving into 2014.

And what about the good ‘ole, gotta have stainless steel appliances?  I don’t know about you, but no matter what finish I get, it still shows finger prints.  After 15 years of stainless appliances, manufacturers are moving on to new finishes.  Check out the Whirlpool’s newest refrigerator addition.  Yep, it’s just like the refrigerator you got rid of 5 years ago…white.  And GE is now pushing their new line of metallic finishes.

My prediction for the upcoming 2014 Texas home trends is that despite the brighter more cheerful trends, buyers and sellers will still be privy to the good ole faithful of safe, easy, and neutral.

More Texas Real Estate Facts

More Texas Real Estate Facts

It is no myth that the consumer is the driving force in the real estate industry in Texas.  Below are some interesting changes that have occurred and will continue to mold the future of the housing market.

  • The average age of a repeat buyer in Texas is 42
  • The average age of a 1st time buyer in Texas is 31
  • 35% of buyers are first time home buyers.
  • Texas sellers stay in their home an average of 9 years
  • Homeowners want information about real estate updates and relevant news about their community
  • A 2012 poll revealed that sales equal 96% of asking price.  This does not include price reductions or seller contributions
  • There are 1900 people moving to Texas a day
  • 92% of Texas home sellers used a real estate agent to sell their home.  Only 8% were For Sale By Owner
  • The best day to put a home on the market is on Friday
  • The best day to hold an open house is Tuesday
  • 74% of consumers believe the economy has gotten better and 71% think the economy will continue to get better in the next year

Texas is:

Big: The population is the 2nd largest in the U.S. with over 25 million people

Young: 27% of the Texas population is under 18 and only 10% is older than 65

Diverse: Approximately 9.5 million or 38% of Texans are of Hispanic descent; 12% are African American; 6% are other (primarily of Asian descent.

 

Texas Dream REALTORS® understands our client’s housing needs and serves Austin, San Antonio, and surrounding areas.  Our expertise encompass military relocation, property management, farm and ranch sales, residential, new home construction, and commercial real estate.  For more information on the housing market and specific community information in Austin or San Antonio, please call a Texas Dream Realtors agent today!