Should It Stay Or Should It Go? 6 Tips for Buyers and Sellers

By Mia Simon, Silicon Valley Redfin Agent

Imagine you’re doing the final walk-through of your dream home, making sure everything is perfect before closing. You peruse all the rooms, peek into the closets, and — hmm. What’s this on the top shelf? An… urn?

Bethesda Redfin Agent Karen Parnes recently worked with buyers who told her that in the last home they purchased, they discovered the cremated remains of the previous owner’s dog left in a closet. Rest in peace, Fido.

Home for Sale in Philadelphia

Sellers, don’t forget Fido!

We can all agree that home sellers should take personal belongings — and especially pet remains — with them when they move out, but what about more ambiguous items like curtains, refrigerators, and spas? Should they stay or should they go?

The answers vary across markets in the U.S. My general rule is that everything affixed to the property — like blinds, dishwashers, and built-in microwaves — should be included with the home. But things get fuzzy when it comes to appliances that plug in but aren’t necessarily attached, like refrigerators, washers, and dryers, as well as big-ticket recreational items, like spas, pool tables, and outdoor play structures.

Here are six tips to help buyers and sellers avoid confusion over what stays with a home and what goes, and a slideshow of examples.

1. Communication is key.

As a buyer touring homes for sale, look out for anything in the home or yard that might be contentious, and don’t be afraid to ask questions. A good listing agent should specify everything that’s included with the home in the listing notes, but when in doubt, ask!

A vacant home can be staged with a brand-new washer and dryer, but that doesn’t necessarily mean they’re included. Light fixtures are technically affixed, but maybe the seller is secretly planning to take those beautiful chandeliers anyway. Don’t assume anything, or else you may be angry or heartbroken when you do the final walk-through and discover something has disappeared.

Spas, pool tables, and outdoor play structures in particular need to be addressed upfront. Sellers often want to leave those items because they don’t want to deal with moving them. But if you don’t want them either, speak up — and make sure your agent specifies in an addendum to the contract that the sellers must remove them.

2. Protect yourself in a seller’s market.

Sacramento Redfin Agent Lindsay Martin says sellers in her area are taking advantage of the current seller’s market in surprising ways: “They’re feeling entitled to take mirrors off the walls, built-in speakers out of the ceiling — whatever they can get their hands on!” As a buyer, you can cover yourself by adding to the contract anything you want to ensure stays with the home, even if it’s something as small as a garage door opener.

3. Get it in writing.

Both buyers and sellers need to be meticulous in the contract to clarify which items are included with the home (called inclusions) and which are not (exclusions). “If your daughter’s curtains match her bedding and you want to take them with you, you have to put that as an exclusion in the contract,” says Baltimore Redfin Agent Lynn Ikle. “I once went to a walk-through with my buyers and found that all the curtains were gone — but the contract said they were included. The sellers had to bring them back; otherwise, it would have been a breach of contract.”

4. Prepare to negotiate… maybe.

If, after the inspection, a buyer wants $1,000 from the seller for repairs, the seller may negotiate by offering $500 and, say, the refrigerator. Many sellers don’t want to deal with the expense and hassle of moving large items, so they’ll try to incorporate them as part of the deal. This is great for the buyer if you actually want what the seller is offering.

But since it’s a seller’s market, that kind of negotiation largely isn’t happening right now. Buyers should make sure they’re happy with the items included and excluded before contract ratification. The Silicon Valley real estate market is so hot that buyers are agreeing to take the home “as-is,” and there are typically no further negotiations after the home is under contract.

5. Expect the unexpected with high-end homes.

Larger, more expensive homes tend to hit the market filled with things like custom-built furniture and elaborate art that may only fit in a certain space, which can complicate matters. I once worked on a deal in which the sellers wanted to leave a massive, semi-attached sculpture that was commissioned specifically for the 30-foot-high foyer — but art is subjective, and the buyers wanted it gone. If neither party wants an item, a good listing agent will get a hauler to remove it from the property before the deal closes.

6. Pay attention at the walk-through.

The final walk-through is your last chance before closing to verify that the home still contains the appliances, furniture, and other items included with your purchase, and that all garbage and unwanted items have been removed. Get those disappearing curtains back. Make sure Fido’s remains made it to his new home. And if you do find any garbage, it’s expected that the listing agent will remove it.

Bottom line is…

Avoid confusion by communicating early and often about what stays in the home and what goes. You can never communicate too much! Put absolutely everything in the contract to avoid disputes throughout the transaction.

http://blog.redfin.com/blog/2013/07/should-it-stay-or-should-it-go-6-tips-for-buyers-and-sellers.html#.UkcvyLwZ81I

 

Mariposa Ct Rehab- After Pics

 

 

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How to Challenge a Low Appraisal

The following post is contributed by John Wheaton, Redfin Open Book Lender in California

iStock_Appraisal_SmallAfter you’ve made multiple offers and toured a lot of homes, you finally get an offer accepted!  The bank has already approved your credit and income. You’ve assembled the cash required to close. You’ve started to plan your luau-themed housewarming party. Then, you get a call from your lender, telling you the appraisal came in below your offer price, and it could derail your offer. What now?

First, it helps to understand how an appraisal is calculated. An initial appraiser uses Automated Valuation Models (AVM) to arrive at his number. AVMs analyze public record data, comparable homes, and other databases to provide an estimate price of the home. Then, two or three experienced staff appraisers review it, before it undergoes a final review by the loan underwriter. The people who appraised your home’s value often have decades of appraising experience, though that doesn’t mean they can’t make mistakes or use flawed information. If you believe the appraisal for the home was misdiagnosed, ask your agent what he or she thinks and see what the Redfin Home Value Tool reports. It only makes sense to embark on the appraisal rebuttal process if you believe the appraiser left out or missed pertinent information.

If all signs point to a low appraisal, the next step is to challenge it via a written appraisal rebuttal to your lender. Though dependent on the temperature of your local market, the seller typically has the most to gain by challenging the appraisal, but will need to work with you since they can’t interfere with your loan. Still, your rebuttal may not ultimately be accepted by the bank, requiring that you either make up the difference or negotiate with the seller on price. Being cooperative and helpful with the rebuttal will build goodwill and may help both of you in the end.

Unlike buyers and sellers, appraisers place less value on intangibles like room flow and rely on data and data alone.  Successful rebuttals are detail-heavy and include compelling, recent data to support your case. Here are three tips for you and your agent as you write your rebuttal.

Dig up any background.

Talk to the Listing Agent and ask how they came up with their selling price. They may know about a cash sale that never hit the MLS or can explain that a low-value sale on the record was a result of the owners selling it to their kids. Undisclosed purchase information like that can help explain a sale price and could help bump up the value.
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The devil is in the details, so double-check them.

Hypothetically, let’s say you offered on a three bed, two bath, 1,800 square foot home, but the appraiser calls it a two bed, 1.5 bath, 1,650 square foot home. Try to figure why there’s a discrepancy and explain it in your report. I’ve seen a simple rectangular loft condo measured by three appraisers whose final numbers all differed by 100 square feet. It happens, so be ready to re-measure your square footage. The kitchen may not be updated, but perhaps the vinyl windows are new. Details like that are often missed by even the best appraisers and can impact your home value. Check your home inspection report. There could be crucial details in there to help as well.

Try finding different comparable homes.

Appraisers try to use comps that have closed within 90 days of your contract and within a one mile radius of your home, but they may have chosen homes that aren’t a representative sample. If you can’t find examples within that 90 day window, look for matches 1.1 miles away and 92 days old, as banks will probably still consider it valid. Depending on the pace of closings in your area, some “pending sales comps” in the report might have been recorded at the county, but don’t yet show in the MLS. Your realtor can help dig those records up. Appraisers often require four or more new comps to justify a value change. Use MLS data whenever possible, not something a simple Google search might provide, and avoid referencing Zillow Zestimates. Most appraisers reject Zillow data outright due to its self-reported margin of error (about 9.1%).

Successful rebuttals are exorcised of emotion and contain compelling and reasonable closed sale data. When they’re done well, they can recalibrate the appraisal in your favor. However, sometimes as hard as it might be to accept, the value just isn’t there. Remember that an unsuccessful appraisal rebuttal is not necessarily the end of the deal. Your lender and your agent will have other ideas for how to proceed, and will do what they can to keep your housewarming luau moving closer to reality.

If you’d like more information, you can contact John Wheaton through his profile on Redfin Open Book.

http://blog.redfin.com/blog/2013/09/how-to-challenge-a-low-appraisal.html#.UkctdLwZ81I

4 Tips for Putting Your Garden to Bed This Fall

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By: Julie Jacobson, Redfin Associate Agent in Los Angeles

One of my clients who lives near the water in West Los Angeles just told me she can smell the seasons changing on the ocean breeze. Whether you have the same finely-tuned sense or not, as the summer comes to a bittersweet conclusion, there is no denying change is in the air. Whether you have a balcony garden or a one-acre plot, it’s important to get your garden settled in for a rest before you begin hibernating with books and pots of soup. Here are four things to put on your to-do list that will help you prepare for the seasonal shift.

Compost dead plants and leaves1. Clean up and compost dead plants

Nobody likes to see dead plants, even if they’re in a far neglected corner of your yard. Start by gathering dead leaves and trimming back dead or dying plant matter and toss it in your yard waste bin, compost heap, or in the case of big piles, haul it to your city’s transfer station. If you’re selling your home, trim heavily and gather as much as you can, but if you’re keeping your home, consider leaving the annuals to rot in place, as they’ll make a nice compost mulch for your garden beds. To keep your garden interesting in the winter, you can leave attractive seed heads and ornamental grasses. If you enjoy bird watching, leave flowers like cosmos and echinacea, which have seeds birds will eat. A well-tidied garden free of dead plants can be an open palette for you to envision improvements you’d like to make next spring.

2. Choose the right plants

Fall is a good time to move plants around in your garden or add new ones. The right plants will please you, flourish in your climate, attract local insects and wildlife, and won’t take too much time to maintain. When in doubt about adaptability, check the USDA’s Plant Hardiness Zone Map to see what will thrive in your area, and when that plant prefers to be transplanted. For any new plantings, read up on the care required and don’t just consider your own preferences, but think about the person who may want to buy your home in a year or two. A bed of ivy may be easy and will grow in quickly, but is viewed by many as an invasive vine that can damage other plants, buildings, and windows. Roses can add a lot of color to your garden, but they’re labor intensive plants future owners may not have time to care for. It’s important to keep maintenance in mind if you plan to sell your home soon.

3. Plan out and prepare for big projects

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At the end of the season, things don’t feel quite as urgent as when the crocuses push up in March. Take advantage of the slower time of year to set things up for the following spring. If you’re thinking about installing new garden beds, till the earth and plant cover crops now. If you’ve always wanted a tree or shrub on the east side of your yard, plant it in the fall, when the heat won’t stress it. If you live in a northern climate, trim back your path so shoveling snow is easier during the winter. It will be easier and safer for you to navigate and will also make your home look well-maintained to winter home buyers. If you live in a southern climate, investigate which plants and vegetables grow through a more moderate fall and winter, and plant them now.  However, even if you don’t plan on selling immediately, think through any large change you plan to make to your yard. Not every potential buyer will as be as excited about a koi pond or meditation hut as you are, and in some cases, it could hurt the prospects for your home. When in doubt, ask for your realtor’s advice.

4. Adopt a conservation mindset

I live in Los Angeles and work with a lot of buyers who are looking for yards with native and adapted plants instead of traditional green grass. Not only are these low-maintenance ‘xeriscaped’ yards better adapted to our desert climate, but they require less water, chemicals and fertilizers than grass, which translates into lower utility and gardening bills. Some of my clients are xeriscaping or doing rock gardens in their yards, which in Southern California are eligible for a $2/square foot rebate for replacing thirsty lawns. Other areas of the country offer similar rebates too, so check with your local county, state and utility company if they have a “cash for grass” program.

Even if you live in wetter, colder climates, the same conservation principles apply. Opt for native and adapted plants better suited to your local soil and climate. These types of plants will attract local insects, including pollinators like bees and hummingbirds, which will help the environment. In addition, these plants require fewer chemicals and fertilizers, and can be clipped instead of mowed, resulting in less pollutants and greenhouse gas emissions. Extra points for helping our feathered friends through the winter by hanging bird feeding and nesting stations.

Another easy way to preserve water is to convert your sprinklers to a drip-line irrigation system, which dribbles water slowly and directly to the plant roots. Drip lines waste less water than sprinklers that spray randomly, often on concrete, and don’t deliver water to plant roots. Not only can sustainable gardens express more personality than a traditional lawn, but they are becoming increasingly popular with homebuyers and owners, and can save you money in the long term.

Periodic seasonal maintenance will help you get a head start on the spring and also ensure your garden looks well cared-for and is sustainable. You’ll feel organized and ready for fall and winter, and if you’re preparing to sell, it will signal to potential buyers that the whole property has been maintained.

Got a garden tip to share? Tell us about it in the comments.

Go Green & Get Green: Tax Rebates and Incentives for Green Home Improvements

By: Julie Jacobson, Redfin Associate Agent in Los Angeles

Sure, Jessica Alba and Gisele Bundchen are doing it, but you don’t have to be a millionaire to make your home green.  Most people know that green homes reduce energy bills, but many aren’t aware of the tax breaks and incentives that can ease the upfront costs of home improvements. So what exactly is a green home, and most importantly, how can you pay for it?

Green Homes = Conservation

3 bed, 2.5 bath home in Garden Grove, CA

This 3 bed, 2.5 bath home in Garden Grove, CA is LEED certified and is listed by Redfin Agent Erin Stepanenko.

The quick definition of a “green home” is a house that is generally built or remodeled to conserve energy and/or water, improve indoor air quality, use sustainable and/or recycled materials, and produces less waste.  Although there are many rating systems out there (including LEED, EarthCraft, Built Green, and Energy Star(c) Homes), they all generally abide by this definition. The benefits of a green home include lower utility bills (water, gas, and/or electricity), a smaller carbon footprint, improved indoor air quality for better occupant health, increased home comfort through more stable temperatures year-round, and improved resale value. Note the distinction between performing energy saving measures (where your home still uses traditional fuel sources but just LESS of them) versus installing renewable “clean energy” technology to produce your own energy – both however have a myriad of financial incentives.

Green Homes = Cost Savings

Most people typically justify installing green features by measuring their “payback period,” which is how fast the savings from a project justifies the upfront cost.  For example, a generic LED light bulb may cost about $10 vs. $0.50 for incandescent bulbs, but it uses 80% less energy, and lasts 25 times longer, for a payback period of approximately six months (with annual energy costs of $0.44 vs. $19.70).

That’s just one small example of how green home improvements can save you money, whether you are looking to keep your home for a while or sell in the near future. So how do you finance them?  It turns out there are a lot of incentives, rebates and programs available.

Green Homes = Federal Tax Incentives

The federal government offers incentives for homeowners to make green improvements in the form of tax rebates. One popular incentive pays for 10% of the cost of items including biomass stoves, efficient heating and cooling, insulation, new roofing, water heaters, and efficient windows and doors. The incentive will pay up to $500, and the improvements must be completed by the end of the 2013 calendar year. Another popular incentive, which expires at the end of 2016, will pay for 30% of energy saving items, including geothermal heat pumps, residential wind turbines, and solar PV hot water heaters and systems. Energy Star® and DSIRE (Database of State Incentives for Renewables & Efficiency) are great resources for more information on these federal tax incentives.

Green Homes = State-Level Incentives

There are also a large variety of state incentives in the form of tax credits, sponsored green home loan programs, and/or cash rebates. For example, in California, we have “Energy Upgrade California,” which currently gives a rebate of up to $4,000 dollars based on the overall percentage improvement in your home’s energy efficiency. Another state with many green incentives is New York, which offers a residential solar tax credit and the HEMI (Home Improvement with Energy Star High Efficiency Measure Incentive), with up to $3,000 in rebates. Be sure to check out the nifty map at DSIRE.org to see what’s available in your state.

3 bed, 2.5 bath home in Redmond WA

This 3 bed, 2.5 bath home in Redmond, WA has new roof and insulated attic, which helps conserve heat. It is listed by Redfin Agent Kurt Pepin.

Green Homes = County/City & Utility Company Incentives

There are also a variety of county and city programs that offer local property tax incentives – this vast patchwork of state programs can also be found on the DSIRE website.  For example, Philadelphia offers streamlined and lower cost permits for home solar projects, while the city of Sunset Valley in Texas offers up to $2,000 in rebates for installing solar hot water heaters.

Most programs are available from local utility companies – there are way too many to describe here! All 50 states have at least one utility company that offers a rebate program with Washington, Texas, Oregon, New York, North Carolina, Minnesota, Massachusetts, Indiana, Florida, Colorado and California generally leading the pack.  Check your local utility for a mind-blowing array of incentive programs with some examples including ‘cash for grass’ replacing lawns with rock gardens and/or native and adapted plants, installing low-flow shower heads, and weatherizing leaky windows, attics and doors. Additionally, approximately 30 states have utility companies that offer loan programs for home efficiency upgrades. Around 20 states have utility companies that offer home performance-based incentives, which provide increasing amounts of money as certain conservation goals and metrics are reached.

Why wait?

icon-greener_house-700x400I often argue there is really no longer an excuse for not upgrading your home with all the incentives and programs out there now, and they may not last forever as green building standards continue to rapidly shift and become standard practice in the real estate industry.

Most existing home retrofits begin with an audit which gives you a customized report of the strengths and weaknesses of your home, along with a list of recommended work that can be performed to make it more efficient.  From there, a good green contractor (usually the programs above have referrals to them) can help you prioritize the various projects to get the most “bang for the buck.”  You can choose to do only work that will be subsidized/rebated, or decide to pay out of pocket for additional renovations if the pay-back periods are sensible to you, which can often be financed with low-interest loans.

Advantages for Home Sellers

Rising energy costs are causing more and more homeowners to look for energy efficient homes. If you are planning to sell your home soon, be sure to save old copies of your utility bills so you can compare them to post-retrofit utility bills and demonstrate the cost savings to potential buyers.  Also, if you do several green improvements, you might want to consider having your home tested to one of the various green home certification standards to show potential buyers the value. Check out your local state, county, and utility programs, calculate the payback period, and take advantage by greening your home today!

http://blog.redfin.com/blog/2013/09/how-to-find-tax-rebates-and-incentives-for-green-home-improvements.html#.UkcpIrwZ81I

4 Self-Discipline Tips to Make You a Better Real Estate Investor

Memphis real estateWe All Love The Nike Slogan ‘Just Do It’

Come up with some goals. Figure out what you need to do to reach them.  Just Do It.  Decide you are going to be a real estate investor. Read some books. Just Do It.  Buy a piece of property. Slap on some new paint. Rent it out for a massive profit! Just Do It.

Yeah Right!

It always sounds so easy, right? If you’re bothering to read this blog, you probably have goals related to real estate investing. And if you have them, then chances are, you want to reach them, right? So come up with a game plan and execute it. How hard could it be?

We get asked that question almost daily and sometimes it is not a question at all.  Sometimes we are told how easy it is to do what we do.  Whether it is run a real estate investing company or buying single family investment homes for our portfolio…the assumption that is so easy is always the same.

Well, if you are a model of efficiency and if self-discipline comes to you naturally, maybe it is a piece of cake, but let’s face it: very few of us fall into this category. Most of us constantly struggle with bad habits that are keeping us from reaching our full potential.  Most of us fail to have all the necessary disciplines in place to help us make good decisions and work our way out of tight situations.  Most of us…are set up to fail!

I’m not in the life coaching business, but I do know a few things about organizing your life in such a way that equips you for success. Failure cannot be an option when buying real estate.  I know what that feels like.  I know how hard it is to go through that and I always try to give advice to avoid it!  This is one of those times.  Yes, time management is a big part of being disciplined to help you be successful, but it goes deeper than that. If you want to take your real estate investing to the next level – if you’re serious about becoming the kind of investor whose success others want to emulate – then pay close attention to the following self-discipline tips from your Memphis investment group.

1. Do the Thing You Want to Do the Least First

You know that task that you dread? Whether it’s crunching some numbers for a deal, taking care of a maintenance issue at one of your rentals, or having a heart-to-heart with tenants about their consistently late rent payments, we all have those tasks that are unpleasant and we’d rather just not even think about. But if you knock that task off your to-do list first instead of putting it off as long as you possibly can, it will take a huge load off your mind, and you’ll be able to accomplish your other tasks with a lot less stress hanging over you.  For us, as a business, we teach our staff to pick up the phone and call clients immediately if there is news they need to know about their investment property.  As managers, this is not only good policy, but it teaches the ability to handle stresses quickly.  The longer you wait, the harder it is for everyone involved and that is the same with every task that is on our least favorite list!

2. Always Assume You’ll Have Less Time

Crises pop up. It’s just part of life. Make it a habit of accomplishing important tasks before you have to. That way, when the inevitable complications arise, you’re already ahead of the game. Know the difference between what’s important and what’s urgent and how to keep the former from becoming the latter whenever possible. Check out this article on the Urgent/Important Matrix to learn more.

3. Take Care of Yourself

It’s very difficult to have the mental or physicalreal estate investor energy to be self-disciplined in other areas of your life if you’re not self-disciplined enough to take care of your body. Get enough sleep. Stay hydrated. Consult your physician to come up with a cardio and strength plan that’s right for you. Some of you may question how working out can make you a better real estate investor, but trust me: your physical state affects how efficient and productive you are in every single area of your life. Your physical condition has a huge effect on you mental condition and is vital for you energy level.  You want to make sure you have the energy to power through your days and be physically and mentally tough when you are challenged.  If you can show self-discipline in your health and fitness, you can show self-discipline anywhere.

4. Be Careful Who You Take Advice From

It is unfortunate, but it is also a fact of life that not everyone who claims to be an expert or even a leader is really either one!  Often, they are trying to sell you their version of get rich quick.  In my experience, I have learned more from those who are humble and gladly tell you about their failures and their successes.  When a person (or company for that matter) is having great success and they are still humble enough to take time out of their day to work with new investors or new business owners, then you have found someone worth listening to.

On this same note, if you are taking advice from the out-of-work cousin or the crazy neighbor who is starting a new venture every few months, shame on you and you you will get what you deserve.  Have more respect for yourself and build your inner circle of advisers with those worth listening to.  The six people you surround yourself with and take advice from will shape who you become.  So choose carefully who you listen to when it comes to advice.  Be disciplined enough to see through the smoke of those claiming to be your friend and take advice from those with enough experience to have both success and failure.

Investing in real estate is a great way to put your family on solid footing and a great investment tool for planning for your future.  But, like anything else in life, without the proper disciplines in place, things can go awry.  Make sure you have good, fundamental disciplines in place and you make them habits.  At some point, you will look back and be very glad you did!

Do you have any self-discipline tips that have helped you to be a better investor? Please share them in the comments section!

- See more at: http://blog.memphisinvest.com/blog/bid/100612/4-Self-Discipline-Tips-to-Make-You-a-Better-Real-Estate-Investor#sthash.2GWWD6if.dpuf

Negative Equity Rate Drops Below 25%, But Many Still Face a Long Road Ahead

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National home values have been rising at a robust clip in 2013, jumping 6 percent in July compared with July 2012. And as home values rise, negative equity falls. The national negative equity rate fell for the fifth straight quarter in the second quarter of this year, to 23.8 percent of all homeowners with a mortgage, according to the second quarter Zillow Negative Equity Report. This is the first time the U.S. negative equity rate has fallen below 25 percent since Zillow began using its current methodology for tracking negative equity in early 2011.

Approximately 12.2 million homeowners with a mortgage were in negative equity, or underwater, at the end of the second quarter, owing more on their mortgages than their homes are worth. That is down from 13 million homeowners in the first quarter and 15.3 million at the same time last year. Roughly one-third of homes are owned without a mortgage. The negative equity rate among all homeowners, both with and without a mortgage, was 16.7 percent at the end of the second quarter.

But even though millions of homeowners have been freed from negative equity as a result of rising home values, millions more remain trapped. And many of them are so far underwater — owing so much more on their mortgages than their homes could fetch on the open market — it may take years for them to surface.

Nationwide, more than half (57 percent) of homeowners in negative equity are underwater by 20 percent or more, and roughly one in seven (13.4 percent) owes more than twice what their home is worth. According to the most recent Zillow Home Value Forecast, home values are expected to rise 4.8 percent in the next year. Assuming appreciation at that rate going forward, it would take a homeowner underwater by 20 percent roughly four years to reach positive equity.

“Widespread rising home values during the past year have helped chip away at negative equity nationwide, helping many homeowners who were only modestly underwater to come up for air. For those homeowners who are deeply underwater, though, there is still a long row to hoe,” said Zillow Chief Economist Dr. Stan Humphries. “The frustratingly slow pace of negative equity declines in the face of such robust home value appreciation is a direct result of the fact that many people in the hardest-hit markets are underwater by an enormous amount. Because of this, negative equity will be a factor in these markets for years to come, constraining the supply of homes for sale and keeping people out of the market who might otherwise get involved.”

Many more homeowners, while technically not underwater, may still have trouble moving from their current homes. Listing a home for sale and buying a new one generally requires equity of 20 percent or more to comfortably meet related expenses, including the down payment for a new home and associated closing costs, taxes and real estate agents’ fees. The “effective” negative equity rate, which includes those homeowners with a mortgage with 20 percent or less equity in their homes, fell to 41.9 percent in the second quarter, from 43.6 percent in the first quarter.

But home values keep rising, and as they do, more borrowers will steadily be freed from negative equity. The second quarter Zillow Negative Equity Forecast predicts the negative equity rate among all homeowners with a mortgage will fall to at least 20.9 percent by the second quarter of 2014, lifting more than 1.9 million additional homeowners nationwide into positive equity.

Visit our negative equity visualization page to find out how many people are underwater in your area.

Metropolitan Area Q2 2013: % of Homeowners w/Mortgages in Negative Equity Q2 2013: “Effective” Negative Equity Rate, Including Homeowners w/ 20% or Less Equity Q2 2014: Forecasted Negative Equity Rate Minimum # of Homeowners Expected to be Freed from Negative Equity by Q2 2014
UNITED STATES 23.80% 41.90% 20.90% 1,961,828
New York 18.70% 32.70% 18.50% 4,742
Los Angeles 18.40% 33.20% 13.10% 89,677
Chicago 35.40% 50.70% 33.20% 38,268
Dallas-Fort Worth 16.50% 42.10% 12.60% 41,436
Philadelphia 22.70% 40.60% 21.40% 14,719
Washington 25.30% 42.90% 23.10% 24,225
Miami-Fort Lauderdale 34.10% 47.10% 31.30% 26,778
Atlanta 44.00% 61.30% 38.20% 61,186
Boston 15.00% 32.30% 13.40% 13,327
San Francisco 17.70% 30.40% 12.80% 33,487
Detroit 37.00% 50.80% 34.00% 25,895
Riverside 36.10% 56.10% 25.10% 74,054
Phoenix 31.30% 47.40% 24.50% 52,236
Seattle 28.00% 46.10% 20.50% 50,065
Minneapolis-St. Paul 26.60% 46.40% 23.80% 19,294
San Diego 21.00% 39.20% 15.10% 27,640
St. Louis 26.60% 47.10% 25.80% 4,711
Tampa 36.30% 50.90% 31.70% 23,805
Baltimore 26.30% 44.40% 23.40% 15,773
Denver 15.30% 38.90% 12.80% 13,165
Pittsburgh 12.80% 27.90% 12.00% 3,110
Portland 22.30% 42.10% 17.70% 19,217
Sacramento 31.50% 50.20% 20.40% 41,781
Orlando 39.80% 55.40% 34.70% 19,541
Cincinnati 24.50% 46.60% 22.90% 6,749
Cleveland 27.10% 45.20% 25.60% 6,077
Las Vegas 48.40% 66.90% 41.30% 23,600
San Jose 11.20% 22.20% 7.90% 9,277
Columbus 26.00% 48.90% 24.30% 5,843
Charlotte 28.30% 51.50% 27.10% 4,443

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http://www.zillowblog.com/2013-08-28/negative-equity-rate-drops-below-25-percent-for-first-time-in-q2-but-millions-still-face-a-long-road/

What Is ‘Risk’ in Real Estate?

Date:September 9, 2013 | Category:Tips & Advice | Author:

red dicesYou’ve undoubtedly heard about reducing your “risk” in real estate, but have you ever really thought about what that means?

The risks are significant, and even though they are clearly identifiable, few home buyers do anything to understand and reduce their risk.

Here’s some guidance based on the example of two different people buying a used car and how their experiences relate to real estate.

Buying a used car

Risky Robert, a dice rolling Las Vegan, decides it’s time to buy a car. He drives to the nearest dealership, where he meets a very nice used-car salesperson. The salesperson shows Robert several cars on the lot, tells him about the great quality of each car and how the car he proposes for Robert was only driven by a grandma to church. Robert likes that tidbit about grandma and test-drives the car and likes it. The sales guy quotes the fair price, they haggle a little, Robert takes the dealership financing and he’s got a new used car.

And that’s risky behavior!

There is a better way

Due Diligence Diane, a sensible Seattleite, starts her shopping online. She looks at Kelley Blue Book and Consumer Reports for the best value deals, car reliability information and pricing. She decides which car she wants and how much she’d like to pay before even leaving her home. She’s not going to get talked into a car model she knows nothing about, and worse, from a salesperson who gets the biggest commission if he can get her to buy the dud that’s been sitting on the lot for 180 days.

Diane also checks the Better Business Bureau website to find a used-car dealership with a good rating. Also, she looks at car financing options and rates from local lenders, so she can compare those to what the dealership is offering. She still hasn’t left her house, but she is now armed with a bevy of valuable information that will help her make a smart and safer purchase.

Then Diane goes to one of the BBB-accredited dealerships and test-drives one of the cars that she already knows is reliable. This salesperson too says the car was only driven to church by a grandma, so Diane demands a vehicle history report that will prove or disprove that claim. Diane also takes the car to her trusted personal mechanic for a quick look, requires that the dealer make it a certified used automobile and requests to see the prior owner’s maintenance records. She haggles on price a little and laughs and then rejects the dealership’s financing offer; instead taking a lower interest rate loan from the local credit union. She then buys the right car for her.

Now Robert and Diane both bought cars today, but one of them significantly reduced risk, probably bought a much better car, at a better price, with better financing and from a reputable dealership.

The real estate connection

Most real estate buyers, probably 95 percent, are doppelgangers who follow Risky Robert’s behavior when purchasing property. Many times this occurs because people simply do not buy real estate often, so they “don’t know what they don’t know.”  They look for houses, have a home inspection done, maybe breeze through the contract, accept the only loan financing offer they’ve received and don’t even look at the title policy, escrow or homeowners’ association documents before closing on their purchase.

That’s risk — being the Risky Robert in the room and not taking every single prudent precaution that you can to mitigate the chances of something going wrong.

Related:

Leonard Baron, MBA, is America’s Real Estate Professor®. His unbiased, neutral and inexpensive “Real Estate Ownership, Investment and Due Diligence 101” textbook teaches real estate owners how to make smart and safe purchase decisions. He is a past lecturer at San Diego State University and teaches continuing education to California real estate agents at The Career Compass.

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

http://www.zillowblog.com/2013-09-09/what-is-risk-in-real-estate/

5 Ways to Make Your Bathroom Look Bigger

Date:September 10, 2013 | Category:Tips & Advice | Author:

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The doorbell rings. You haven’t had time to tidy up, so you’re hoping you can confine small talk to the foyer. Ten minutes later, your guest turns to leave but asks, “Can I use your bathroom?”

It’s a familiar scenario, yet designing a powder bath can seem daunting. How do you combine style and function in such a small space? If you’re on a tight budget, should you pour resources into 30 square feet or focus on larger rooms?

Designer Jaque Bethke of PURE Design Environments, Inc. says regardless of space or budget, the powder bath is a room that shouldn’t be ignored. “It’s the soul of your house,” she said. “It’s the room that everybody who is a stranger and those who intimately know you might see.”

Here are five tips from Bethke and other leading Zillow Digs designers for tackling small bathrooms.

Set the scene

“The most critical thing is to consider how the bathroom will be used,” Bethke said. “Entertaining? Children? Will it be used every day or just by guests?”

Jason Urrutia of Urrutia Design says if it’s a bathroom you are going into every day, you might get tired of it. In that case, you’ll want a classic, timeless design or elements that can be easily swapped out. But if it’s a space for guests, he says it’s acceptable as a place for fun.

Stephan Sardone of Sardone Construction agrees. “Some of my clients say that it just needs to look great,” he said. “They don’t need space for towels and soap because it’s a guest bathroom where people go in during a party for a minute or two and then leave.”

Contemporary powder room by Urrutia Design

Wallpaper works in this bathroom by Urrutia Design because the space is primarily used by guests.

A bathroom occasionally used by guests also lends itself to different design materials than a full bathroom with a shower or tub.

“If you have a shower, it creates humidity,” explained Marta Carvalho, principal designer at Urrutia Design. “For this reason, you should put wallpaper in a powder room without a shower.”

Save space

Once you know how your bathroom will be used, designers agree that you should prioritize storage. It may seem counterintuitive to think about storage when you’re trying to maximize space, but without planning ahead, your room could end up feeling smaller if it’s cluttered and disorganized.

What makes storage successful is if it fits your individual needs, Sardone explains. “For guys, a medicine cabinet is all you need. But for women, more cabinet and counter space is often required,” he said.

To strike a balance, Sardone found a way to add counter space without changing the dimensions of his own bathroom. “We put in a double vanity but decided to have only one sink on the left,” he explained. “This provided more counter space for my wife, and we don’t use the sink at the same time anyway.”

wall-hung sink by S + H Construction

A wall-hung sink held up by a teak skirt is an elegant, space-saving alternative in this bathroom by S + H Construction.

Dan McLaughlin of general contracting firm S + H Construction has also experimented with how to save space in small bathrooms. In a condo that didn’t allow for a separate powder bath, he created one by adding a pocket door in the master bathroom and adding two built-in closets. The wall serves as a divider between the sink/toilet area and the shower; the closets keep linens and toiletries out of sight.

McLaughlin’s team also installed a wall-hung sink and toilet to save space by hiding the water tank and pipes in the wall. “All it required was a couple more inches of wall versus 8 inches of tank exposed,” he explained. “It allowed us to push the toilet seat right up to the wall.”

Let there be light

Another way to make a small bathroom feel bigger and bolder is by bringing in light.

“With the right kind of accent lighting, you can make a space very playful,” Bethke said. “I use more shiny surfaces — a lot of mirrors and patterns. As a result, you notice the scale of the items. You don’t notice it’s a small powder room.”

bathroom lighting by PURE Design

A large mirror reflects light and creates the illusion of space in this small powder bath by PURE Design Environments, Inc.

Sardone says if you can bring in more natural light from a window or skylight, it’s a great way to make a smaller space feel bigger and more inviting.

“You can do some great stuff with light fixtures, too,” he said. “But if they’re too big and bulky or hang down too far, that could be a problem. We use customized LED lighting in every space, adding indirect and direct light.”

A lighter color palette can also make a space look larger by keeping the space bright and airy.

“We use colors that are fairly classic,” Urrutia said. “Especially for the major pieces in the house — tiles, wall colors and flooring — we keep it neutral.”

Accentuate your accent wall

Once you’ve set the scene and maximized storage and lighting in your bathroom, it’s time to think about aesthetics.

“You can go minimalistically, or you can focus on one particular area,” Bethke said. “I highly encourage people to go a little bit hog wild. It’s a small space, so do that fixture you are scared to do in the living room. Amp it up and be fearless.”

The designer's thought in this bathroom by Sardone Construction was "Let's give them something really nice to look at," Sardone explained. "Everything you've wanted but been too afraid to have."

The designer’s goal in this elderly-care home bathroom by Sardone Construction was to provide a space full of life and color.

Bethke recommends using unique pieces such as an antique mirror that you don’t know what to do with. Urrutia uses the accent wall to bring color into the room, making it feel slightly contemporized while still being classic.

McLaughlin also says there’s an opportunity to do some fine detailing because people will notice it more in a small space. “If you want to show off a piece of your home, the powder bath is the place to do it because people aren’t looking across a huge room,” he said.

Splurge on something you love

Despite the tendency to be frugal in order to save remodeling dollars for larger spaces in the home, designers agree that it’s precisely because of a bathroom’s small size that you can spend more.

“You can be playful without spending the farm,” McLaughlin said. “You don’t need to cover 150 square feet of floor with tile. Instead, you can cover just 20 to 30 square feet of wall.”

bathroom tile by Urrutia Design

A small accent wall is a great place to spend more because you have less square footage to cover. Project by Urrutia Design.

One of Urrutia’s clients, for example, splurged on hand-crafted gray subway tile ($15-$17 per square foot) for a bathroom accent wall but balanced the cost with machine-fired white tile ($4 per square foot) on the adjacent, longer walls.

As you think about where you might want to splurge in your bathroom design, Bethke says it’s OK if the powder bath doesn’t take other rooms’ style into consideration.

“There is no right or wrong,” she said. “The powder room is an experience. The challenge is to come up with something that represents your style and allow it to become unique to the space.”

Related:

Catherine Sherman, a real estate writer for Zillow Blog, covers real estate news, industry trends and home design. Read more of her work here.

http://www.zillowblog.com/2013-09-10/5-ways-to-make-your-bathroom-look-bigger/

3 of 10 Americans Unlikely to Qualify for a Mortgage

Date:September 26, 2013 | Category:Finance | Author:

 

DeniedIf you have applied for a mortgage and have had the unfortunate experience of being turned down for a loan because your credit score was too low, you are not alone. Three out of 10 Americans are unlikely to qualify for a mortgage because their credit scores are below 620, according to a new Zillow Mortgage Marketplace analysis.

“Your credit score is the single most important factor in determining your mortgage interest rate and monthly payment,” said Erin Lantz, Zillow’s director of mortgages.

In fact, with all factors being equal such as down payment, income and mortgage amount, there is a considerable difference in rates among borrowers with below to above average credit. For example, on a $200,000 loan, the difference in mortgage payment between a credit score of 639 and 740 is roughly $700 per year  — or more than $20,000 over the life of a 30-year loan.

Lantz’s advice?

To avoid any surprises when buying a home, check your credit score and report at least six months before you intend to buy to see if there are any costly inaccuracies, pay down high-balance lines of credit and make sure your bills are always paid on time.

Mortgage rates for those with above average credit

Good news! If you are one of the 4 in 10 borrowers with a credit score of greater than 740, you should expect to get the best mortgage interest rates. But, if you are pushing yourself to get your score significantly higher than 740 for mortgage rate purposes, you may be able to put the brakes on that. According to the Zillow Mortgage Marketplace analysis, borrowers with credit scores above 740 did not receive significantly better mortgage rates than those with a 740 score.

For more information on the analysis, read the full research brief on Zillow Research.

http://www.zillowblog.com/2013-09-26/3-of-10-americans-unlikely-to-qualify-for-a-mortgage/

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