3 Reasons Home Inspections Kill Deals

It may be tempting to blame a faulty property or an overzealous home inspector when a transaction falls apart after inspection. But there’s more to this common situation than meets the eye.

Home InspectionsVia Realtor Magazine: If I were a real estate agent and I had worked weeks, months, or even years with a client, I would dread home inspection time. Experienced real estate professionals know there are hundreds of ways a deal can fall apart, from credit and financing problems to appraisals to just plain cold feet. But certainly, one of the more common deal killers is the home inspection. But it doesn’t have to be. To help prevent home inspection time from becoming contract termination time, here are a few thoughts from the point of view of an experienced home inspector.

Houses and Home Inspectors Do Not Kill Deals

From my experience, there are three home inspection situations that lead to a canceled transaction. You might be surprised to hear two things are not on this list: the house and the home inspector. Having spent more than a dozen years performing more than 5,000 structural home inspections, I have found that some real estate agents do think that the home or the home inspector is to blame, but let’s step back for a minute and look at what really happens in these situations.

When the findings uncovered in a home inspection significantly alter the buyer’s expectations about what they thought they were buying, this causes problems. You might hear something like, “Gee, I thought I was buying X, but now that we have looked closely, I see the house is more Y” from your client.

From this point of view, the cancellation has everything to do with the client’s expectations coming into the inspection. It might be tempting to wish the home inspector had been less forthcoming about the condition of the house, but that implies that the client should experience some level of deceit or poor communication from the home inspector. The better solution to this common problem is buyers having more realistic expectations before they sign the contract. This is why I wrote my book, The Confident House Hunter—to teach people skills that will help them look at houses and evaluate risk so they are more prepared to make an offer on the right house. Here are the top three reasons buyers cancel a deal after the inspection.

1. Buyers Are Unprepared

There are no classes in college or high school to teach people how houses work or where risk lies in a residential building. Even professional real estate agents have little or no training to help them understand how to look at houses and identify issues; most of these skills are learned on the job through the school of hard knocks. This problem has been exacerbated in recent years by a new generation of home buyers, many of whom who did not grow up working on their houses with their parents.

2. Buyers Have Higher Expectations

Adding another layer of complexity to modern homebuying is how much our assumptions about houses have changed. Most buyers now expect a level of luxury and comfort in a house that consumers could scarcely have imagined as recently as the 1960s. The result is that people are now buying more expensive and more complex homes, yet have less understanding of how they are built or how they work. And in markets enduring tight inventory conditions, your clients have less and less time for decision-making, as multiple offers and spontaneous action become the norm and increase the chances for buyer remorse.

3. Technology Has Dramatically Improved Reporting

Further complicating matters is the reality that home inspections have changed as well. It’s a relatively new industry, and over the past 15 years, I’ve watched computer-generated reports, digital cameras, and other new tools lead to rapid innovation. Today, upon hiring a quality home inspector, a buyer can expect to receive a 40- to 60-page report with dozens or even hundreds of high-resolution color photos, detailed diagrams, and links to additional information. The reality is, your clients have access to more information and receive more data about the home they are purchasing than ever before. However, they often lack the tools to help them digest all of the facts.

A New Motto for Buyers

The number one reason deals fall apart after a home inspection is that the findings significantly change what the home buyer thought they were buying. Many make the mistake blaming the home inspector or the house. That’s why I created a new motto for home buyers: “All houses have problems, but every house is a great house for the right person at the right price.”

I’ve inspected houses that I felt were teardowns, meaning the property would be costlier to fix than it was worth. Upon giving this information to one homebuilder client, he said, “Great! I was hoping to tear it down anyway.” I have inspected other houses that I thought should be torn down, but buyers wanted to renovate them anyway because they were in love with the cabin-like feel of the place and they had the resources to make their dream come true, even if it was not the most cost-effective approach. If an inspection on a teardown can go well, then really any inspection should be able to be successful, right? Looking at property from this point of view, we start to see that “bad houses” are extremely rare, even though unrealistic expectations on the part of buyers or sellers can make them seem like they are common.

I am always surprised when people read my inspection reports and comment something like, “Oh, you hated that house.” I do not hate houses. I am simply doing my best to document the condition of the property so the right person can buy it at what they believe is the right price. I love houses; it is unrealistic expectations that I don’t like.

Are Home Inspectors Sometimes Responsible for Killing Deals?

One of the hardest things for me to hear is the charge that home inspectors are killing deals. I do feel that the industry could do more to train inspectors on both technical and communications skills. In fact, communication training is particularly lacking in home inspection schools and continuing education courses. But I also feel that the real estate industry could do more to prepare agents to teach buyers a better way to look at the “bones” of houses. I am not aware of any requirements for new real estate agents to learn anything about houses to get a real estate license in my home state of Washington, and maybe that should change.

The truth is all houses pose some level of risk, and there are skills everyone can learn to help evaluate that risk and make appropriate offers on the right homes. A more transparent approach could help us all show up to the inspection armed with realistic expectations. This could save everyone a lot of time and heartache, resulting in happier clients, better referrals, and a lot less talk about home inspections killing deals. 

Authored by home inspector Dylan Chalk,  author of “The Confident House Hunter” (Cedar Fort Press), a book to teach home buyers how to look at and understand houses. He is the owner of Seattle-based Orca Inspection Services LLC, and in 2017 he accepted the position of vice president of the American Society of Home Inspectors’ western Washington chapter.

Welcome Home: 10 Tips to Turn Your Neighborhood Into a Hometown Haven

Hometown Haven

“Communities work better (students perform better, crime rates are lower, kids are safer, people live longer) when neighbors know one another better. Knowing your neighbor on a first-name basis…is a surprisingly effective first step.”
Robert Putnam, Harvard Public Policy Professor and author of Bowling Alone

While advancements in technology have made it possible for us to connect with people from around the world, numerous studies show that it has led to a decline in face-to-face interactions.1

Places where we used to strike up casual conversations—such as a doctor’s office waiting room, bus stop or grocery line—are now filled with people looking at their smart phones, barely acknowledging those around them.

Even many families dining together or relaxing in the evenings can be caught spending more time focused on screens than each other. Is it any surprise that we’ve experienced a steady decline in community involvement?

In his book Bowling Alone, Harvard Public Policy Professor Robert Putnam “draws on evidence including nearly 500,000 interviews over the last quarter century to show that we sign fewer petitions, belong to fewer organizations that meet, know our neighbors less, meet with friends less frequently, and even socialize with our families less often.”2

How is this shift impacting our overall well being? A study by Oregon Health & Science University researchers found that having limited face-to-face social contact nearly doubles an individual’s risk of depression.3

CONNECTING WITH YOUR COMMUNITY

If you’re considering a move to a new city or neighborhood, you may be worried about replacing the comfort and support of family and friends you’ll leave behind. Or perhaps you have completed a move but would like to meet more people, build friendships and strengthen your support system.

In this blog post, we’ll explore 10 ways you can utilize technology to foster in-person connections with your neighbors, make friends and get engaged in your local community.

  1. JOIN YOUR NEIGHBORHOOD’S SOCIAL NETWORK

A growing number of neighborhoods are utilizing private social networks like U.S.-based Nextdoor and Canadian-based GoNeighbour. These platforms are designed specifically to connect neighbors and include an address verification process.

Residents post about a variety of topics, including neighborhood news, recommendations for local businesses, lost pets, etc. These platforms are a great way to stay up-to-date on what’s happening in your neighborhood, but don’t just use them to connect virtually. Extend an invitation to your neighbors to attend an in-person event, such as a park playdate for families, an informal soccer game or a potluck block party.

  1. ATTEND A PLACE OF WORSHIP

If you have a religious affiliation, joining a local place of worship is great way to meet people and get involved in your community. Aside from attending services, most religious institutions also host extracurricular activities to foster fellowship amongst the congregation.

Whether you are looking to join a church, synagogue, mosque or temple, there are a variety of online resources available to help you find a match in your area, including:

To make the most of your affiliation, look for opportunities to meet in smaller group settings. It’s a great way to form interpersonal relationships with people who share your beliefs and values.

  1. FIND AN INTEREST GROUP

Whatever your favorite hobby or pastime, you’re guaranteed to meet people who share your interests when you join an interest group!

The website Meetup.com has over 32 million members in 288,000 groups in 182 countries. You can search for a group in your area that appeals to you … from book clubs to running groups to professional networking, they have it all.

If you don’t find what you’re looking for, you can start your own group for a monthly fee. The site makes it easy to ask (or require) members to pitch in to cover the cost. It also enables you to promote a corporate sponsor on your page, so you may be able to find a local business to cover the cost.

Most people who join Meetup are there for the same reason you are … to meet people who share their interests. So it’s a great place to make like-minded friends in your community.

  1. LEND A HAND

Volunteering your time and talents is another good way to get engaged in your community and meet those who share a similar mission.

Most nonprofit organizations rely heavily on volunteers. Find one with a cause you’re passionate about by visiting VolunteerMatch.

You can search by cause, location and keywords, and filter your results to include opportunities that are suitable for kids, seniors or groups. Another option is to search for volunteer positions that require specialized skills. Perhaps you’re musical or maybe you’re good with computers. There could be an organization in your area that needs your talents or skills.

Lotsa Helping Hands is another site focused on connecting volunteers with those in need. Members can request help or search for opportunities to assist others in their area. Most of the volunteer opportunities involve aiding neighbors who are ill or elderly by delivering meals, offering rides to appointments or just stopping by for a visit. This can be a great way to make a direct impact on your neighbors who need a helping hand!

  1. TAKE A CLASS

Taking a class is a wonderful way to develop a skill while meeting people who share your interests and passion for learning.

Whether you want to brush up on your Spanish, finish your novel, or learn how to tango, most community colleges offer inexpensive, non-credit classes on a variety of topics.

And if you are pursuing a degree, forego taking your courses online. Opt for the traditional route instead. There’s no substitute for being part of a live community of your peers.

To search for a community college in your area, visit the American Association of Community Colleges or SchoolsInCanada.com.

  1. ATTEND AN EVENT

Attending a live event is another way to engage with members of your community. From festivals to fundraisers to retreats, Eventbrite is a great place to search for events in your area. You can filter your search by category, event type, date and price to find something that fits your interests, schedule and budget.

Be strategic about the type of event you choose. For example, while attending a large festival might be a fun way to feel engaged with your community, it might also be harder to meet people. A retreat or a networking event may offer more opportunities for one-on-one interaction.

  1. SHARE YOUR STUFF

Everyone’s talking about the rise of the “sharing economy” with the popularity of Uber and Airbnb. But there’s also been a rise in “sharing communities,” which facilitate the free exchange of goods among neighbors to reduce consumption and keep usable items out of landfills.

Nonprofit groups like The Freecycle Network are made up of people who are giving (and getting) stuff for free in their own towns and neighborhoods. Members can post “offers” of free items or “wanted” items they need.

The company Peerby has a similar goal of reducing consumption by encouraging neighbors to lend and borrow items they don’t often use. For example, you can offer to share your blender, rake or ladder. Maybe you need to borrow a drill, cake pan or moving trolley. Peerby enables you to request items to borrow from your neighbors and encourages you to register items you are willing to lend.

The Little Free Library is another innovative way neighbors are participating in a sharing community. Stewards build or purchase a box to house the library and fill it with books they are willing to give away. The library is usually placed in their front yard or in a public outdoor space. Visitors are encouraged to take a book they’d like to read, and in exchange leave a book for someone else to enjoy. With over 60,000 libraries in 80 countries, the organization estimates millions of books are exchanged annually among neighbors.

  1. SUPPORT A COMMUNITY GARDEN

 Community gardens have become increasingly popular in both urban and rural areas across North America. Not only do they beautify a neighborhood, they also foster community, encourage self-reliance, reduce family food budgets, conserve resources, and provide opportunities for recreation and exercise.

The mission of the American Community Gardening Association is to build community by increasing and enhancing community gardening and greening across the United States and Canada. The organization’s website enables you to search for existing community gardens in your area. If there isn’t one nearby, you might considering starting one. The site provides helpful tips and resources for organizing a garden in your neighborhood.

  1. CARPOOL WITH A COWORKER

In the spirit of joining a “sharing community,” carpooling offers many similar benefits. It presents an opportunity to form a bond with coworkers and/or neighbors during your daily commute. Additionally, you can save money on gas, reduce wear-and-tear on your vehicle, lower carbon emissions, and in many cities reduce your commute time by taking advantage of high-occupancy vehicle (HOV) travel lanes.

The success of ridesharing companies like Uber and Lyft has spurred a new wave of carpooling websites and apps that aim to revolutionize the way we commute by making it easier and more convenient to carpool. While many of these are still in their infancy stages, they are expanding into new markets and improving functionality at a rapid pace.

Kangaride Local, Scoop and Waze Carpool are just a few examples, and more are popping up every day. They are currently available in limited markets throughout the United States and Canada, but are becoming prevalent in more cities as residents opt-in. Check to see if any of these are available in your local area.

Alternatively, you can try posting on your neighborhood’s social network to see if one or more of your neighbors are commuting to a nearby location. Take turns driving and start benefiting from all that carpooling has to offer!

  1. PARTICIPATE IN WORLD NEIGHBORS DAY

The organizers behind World Neighbors Day promote it as “an invitation to share a moment with your neighbors, to get to know each other better and develop a real sense of community.”

In Canada it’s held on the second Saturday in June, and in the United States it’s held on the third Sunday in September. Participants are encouraged to organize gatherings with their neighbors to build relationships that “form the fabric of our communities.”

You can participate by attending or organizing a gathering in your neighborhood. Examples include: a block party, outdoor movie screening, book exchange, charity bake sale, volleyball game, etc. Anything that brings neighbors together in a fun and relaxed setting is a good choice!

Gatherings can be promoted through your neighborhood’s social media network, blog or listserv, or you can go the old-fashioned route and hand out flyers door-to-door. Whatever you do, be sure to make your gathering inclusive and welcoming to all.

BE A GOOD NEIGHBOR

 As with anything in life, you will get out what you put in. It can take time to build lasting and meaningful friendships with your neighbors, but the effort you make is likely to pay off tenfold.

The tried-and-true way to make friends, expand your circle, grow your support system and get engaged in your community? Be a good neighbor yourself.

What are the best ways you’ve found to meet and engage with your neighbors? Share your success stories or challenges in the comments below!

Sources:

  1. Lengacher, L. (2015) Mobile Technology: Its Effect on Face-to-Face Communication and Interpersonal Interaction. Undergraduate Research Journal for the Human Sciences –  
    http://www.kon.org/urc/v14/lengacher.html
  2. Putnam, R. (2000) Bowling Alone. New York: Simon & Schuster –
    http://bowlingalone.com/
  3. Bergland, C. (2015 October 5) Face-to-Face Social Contact Reduces Risk of Depression. Psychology Today
    https://www.psychologytoday.com/blog/the-athletes-way/201510/face-face-social-contact-reduces-risk-depression

Why Real Estate Investing Makes (Dollars and) Sense

Real Estate Investing

INTRODUCTION

Turn on the television or scroll through Facebook, and chances are you’ll see at least one advertisement for a group or “guru” who promises to teach you how to “get rich quick” through real estate investing. The truth is, much of what they’re selling are high-risk tactics that aren’t a good fit for the average investor. However, there is a way to make steady, predictable, low-risk income through real estate investing. In this blog post, we’ll examine the tried-and-true tactics that can be used to increase your income, pay off debt … even fund your retirement!

WHY INVEST IN REAL ESTATE?

One of the basic principles of real estate investment lies in this fact: everyone needs a place to live. And according to the Bureau of Labor Statistics’ most recent Consumer Expenditures Survey, housing is typically an American’s largest expense.1

But there are other reasons why real estate is a great investment choice, and we’ve outlined the top five below:

  1. Appreciation

Appreciation is the increase in your property’s value over time. History has proven that over an extended period of time, the value of real estate continues to rise. That doesn’t mean recessions won’t occur. The real estate market is cyclical, and market ups and downs are natural. In fact, the U.S. housing market took a sharp downturn in 2008, and many properties took several years to recover their value. However, in the vast majority of markets, the value of real estate does grow over the long term.

The S&P CoreLogic Case-Shiller National Home Price Index, which tracks U.S. residential real estate prices, released its latest results on August 29 with the headline “National Home Price Index Rises Again to All Time High.”2

While no investment is without risk, real estate has proven again and again to be a solid choice to invest your money over the long term.

  1. Hedge Against Inflation

Inflation is the rate at which the general cost of goods and services rises. As inflation rises, prices go up. This means the money you have in your bank account is essentially worth less because your purchasing power has decreased.

Luckily, real estate prices also rise when inflation increases. That means any money you have invested in real estate will rise with (or often exceed) the rate of inflation. Therefore, real estate is a smart place to put your money to guard against inflation.

  1. Cash Flow

One of the big benefits of investing in real estate over the stock market is its ability to provide a fairly steady and predictable monthly cash flow. That is, if you choose to rent out your investment property to a tenant, you can expect to receive a rent payment each month.

If you’ve invested wisely, the rent payment should cover the debt obligation you may have on the property (i.e. mortgage), as well as any repairs and maintenance that are needed. Ideally, the monthly rental income would be great enough to leave you a little extra cash each month, as well. You could use that extra money to pay off the mortgage faster, cover your own household expenses, or save for another investment property.

Even if you only take in enough rent to cover your expenses, a rental property purchase will pay for itself over time. As you pay down the mortgage every month with your rental income, your equity will continue to increase, until you own the property free and clear … leaving you with residual cash flow for years to come.

As the owner, you will also benefit from the property’s appreciation when it comes time to sell. This can be a great way to save for retirement or even fund a child’s college education. Purchase a property when the child is young, and with a little discipline, it can be paid off by the time they are ready to go to college. You can sell it for a lump sum, or use the monthly income to pay their tuition and expenses.

  1. Leverage

One of the unique features that sets real estate apart from other asset classes is the ability to leverage your investment. Leverage is the use of borrowed capital to increase the potential return of an investment.

For example, if you purchase an investment property for $100,000, you might put 10% down ($10,000) and borrow the remaining $90,000 in the form of a mortgage.

Even though you’ve only invested $10,000 at this point, you have the ability to earn a profit on the entire $100,000 investment. So, if the property appreciates to $120,000 – a 20% increase over the purchase price – you still only have to pay the bank back the original $90,000 (plus interest) … and you get to keep the $20,000 profit.

That means you made $20,000 off of a $10,000 investment, essentially doubling your money, even though the market only went up by 20%! That’s the power of leverage.

  1. Tax Advantages

One of the top reasons to invest in real estate is the tax benefit. There are numerous ways a real estate investment can save you money each year on taxes:

Depreciation

When you record your income from a rental property on your annual tax return, you get to deduct any expenses associated with the investment. This includes interest paid on the mortgage, maintenance, repairs and improvements, but it also includes something called depreciation.

Depreciation is the theoretical loss your property suffers each year due to aging. While it’s true that as a home ages it will structurally need repairs and systems will eventually need to be replaced, we’ve also learned in this post that the value of real estate appreciates over time. So getting to claim a “loss” on your investment that is actually gaining in value makes real estate an appealing investment choice.

Serial Home Selling

Even if you’re not interested in owning a rental property, other types of real estate investments offer tax advantages, as well. Generally, when you own an investment property you pay a capital gains tax on any profits you make when you sell the property.

However, when you sell your principal residence, you are exempt from paying taxes on capital gains (up to $250,000 for singles and $500,000 for couples). The Internal Revenue Service (IRS) only requires that you live in the house for two of the previous five years. That means you can purchase an investment property, live in it while you remodel it, and then sell it for a tax-free profit two years later. This can be a great way to get started in real estate investing.

Section 1031 Exchanges

In addition to profiting off of your personal residence tax free, it is possible to sell an investment property tax free if you do it through a 1031 Exchange. If structured properly, the IRS Tax Code enables an investor to sell a property and reinvest the proceeds in a new property while deferring all capital gains taxes.

Tax-Deferred Retirement Account

It’s a common misconception that you can only purchase financial instruments (i.e. stocks, bonds, mutual funds, etc.) through an Individual Retirement Account (IRA) or 401(k). In actuality, the IRS allows individuals to invest retirement funds in real estate and other alternative types of investments, as well. By purchasing your investment property through an IRA, you can take advantage of all of the tax savings these accounts offer.

Be sure to consult a tax professional regarding all tax matters related to your real estate investments. If structured correctly, the profits you earn on your real estate investments can be largely shielded from tax liability. Just another reason to choose real estate as your preferred investment vehicle.

TYPES OF REAL ESTATE INVESTMENTS

 While there are numerous ways to invest in real estate, we’re going to focus on three primary ways average investors earn money through real estate. We touched on several of these already in the previous section.

  1. Remodel and Resell

HGTV has countless “reality” shows featuring property flippers who make this investment strategy look easy. Commonly referred to as a “Fix and Flip,” investors purchase a property with the intention of remodeling it in a short period of time, with the hope of selling it quickly for a profit.

This is a higher-risk tactic, and one for which many of the real estate “gurus” we talked about earlier claim to have the magic formula. They promise huge profits in a short amount of time. But investors need to understand the risks involved, and be prepared financially to cover additional expenses that may arise.

Luckily, an experienced real estate agent can help you identify properties that may be good candidates for this type of investment strategy… and help you avoid some of the pitfalls that could derail your plans.

  1. Traditional Rental

One of the more conservative choices for investing in real estate is to purchase a rental property. The appeal of a rental property is that you can generate cash flow to cover the expenses, while taking advantage of the property’s long-term appreciation in value, and the tax benefits of investing in real estate. It’s a win-win, and a great way for first-time investors to get started.

And according to the U.S. Bureau of Labor Statistics, rents for primary residences have increased 21.9 percent between 2007 and 2015 as demand for rental units continues to grow.1

  1. Short-term Rental

With the huge movement toward a “sharing economy,” platforms that facilitate short-term rentals, like Airbnb and HomeAway, are booming. Their popularity has spurred a growing trend toward dual-purpose vacation homes, which owners use themselves part of the year, and rent out the remainder of the time. There are also a growing number of investors purchasing single-family homes for the sole purpose of leasing them on these sites.

Short-term rentals offer several benefits over traditional rentals, which many investors find attractive, including flexibility and higher profit margins. However, the most profitable properties are strategically located near popular tourist destinations. You’ll need an experienced real estate professional to help you identify the right property if you want to be successful in this highly-competitive market. 

DOES REAL ESTATE INVESTING SOUND TOO GOOD TO BE TRUE?

We’ve all heard stories, or maybe even know someone, who struck it rich with a well-timed real estate purchase. However, just like any investment strategy, a high potential for earnings often goes hand-in-hand with an increase in risk. Still, there’s substantial evidence that a well-executed real estate investment can be one of the best choices for your money.

Purchasing a home to remodel and resell can be highly profitable, as long as you have a trusted team in place to complete the remodel quickly and within budget … and the financial means to carry the property for a few extra months if delays occur.

Or, if you buy a house for appreciation and cash flow, you can ride through the market ups and downs without stress because you know your property value is bound to increase over time, and your expenses are covered by your rental income.

In either scenario, make sure you’re working with a real estate agent who has knowledge of the investment market and can guide you through the process. While no investment is without risk, a conservative and well-planned investment in real estate can supplement your income and set you up for future financial security.

If you are considering an investment in real estate, please contact us to set up a free consultation. We have experience working with all types of investors and can help you determine the best strategy to meet your investment goals.

Sources:

  1. Bureau of Labor Statistics Consumer Expenditure Survey Annual Report – https://www.bls.gov/opub/reports/consumer-expenditures/2015/home.htm
  2. S&P Dow Jones Indices Press Release –
    https://www.spice-indices.com/idpfiles/spice-assets/resources/public/documents/574349_cshomeprice-release-0829.pdf?force_download=true
  3. Durden, T. (2016 November 29). US Home Prices Rise Above July 2006 Levels, Hit New Record High [blog post] ZeroHedge –
    http://www.zerohedge.com/news/2016-11-29/us-home-prices-rise-above-july-2006-levels-hit-new-record-high

5 Ways to Get a Larger Mortgage

 Learn how to get a larger mortgage and buy a house you thought you couldn’t afford.
 
GoBankingRates.com | The process to buy a home is exciting but takes time, research and money. And larger mortgages or mortgages with better rates usually require a high credit score and high income, too. If your credit history or income isn’t up to what most lenders deem acceptable for a home loan, however, it’s time to explore your options.
 

Rebuilding your credit is one way to improve your chances of qualifying for a large mortgage loan, but it can take some time to accomplish. There are several easier alternatives to help you figure out how to buy a house with a large mortgage when you don’t meet certain mortgage requirements.

happy couple meeting real estate
DragonImages / iStock.com

How to Get a Larger Mortgage Even If Your Income Is Low

Before you even start the preapproval for mortgage process, use a mortgage qualification calculator to figure out how much you can afford. Many lenders advise not to spend more than 28 percent of your income on your mortgage.

Here are five ways you can get a large mortgage with low income:

1. Increase Your Qualifying Income

When underwriters look at income, they take a pretty conservative stance. For example, income from your part-time job might not be considered unless you have a history of working more than one job. And if you deduct unreimbursed business expenses on a Schedule 2106, your lender will probably also deduct them from your qualifying income.

However, sometimes the rules work in your favor. Per the Equal Opportunity Act Amendments of 1976, you can use income that you receive from public assistance programs to qualify for a loan if the income will likely continue for three years or more.

Here are other sources of income that you might not have considered:

  • Alimony or child support
  • Automobile allowance
  • Boarder income
  • Capital gains income
  • Disability income — long term
  • Employment offers or contracts
  • Employment-related assets as qualifying income
  • Foreign income
  • Foster-care income
  • Interest and dividends income
  • Mortgage credit certificates
  • Mortgage differential payments income
  • Non-occupant borrower income
  • Notes receivable income
  • Public assistance income
  • Retirement, government annuity and pension income
  • Royalty payment income
  • Social Security income
  • Temporary leave income
  • Tip income
  • Trust income
  • Unemployment benefits income
  • VA benefits income
woman signing paperwork filling document
BernardaSv / iStock.com

2. Choose a Different Mortgage

Some mortgages have more forgiving guidelines than others when it comes to income. VA loans, for example, calculate income two ways: the standard debt-to-income method and the “residual income” method, which is much more generous.

For people with lower incomes, a worthwhile option is Freddie Mac’s Home Possible program. To qualify, you must have a yearly income that’s either equivalent to or less than the area median income for the census tract in which the property is located. The only exception to this rule is if the property is in a designated underserved or high-cost area.

The Home Possible rules state that if the property is in a high-cost area, your annual income can exceed the AMI within certain limits. If the property is in an underserved area, the AMI requirements don’t apply at all.

An FHA loan might be another option to buy your dream home if you have a history of paying your bills on time, even if you experienced a period of financial hardship. FHA loan qualifications state that you might still be able to qualify for a loan, regardless of isolated cases of late or slow payments.

happy young couple making deal with realtor
shironosov / iStock.com

3. Bring in a Co-Borrower

If you’re still wondering how to get approved for a higher mortgage loan, you can bring in a co-borrower — that extra income and equity will likely enable you to qualify for your home. Co-borrowers can be occupants or non-occupants. An occupying co-borrower lives in the home with you. A non-occupant co-borrower is more like a co-signer. This person doesn’t live in the house but is responsible for the payments.

Lenders are more likely to put restrictions on non-occupant co-borrower loans, such as requiring a higher down payment. Government loans typically come with fewer restrictions.

For manually underwritten loans, the income from a non-occupant co-borrower might be considered as acceptable qualifying income. This income can offset certain weaknesses that might be in the occupant borrower’s loan application, such as limited financial reserves or limited credit history.

woman working on computer and writing down her thoughts
DragonImages / iStock.com

4. Get a Subprime Mortgage

The term “subprime mortgage” has a negative connotation because of the housing bubble and financial crisis it’s often associated with, but subprime mortgages can actually be a gateway to home ownership for some people.

A subprime mortgage is a home loan with higher interest rates than their prime mortgage counterparts. The higher interest rates are in place to offset the risk of loan default by subprime mortgage borrowers who are risky customers because of poor credit. These mortgages can be either fixed or adjustable.

The benefit of a subprime mortgage is that people with poor credit don’t have to wait as long to own a home. They can repair their credit by paying their mortgage each month, rather than waiting years to repair their credit and then buy a home.

The obvious disadvantage, besides higher rates, is that closing costs and fees associated with home loans will be usually higher for subprime borrowers. Although credit scorerequirements aren’t as stringent for subprime loans, borrowers must still show proof that they can afford the mortgage payments each month.

 
credit report on a digital tablet with paperwork.
Courtney Keating / iStock.com

5. Strengthen Your Application

It might surprise you to know that income is actually one of the least important underwriting criteria. If you don’t believe it, try calling a few lenders. Tell them you make $1 million a year, but have a 500 FICO score and only 5 percent to put down. You will not get far.

However, people with low-to-moderate incomes get mortgages all the time, especially when they have excellent credit, a decent down payment and money in the bank. Some of the first few steps to buying a house are to establish great credit and substantial savings. It helps to have an emergency fund — enough in the bank to cover two to six months’ worth of bills — and a credit score of 720 or better.

Other compensating factors include low debt, additional savings, a secure job with excellent prospects and documenting extra “unofficial” income. Even if you know you can’t “officially” count some kinds of income, it’s smart to document its existence anyway.

Thank you to Barri Segal for writing this article.

The Consumer’s Guide to Hiring an Amazing Real Estate Agent

Hiring Amazing Real Estate Agents

When you’re buying or selling a home, it’s crucial to work with a qualified real estate agent. Not just a professional, but an amazing agent and a market expert. So how do you ensure you’re hiring an amazing real estate agent?

There are currently more than two million real estate professionals in North America.1,2 With so many options to choose from, how does a prospective home buyer or seller choose the right agent or broker? According to the National Association of Realtors®, trust and reputation are the top deciding factors consumers use when hiring an agent.3

But how do you measure trust and reputation … and what criteria can be used to help you make your decision?

In this guide, we’ve outlined the top attributes that amazing agents possess, as well as the questions you can ask to make sure you’re working with the right market expert to achieve your real estate goals. 

5 ATTRIBUTES OF AN AMAZING AGENT

As we mentioned above, not all real estate professionals are the same. And it’s easy to be overwhelmed by the options and information about working with real estate professionals to buy or sell your home. In fact, many real estate markets are oversaturated with agents.

To help you understand what makes top agents and market experts stand apart from the competition, following are five key attributes of an amazing agent:

  1. A Pricing Specialist

If an agent has their real estate license, they know the basics of the transaction process. They know what goes into buying and selling a home. However, there’s a difference between knowing the process and navigating it for an ideal result. This ideal result often means buying or selling a home for the best price.

For buyers, amazing agents have a strong understanding of market trends, competition, and how to make your offer attractive to sellers. They can help you identify and secure a deal to ensure you get the home you want, within your desired budget.

If you’re selling a home, market experts have experience pricing homes optimally for the market, and creating pricing plans to minimize the time spent selling the home. This will help you sell for your desired price, and avoid costs like additional mortgage and utility payments.

Takeaway: Whether buying or selling a home, pricing can be tricky. Market experts can help navigate best-possible pricing strategies, and also secure the home you want within your budget.

  1. An Effective Time Manager

It’s common to underestimate the amount of time it takes to buy or sell your home. The average real estate agent may not be utilizing the latest tools and technology to make the transaction easier and more cost effective for their clients. Market experts have tools and strategies at their disposal to minimize the amount of time you spend on the process.

For sellers, market experts can make sure you only deal with qualified buyers, not the “window shoppers” who can waste your time. We also utilize the latest marketing practices to advertise and price your home effectively, ensuring it gets sold quickly.

When looking to buy a home, inexperienced agents may waste your time by showing you homes that are not a good fit for you. A market expert knows how to prioritize your needs and wants to find you the ideal home within your budget. They also know how to spot “red flags” and can steer you away from homes that are likely to turn up major issues in a real estate inspection, saving you time and money.

In addition, well-networked Realtors can gain access to the hottest listings before many websites do. Their extensive professional networks can help identify “pre-list” homes before they’re officially on the market. This can be invaluable in a highly-competitive real estate market.

Takeaway: Even a well-intentioned agent may not have the skills, tools or technology to make the experience easy for you. There are lots of hidden activities that may take up unexpected time, and a market expert will save you time and energy.

  1. A Market Insider

While most agents can pull market stats about a neighborhood, community or city, they may not understand important trends or developments that would affect your transaction. These can include the state of the school district, issues with a homeowner association, new businesses in the area, zoning rules or trends in home prices.

Market experts live and breathe local real estate and know the trigger points for buying and selling in this market. We also stay current on effective marketing and negotiation practices, resulting in our track record of success.

For sellers, we understand what features of your home and neighborhood are assets in the selling process. And for buyers, we share a deep understanding of market factors, including school and neighborhood quality, crime statistics, speed of sales and more.

Takeaway: Getting relevant and specific market knowledge can be difficult and time consuming, which is why many real estate agents don’t have it. Whether you’re buying or selling a home, an experienced real estate agent is often the best source of information about a city, neighborhood, or even street … we’re literally conducting market research every day.

  1. A Strong Negotiator

Amazing agents truly set themselves apart in their ability to negotiate. Unfortunately, a large portion of agents don’t commit their full time to increasing this key skill.

Real estate negotiations can be challenging, even for seasoned professionals. It takes skill, experience and a knowledge of how to fight for your client’s best interests. While any agent can enter negotiations to buy or sell a home, they may not know the effective strategies to exit those negotiations with the result you want.

Experienced Realtors focus on negotiation as a key skill. We understand what to do before entering negotiations (establishing the upper hand to set up the best outcome), as well as during the process (when to offer or accept concessions).

Takeaway: Many agents can feel the stress of the negotiation process, and may agree to terms of the buyer/seller. Working with a market expert will help ensure you get the best deal, not just the fastest deal.

  1. An Effective Closer

Closing a deal fast is often a good thing. For buyers, it means you found the home you wanted quickly. For sellers, it often means you can avoid the added expenses of mortgage and utility payments, and maximize the value of your home sale.

However, an agent solely focused on speed can make decisions that aren’t in your best interests. Top real estate professionals know how to not only achieve your real estate goals quickly, but in the right way to avoid potential pitfalls.

Just like negotiations, the paperwork and process of closing a real estate transaction are complicated. And they can be overwhelming for the average agent who hasn’t handled a lot of transactions. Sales contracts, property disclosures, occupancy agreements and even lead paint records need to be executed with precision. Your agent not only needs to be familiar with these, but also stay current on any changes in requirements or regulations.

Market experts have a strong understanding of real estate contracts, timelines, clauses and contingencies within the closing process. In fact, avoiding pitfalls during the closing process is where many sellers find an experienced Realtor is a huge asset.

Takeaway: Many agents don’t have a firm understanding of contracts. Because a real estate transaction often involves a significant investment, even a small mistake can mean serious trouble. With that in mind, it’s often best, and most responsible, to work with a true market expert.

 5 QUESTIONS TO ASK YOUR REAL ESTATE AGENT

So how do you know if you’re working with an amazing agent?

The first step would be to “shop around.” Many people work with the first agent they come across without a firm understanding of their level of experience. It’s always a good idea to interview a number of agents before selecting one. If you’ve gotten referrals from people you trust, then you may only need to interview 2-3 agents.

However, it can be tough to know what to ask in the interview process. Here are some questions that can help you qualify the best agent to help you achieve your real estate goals:

  1. Can you send me some information about yourself?

Look for professionalism and consistency. What are their professional accomplishments? Also, try to identify how they approach their work. Look for a business person who has a strategy and solid support system. If they’re a newer agent, ask about their team’s dynamic and accomplishments.

  1. How long have you been in real estate?

The average Realtor has 10 years of experience4. But while longevity is important, even more telling are the number of transactions they have closed or been involved in. So feel free to also ask: “How many homes have you sold in this area?”

  1. What will you do to keep me informed?

Do you want daily or weekly reports from your agent? Will the agent be able to meet these expectations? Determine how much communication you want, and then find an agent who will give you the attention and time you want and deserve.

  1. Can you provide me with further resources I may need?

From market reports and pricing trends to school performance and crime statistics, top agents have resources at their disposal. In addition, market experts have built strong relationships with their extended team of professionals, and can often get expedient service or be able to “cash in a favor” for you should a need arise.

  1. Seller only: Can you share with me your plan to market my property? Many agents will simply put your home in the MLS and wait for it to sell. An amazing agent should have a detailed plan of how to get your home exposure on social media, to their local networks, and more.

GET STARTED

Now that you’re armed with the 5 Attributes of Amazing Agents and the Top Questions to ensure you work with the best possible real estate agent, you’re ready to start interviewing agents.

We’d love an opportunity to win your business. Please schedule a free consultation with us to find out how true market experts can help you achieve your real estate goals!

Sources:

  1. National Association of REALTORS – https://www.nar.realtor/field-guides/field-guide-to-quick-real-estate-statistics
  2. Financial Post – http://business.financialpost.com/personal-finance/mortgages-real-estate/canada-housing-bubble-agents/wcm/b49d4e3a-bd8d-4d1c-9566-bd3d80c8e23a
  3. National Association of REALTORS –

            https://www.nar.realtor/reports/highlights-from-the-profile-of-home-buyers-and-sellers

  1. National Association of REALTORS – https://www.nar.realtor/field-guides/field-guide-to-quick-real-estate-statistics

Top 12 Apps for Homeowners and Renters  

Homeowner Apps

More than 77 percent of people own a smartphone.1 The average person checks their smartphone 46 times a day, with people under the age of 24 checking it an average of 74 times a day.1 We check it while we’re waiting in line and during our leisure time, whether we’re scrolling through social media, reading emails or getting up-to-date on the latest news.

Smartphones are not only a useful tool for communication. With the following apps, you can get organized (whether you plan to buy or sell), save money, learn about the homes in your neighborhood and get inspired for your next renovation project. If you’re like 81 percent of people, you have your smartphone with you during most of your waking hours; let it help you stay organized and make your life easier.3

Homeowner Apps: Get Renovation Inspiration

These apps not only offer ideas for your next remodel or home décor project, some of them even give you a preview of what your home may look like once it’s finished. 

1.) Houzz (Free)

The Houzz app is the number one app for home design and it’s no wonder; the app gives you access to all the inspiration, blogs and design ideas from the Houzz site on your phone or tablet. The app features View in My Room 3D, which allows you to view products in your home before you buy. Just take a photo of the space and a 3D version of the product will appear. Browse products, save photos of designs you’d like to view later and connect with local professionals in your area. Whether you’re gathering ideas for your next renovation and décor project or you’re just browsing, the Houzz app will satisfy all your design needs.  (Android, iOS)

2.) iHandy Carpenter ($1.99)

Make sure the photos, shelves, mirrors and other artwork you hang are even and aligned with this helpful app. It’s an all-in-one tool kit that features a plumb bob, surface level, bubble level bar, ruler and protractor. No need to purchase these tools separately; just hold your smartphone up to the wall and the app will take care of the rest.  (iOS, Android)

3.) Color911 ($3.99)

If you’re thinking of changing the color scheme of your home or want to find the right shades for lamp shades, rugs or throw pillows to match your vintage sofa, the Color911 app provides pre-selected color palettes to match any color scheme. Take a photo of the room or the furniture and the app will create a custom palette full of complementary colors. Write notes about your palette and organize it all into folders to share with family, friends or your design professional.  (iOS)

Bonus Apps for Homeowners:

AroundMe (Free)

Hungry and looking for a local hotspot? Meeting friends at a coffee shop nearby? Or just need to find the closest ATM? AroundMe allows you to search for the nearest restaurants, banks, gas stations, book a hotel or find a movie schedule close to where you live. Open the app and start learning more about your neighborhood. (iOS, Android, Windows) 

BrightNest (Free)

From keeping things clean to making them colorful, Brightnest, developed by Angie’s List, is loaded with suggestions on how to make your home a better place to live. With categories of customized tips (money-saving, cleaning, eco-friendly, healthy, cooking, and creative) there are plenty of great ways to pull inspiration from the app. BrightNest will help you tackle important home tasks with easy-to-follow instructions, a personal schedule and helpful reminders. (iOS, Android, Web)

Apps For Sellers: List & Sell Your Home Quickly

Are you a homeowner who is thinking of selling? If you’re preparing to sell, you know there are a lot of tasks to complete before putting your home on the market. These apps help you manage your to-dos so you can list and sell your home more efficiently with fewer distractions.

4.) Homesnap (Free)

Using the Homesnap app, you can snap a photo of any home, nationwide, to learn more about it. When you’re ready to sell, snap a few of the homes in your neighborhood to find out their valuation. This app isn’t perfect, which is why you should always consult with a local real estate agent. However, it can give you a general idea of the value of your home compared to others in the neighborhood. (iOS and Android devices)

5.) Docusign (Free)

Use the DocuSign app to complete approvals and agreements in hours—not days—from anywhere and on any device. Quickly and securely access and sign any documents. The benefit to using the app (over your desktop computer) is you will receive push notifications when a document is waiting for your signature and you can view and organize all your docs on-the-go. Using the easily downloadable app, receive and sign documents for free. You can receive and sign documents for free, but will need a paid account to send documents; pricing starts at $10 a month. (iOS, Android, Windows, Web).

6.) Wunderlist (Free)

Designed for use on the Web and mobile devices, Wunderlist is a well-designed to-do list and task management program that makes it easy to create a list and add tasks, due dates and reminders. Organize your ideas or focus into separate lists or create tasks within one list. You can also email them with whomever you collaborate, such as a spouse or your real estate agent. (Android, iOS, Windows Phone, Web)

Bonus App for Sellers:

Real Estate Dictionary (Free)

Not sure what all those industry specific terms mean? Search thousands of words and phrases from real estate, mortgage, and financial dictionaries for clear, in-depth definitions. This is a handy app for anyone who’s buying or selling and wants to learn more about the process. (iOS, Android)

Apps For Renters: Get Ready to Buy

Not ready to buy a home just yet? These apps will help you get into the perfect rental while you save money, build a budget and get on track for homeownership.

7.) Mint (Free)

Do you know where your money goes each month? Manage your bills, budget and credit score all in one place. Mint is a free app that helps you view your complete financial picture and track your spending. We recommend this app to anyone, but it’s especially useful for renters who need to crack down on their spending in order to save for a down payment. Use Mint to look for areas you can cut spending in order to save a little extra each month. (iOS, Android)

8.) Acorns ($1 a month to start)

Acorns is modernizing the practice of saving loose change with their automated savings tool. The app rounds up your purchases on linked credit or debit cards, then sweeps the change into a computer-managed investment portfolio. Acorns is free for four years for college students and everyone else pays $1 a month until their account balance hits $5,000, then 0.25% of their account balance per year. This is a useful tool for those who have a hard time saving. (iOS, Android)

9.) Neighborhoods & Apartments

Built for the on-the-go apartment hunter, this app from Walk Score takes the hassle out of finding your next home or apartment and helps you live near the people and places you love. They collect listings from top rental listing sites and we like them because they share how walkable each address is, determined by access to public transit, things to do, bike trails, shorter commutes, etc. (iOS, Android) 

Bonus Apps for Renters:

Wally (Free)

Wally is a personal finance app that helps you compare your income to expenses, so you can understand where your money goes each month, and set and achieve goals. Wally lets you keep track of the details as you spend money: where, when, what, why, & how much. We love how simple it is to set a personalized savings target and scan receipts. (iOS, Android)

Credit Karma (Free)
If you’re preparing to buy, boosting your credit score is likely a goal you’ve set. Credit Karma is a free app that allows you to safely monitor your score and receive updates on ways you can improve it over time. They provide financial calculators and educational articles to help you better understand what credit is all about. Check as often as you want, and it doesn’t hurt your score. (iOS, Android, Web)

Apps for Buyers: Find the Perfect Home

When you’re ready to buy, there are several apps that can help you stay on top of the process. Whether you’re browsing online at different neighborhoods and homes and can’t seem to remember where all your saved data and information went or you want to save an important task or a neighborhood or listing clipped from the Web, these apps help you keep it all straight.

10.) Dwellr (Free)

Dwellr is run by the U.S Census Bureau and provides demographic information about the neighborhoods you are considering moving to. You get a variety of education/school, real estate, transportation, and population statistics to give you an idea of what it would be like living there. If you want to get the feel of a potential neighborhood, then Dwellr may just be the app to help you find the best home. (iOS, Android)

11.) Evernote (Free for the Basic version, $34.99 per year for Plus and $69.99 per year for Premium)

Collect ideas, notes and images in one place to access later on your computer, tablet or smartphone. Categorize your notes so you can find them quickly and easily and share them with others in a group notebook. Add the Web Clipper feature to your browser and clip and save articles, blogs and images from the Web. Whether you’re collecting research on a business idea or you’re looking for inspiration for a home renovation, Evernote can help you keep it all together. (Web, iOS, Android)

12.) Mortgage Calculator (Free)

There are a lot of free mortgage calculators available for download that will help you quickly determine what your monthly payment will be while you’re house hunting. We recommend picking your favorite and using it to help you shop in your price range. These numbers should be used as a guide, work with your agent and mortgage professional to learn exactly what type of loan you’ll qualify for. (Web, iOS, Android)

Bonus App for Buyers:

Google Maps (Free)

Google Maps is a must-have for anyone who’s house hunting. When you’re ready to visit a property or check out a neighborhood, you can use Google Maps to give you turn by turn directions to the house. You can use their satellite view to get a good idea how far important things like schools, parks, shopping, bus stops, and restaurants are to a home you are interested in and check out the other houses on the street. (Web, Android, iOS,)

Ready to move beyond the app?

If you’re thinking of buying or selling your home, or know someone who is, keep us in mind because we’re happy to help!

Source: 1. Pew Research Center, January 12, 2017 http://www.pewresearch.org/fact-tank/2017/01/12/evolution-of-technology/

  1. Deloitte, 2016 global mobile consumer survey: US edition https://www2.deloitte.com/us/en/pages/technology-media-and-telecommunications/articles/global-mobile-consumer-survey-us-edition.html
  2. Gallup, July 9, 2015 http://www.gallup.com/poll/184046/smartphone-owners-check-phone-least-hourly.aspx

Meet Joe Girard–World’s #1 Retail Salesperson

I published this blog 8 years ago on my personal site, and and have never forgotten the incredible success Joe Girard had in retail sales.  How many different ways you can apply these lessons to real estate sales?

Joe GirardJoe Girard figured out—quickly I might add—that personal branding is what sets the champions apart.  If you’re like me, you take pleasure in learning about and applying people’s personal success stories.  Please enjoy this shortened (you can thank me later) edit of an April, 2008 blog by Mike Reining about this amazing sales professional.

For over 12 years in a row, Joe Girard was the #1 retail salesperson in the world and he still holds the world record today.

On average, he used to sell 6 cars per day!

I like you.

Those three words are at the core of what made Joe Girard successful.

Joe Girard did not get into selling right away.  Whenever someone came into Joe’s office he would hand people an “I like you pin.”  “Even if you don’t buy, I like you… but I know you will buy.”

How did you become the world’s $1 salesperson in the toughest business in the world?

Life is a game and you gotta know what you are playing.  Whatever you do and whatever you are selling you are not selling.  You must never stop learning more about this game… what makes people tick, what makes people buy, what makes people do what they do.

Constantly strive to improve yourself. “I am never satisfied.”  If you are satisfied… then you are dead.

I watch both the smart people and the dumb people so that I can see what makes good people good, and what makes bad people bad.

“Every morning that I get up, I say that somebody is going to pay for getting me out of bed.  I love to sleep.”

“The night before tomorrow I plan my day.  You must have a plan to make sure they pay.”

“Whatever it is that you are selling… I will prove to you that you are not really selling those things.”

“What’s your secret?”

“If there is one word I detest is the word secret.  There is no secret.  If there was a secret nobody would be sharing it with you.  There are no secrets.”

“I have tried all the shortcuts to make the fast dollar but I could never do it.”

He was 1 of 42 salesmen on the showroom floor.  Everyone sold on average 5 cars a month, while Joe was selling 6 or more per day!

First you must find the job you love.  Joe says “I never worked a day in my life, I played!”

Never leave because the grass is greener on the other side.  You stay and grow like a tree and the bigger the tree gets, the more money you are going to make.  A lot of times I wanted to quit because of a problem.

But you want to know something? A problem is like a gift from God. It is your opportunity to grow stronger.

Always hang around people that can help you, successful people, people that know about the power of positive thinking.  I never want to talk to somebody unless they have something good to say.

You gotta be like a race horse.  Put on you blinders r before leaving the house so that you don’t have any distractions.  Every move you make needs to be positive.  Stay focused on your life.

A few things that will kill you:

  • Selling a few things on the side
  • Put all your focus and energy on ONE thing and you will rise and soar to the very top
  • Sneaking out to play golf. Be committed –when you eat you eat, when you work you work… do not mingle and mix them up.  Sneaking out of work means you are a loser.

Joe went through the extremes… he used to have a brown bag lunch everyday.  He never had lunch with his employees because he could not sell them anything.  He also would NEVER ever take a 2 1/2 hour lunch.  When you cheat on lunch, you cheat yourself out of success..

Joe says he once failed in business and it was because he did not focus.

How did Joe end up selling cars?

He got on the bus and did not know where to go!  He got off the bus and in front of him was a car dealership.  He walked in, and asked for a job.  The manager said he could not hire him because he had never sold a car before.  Joe said… “just give me a desk and a phone and within 2 months I will beat everyone you have on board.”

What happened then? Joe just started handling the phone but when he walked downstairs at the end of the day… he walked downstairs and there was nobody there.  All the losers had left and now he was alone with the customers.

He sold the first customer that day and the customer said “you know what Joe, I have never seen anyone beg like you.”  Joe was not afraid to get on his hands and knees and beg.

After this Joe said “I am going to climb this mountain with imaginary blinders on to always stay focused.  I don’t care if anyone laughs at me… I will always keep climbing to the top.”

Joe sold cars for 15 years.  In the first 3 years he developed a system that was driving people to his door in droves.  People outside his office were screaming to in into his door and he used to say, “the longer you have to wait… the cheaper it will get for you.

In his last 12 years… if you did not have an appointment you could not get into Joe’s office.  You could not even buy a car from Joe without an appointment!

What is the world’s greatest advertisement in the world?  It is word-of-mouth.  Why did people go to him… because Joe likes you.

“I like to look at people’s lips.  I learn more from people’s lips than from any other part of their body.”

“I am going to show you how to sell something to someone so that they will never forget your name until you are dead.”

How did he become so successful?  He had a burning desire and he always remembered where he had come from and then he just focused.  Take it slow… go easy… plan your work and work the plan.

“I am so organized it is sickening.” 

Joe Girard never had the chance to graduate from high school.  Instead, I graduated from the world’s best university called “Street University.”

When it comes to mailing people… don’t add your company name to the envelope.  What did Joe do?  He just added “I Like You” to the card.  He used to send out 16,000 envelopes a month, each containing two business cards.  Anyone that did or did not buy from him got into his mailing system.

Joe’s first card just said:

  • I like you (on outside)
  • and I wish you a happy new year.
  • Joe Girard

That’s it!  He did not do anything else!

In February

  • I like you
  • and I want to wish you a happy valentines day

Every month he is coming into your house in the mailbox.

  • In March – Happy Saint Patty’s day
  • In April – Happy Easter
  • In May – Happy Mothers Day
  • In June – Happy Fathers Day
  • In July – Happy 4th of July
  • In August – Send me a customer and I give you $50
    etc… etc…

NOTE: The beauty of his mailing system is that it is so simple!  Every year he had an artist draw up 12 cards and then send them out.  That’s all he did.  Why has no one ever created an auto-responder with simple greeting cards?  Could this be worth testing?  I sure think so!

Customers would move and he’d to get up to 50 envelopes back.  Instead of ignoring these, he would update his records… nobody could escape him.

Joe Girard: “I will burn my name in your brain.”

Joe’s secret was to get customers to come in the door.  He did not sell customers from the floor.

In his second month, Joe was the #1 sales person in the company.  You know what happened?  His manager called him into his office and said that the other salespeople were complaining that he was stealing customers.  He said that he had to let Joe go.  So, Joe got fired!

Can you believe that?  He got fired because the losers, people that could not perform were complaining.  That’s just crazy!

People ask Joe, how can you keep up and sell so many cars per month?

He started hiring people to assist him.  He ran his office like a doctors office.  He created a well tuned system that would keep him free so that he could do what he could do best.

How did you service so many?

He made a deal with a nice Italian restaurant and treated all of the people in the service department.  The mechanics loved him and took good care of Joe’s customers.  He told his customers that if they every had any problem with their car that he would take care of them right away!  Within 15-20 minutes they could walk into Joe’s office and have 3 mechanics look at their car.

What do you think they would do after this treatment?  They would tell everyone at church, at school, at home that there was nobody else like Joe Girard.

Who can you wine and dine to get to the top?  The name of the game is service, service, service!  Don’t have lunch by yourself or with your co-workers. Who can you have lunch with that can help you get to the top?  Take care of your customers, and they will take care of you.

People are sick and tired of being treated bad.

What is the most important thing a business person should do?  Market yourself!

Give everyone who comes in your card.  You gotta be like a farmer –they throw seeds all over the field.  Even when he paid his bills, he always put two cards inside.

“They call me crazy… sure I am crazy… at least people talk about me.  You gotta be crazy so that people know who you are!”

Everyone started writing about Joe Girard because of his crazy sales strategy.  This stuff works.  Put your card everywhere.

“People buy people.  That’s what people buy.”

Sell yourself and sell yourself the right way.  That’s the game we play.  I want you to be #1.

“I have never sold a car in my life.  I sold Joe Girard.”

The moment we get out of bed we are all salespeople.  We sell people to love us, to trust us, and to buy from us.  And once you have sold someone you have to service your customer.  You know what happens when you sell yourself to your husband and wife and stop selling and servicing?  You end up in divorce.

“People quit selling after they get what they want. So what I am trying to tell you is that the sale begins after the sale.  Anyone can sell something to someone one time.  The key is to get people to come back to you.”

After selling a customer Joe used to say “I am not excited about selling you.  You know what will excite me is if you come back from me a second time.”

Always compliment people on buying from you and compliment them for making a really good choice.

He also always said that you bought two things.  You bought a car and you bough Joe Girard.  Some say you cannot make money in service and I tell them that is crap.  Joe always showed them that he cared and that he loved them.

As soon as he got the sale Joe continued selling.  He would instantly put together another piece of mail that said:

  • I like you
  • Thank you
  • and two business cards

Dear Mr. Customer,
My family and I thank you for buying a car from me.  Remember what I said, if you get a lemon I will turn it into a Peach.

Second strategy.  After I sold you I hired you!  He would send customers a coupon and say, I will pay you $50 if you refer me.  You MUST give them something and show them appreciation.

You know what he used to say? “Where ever you go… I go.”  Joe used to put his business cards into the glove box so that customers could always hand out his cards when they asked where and who they bought the car from.

Three days after a sale, Joe would always get on the phone and talk to customers and ask them how the car was working out for them.  He always reminded them that if they bought a lemon, that he would turn it into a peach. He would also ask for referrals and remind them that he would pay people $50.

He would get 3 leads from making this call!  Every customer that comes in the door with the customer’s name on his card, Joe would pay $50.

NOTE: What if we started calling and thanking every single customer after they bought and asked them how it is working out for them?

“If you don’t promote yourself, nobody else is going to promote you.”

It was his customers that made Joe the #1 sales person.

Whatever happens in your life, you can beat it, you can get back up and climb to the mountain top!  Nobody is going to do nothing for you.  I can guarantee you that.  We are all alone in this world.  And I will prove to you that no one is better than you.

Before I did a sale, I would always disarm people’s fears.  Because everyone is afraid that people want to take money away from them.  Talk to your prospects how you would talk to your mother.  Be sincere… and start a conversation and LISTEN to your customer.  Keep your big mouth shut!

“We have one mouth and two ears… God is trying to tell us something.”

“It is tough to walk away from a good listener.”

And my second power… my face is your mirror and I smile and that gets the prospect smiling.  That’s my second power.

It takes 9 muscles to frown and none to smile.

Everybody has feelings.  You treat people good and they will buy from you and they will love you.  Show them that you cared!  People want to be loved.

The name of the game is treating people good.

Everyday I leave the house I start by looking into the mirror and start off by saying:

  • “I feel good”
  • “I feel great”
  • “I am Number 1”

 

Real Home Value Calculator: Find Your Home Value

Home Value

Understanding a home’s true market value is about more than pictures, software assessments and price-per-square-foot. Whether you’re a current homeowner thinking of selling or are house-hunting, it’s crucial you understand what factors affect home valuation. By partnering with a local market expert, sellers will avoid pricing their house out of the market (the kiss of death in real estate) and buyers will ensure they get a good deal on their next home.

So, how do you accurately calculate a home’s value? After all, the value a home is assigned by its town or county and the one it’s given when it’s listed are often dramatically different from one another. Which one is accurate and what does it all mean? Read on to learn more.

Assessed Value vs Market Value: What’s the difference?

When it comes to home value, you’ll often hear two terms, assessed value and market value.

A home’s assessed value is often the lower number of the two, and is the value given by your municipality or county. Investopedia defines assessed value as “the dollar value assigned to a property to measure applicable taxes.”1 Although property tax laws vary, assessors commonly arrive at this number by taking into account the following:

  • What comparable/similar homes are selling for in your area.
  • The value of recent improvements.
  • Income from renting out a room or space on the property.
  • How much it would cost to rebuild on the property.

A home’s market value, or Fair Market Value, is the price a buyer is willing to pay or a seller is willing to accept for a property. A skilled real estate professional will arrive at the value using a variety of metrics, including:

  • External characteristics, such as lot size, home style, the condition of the home and curb appeal.
  • Internal characteristics, such as the number of rooms and their size, the type and condition of the heating or HVAC system, the quality and condition of construction, the flow of the home, etc.
  • The sales price of comparable homes that have sold in your area.
  • Supply and demand; that is, how many buyers and sellers are in the area.
  • Location; that is, the quality and desirability of your neighborhood and other community amenities.

Why are these values often so different? An assessor usually estimates your property’s market value during a reassessment or if you make a physical change or improvement to it.2 As a result, a property may not be reassessed for many years. While your home’s market value may fluctuate with the market, your home’s assessed value is more likely to remain steady.3

What Determines a Home’s Value?

You’ve likely heard the motto of real estate: “Location, location, location.” This means a home’s value relies on its location. While the home and structures on the property will likely depreciate over time, the land beneath it tends to appreciate. Why? Land is in limited supply and a growing population puts increased demand on the housing supply. As a result, values increase.4

Other factors that affect your home’s value include the function and appearance of the property, how well the home and other structures are maintained and whether the home is a lifestyle property, such as a ranch style with mountain views or beach bungalow.

Ultimately, the best indication of a home’s value is the overall supply and demand of the market. This is why we recommend you partner with a real estate professional who takes all of these factors—the assessed value, local market conditions, home features and has physically walked through and experienced your home— into consideration to determine the most accurate market value.

How to determine if a property is comparable to yours.

Both assessed value and market value are partially determined by the sales price of similar, or comparable, homes in the area. To determine if a home is comparable to yours, look for the following characteristics:

  • Lot size
  • Square footage
  • Home style or similar architecture
  • Age
  • Location

While you may not find a home with the same exact characteristics as yours, you’ll likely find a few that are close. To account for any disparity, adjust the sales prices of the comparable properties. Look at the differences between your property and the one in question and determine if the differences increased or decreased the sales price and by how much. For example, if your home has two bathrooms and a similar home only has three, estimate how much that extra bathroom increased the sale price of the similar home. The adjusted sale price is the estimation of what the property would sell for if the properties were exactly the same.2

Where can you find comparable sales?

Fortunately, you can find comparable home sales in a variety of places.2

  • Your local assessor’s office is able to provide a list of recent sales you can browse and compare or a sales history of a particular house, home style or neighborhood.
  • Your municipality. Many cities keep local sales information in their offices or post it online.
  • Online databases, such as a real estate database
  • Your local newspapers may offer some real estate information in the form of quarterly sales reports in the business or real estate sections of the newspaper.
  • Our office. We regularly do Comparable Market Analysis of homes in our local area.

How to calculate your home’s value.

By answering a few questions about your home, property and the local market, you can begin to estimate your property’s value. We’ve also included a worksheet for you below…

Home Value Questions:

When was your home last assessed?

What was its CMA assessment value?

What is your area’s average sales price?

What is your area’s average price/square foot?

Structure:

  • Is the architecture and exterior structure of the home consistent, superior or inferior to other homes in the area?
  • Does the era or genre (Modern, Victorian, Ranch, Cottage, etc.) add a premium based on current design trends?
  • How does the floor plan and room size proportions of the home compare to other homes on the market?

Interior Structure:

  • How does the kitchen compare to others on the market?
    • Updated or outdated
    • Floor plan
    • Appliance packages
  • How does the Master Suite compare to others on the market?
    • Size
    • First/second floor
    • Updated or outdated
    • Access to Master Bath
  • How does the Master Bath compare to others on the market?
    • Updated or outdated
    • Shower and bath
    • Flooring

Outside Areas:

  • Are there views, outdoor living areas or recreational areas?
    • Pools
    • Ponds
    • Patios
  • How does the landscaping and hard-scaping compare to the market? (e.g., built elements such as walkways, patios, decks, etc.)

Overall Condition of Home

  • What is the level of repair needed to compete with other homes?
  • Does the home need to be staged? How does it show?
  • What curb appeal projects are necessary to be consistent with others on the market?

 Home Assessment Worksheet

Home Value Calculator

If you want to accurately assess a home’s value, it’s crucial to know about the market activity of our local area. We can help! Give us a call to get the scoop on the local market.

Sources: 1. Investopedia http://www.investopedia.com/terms/a/assessedvalue.asp

  1. New York State Department of Taxation and Finance https://www.tax.ny.gov/pubs_and_bulls/orpts/mv_estimates.htm
  2. Realtor.com http://www.realtor.com/advice/sell/assessed-value-vs-market-value-difference/
  3. Investopedia, http://www.investopedia.com/articles/mortgages-real-estate/08/housing-appreciation.asp?lgl=myfinance-layout

7 New Florida Laws go Into Effect July 1

New Florida Laws

Florida Realtors: New Florida Laws effective July 1

  1. Cap on estoppel certificate fees – Sellers of properties who live in an HOA, condo association or co-op will have a limit on the amount they’ll pay for an estoppel certificate, a document that informs a buyer if the seller is current with their dues and assessments. SB 398 (Sen. Passidomo, R-Naples) caps estoppel certificate fees at $250 for unit owners who are current in their assessments. Associations may charge an additional $100 for expedited estoppel certificates (delivered within three business days) and another $150 to owners who are delinquent in their assessments. The bill sets the price of estoppel certificates for multiple units owned by the same person and establishes a uniform, statewide format that ensures buyers and closing agents receive the appropriate information needed to close the real estate transaction. This bill also requires certificates to be valid for 30 days if delivered electronically or 35 days if delivered by mail.
  2. Florida’s natural resources – More than $500 million is earmarked for Everglades restoration, beach renourishment and springs restoration. During the session, SB 10 (Sen. Bradley, R-Orange Park) served as the primary piece of policy legislation for Everglades restoration and establishes how the funding will be used for these projects. A key provision of SB 10 is the construction of a reservoir south of Lake Okeechobee that is designed to curb nutrient and salinity levels that are harmful to Florida’s valuable natural resources.
  3. Condominium termination law – Legislation passed in 2015 to protect condo owners from being forced to sell – possibly at a loss – has several loopholes that real estate investors and bulk buyers exploited. SB 1520 (Sen. Jack Latvala, R-Clearwater) fine-tunes the rules and modifies the process by reducing the percentage of owners required to reject the termination – from 10 percent to 5 percent.
  4. Condominium oversight – A South Florida news report of fraud in condo board elections, misappropriation of funds and rigged bids resulted in a Miami-Dade grand jury recommending changes to Florida’s Condominium Act. HB 1237 (Rep. Jose Felix Diaz, R-Miami) provides several new condo oversight rules: (1) a condo association with more than 150 units must publish its financial reports and other documents (bylaws, articles of incorporation, condo rules) on a password-protected web page; (2) if an owner is denied documents and fraud is proven, persons responsible for fraudulent activity could face felony charges; (3) the term of a condo board director is limited to eight years, with some exceptions.
  5. Private flood insurance – As Realtors petition Congress to reauthorize the National Flood Insurance Program (NFIP), Florida lawmakers continue to work to attract private flood insurance capital to Florida. HB 813 (Rep. Larry Lee Jr., D-Fort Pierce) accomplishes two primary goals: (1) Rating flexibility for flood insurers is extended from 2019 until 2025 before they must follow guidelines similar to other lines of coverage – a way to encourage private insurers to enter the Florida market; (2) insurance agents can place flood policies with surplus lines insurers for two more years – until 2019 – before they must make a “diligent effort” to place the coverage with carriers regulated by the state. Diligent effort requires an agent to seek coverage and be rejected by at least three regulated carriers writing the same type of coverage.
  6. Drone regulation – HB 1027 (Clay Yarborough, R-Jacksonville) preempts the regulation of unmanned aircraft systems (drones) by local governments and grants oversight to the state of Florida. This will prevent drone operators from having to potentially comply with ordinances adopted by 400+ local governments.
  7. Pollution notification – SB 1018 (Sen. Denise Grimsley, R-Lake Placid) sets a threshold for when an operator is required to notify the Division of Emergency Management and the Department of Environmental Protection about a pollution event. It also provides a timeframe for the notification and defines what a reportable event means. This legislation is the result of pollution from a sinkhole at the Mosaic fertilizer facility in Mulberry, Fla., last summer. The Scott administration created an emergency rule that shifted the burden of pollution notification from the state to the owner of the property where the spill occurred. Florida Realtors was part of a coalition that successfully challenged the legal authority for this rule, creating an opportunity for the passage of this friendly legislation.

© 2017 Florida Realtors