• What Type of Property Should You Buy?

    With spring around the corner (woot woot!), you may be considering buying a property.  Even if you plan on living in it for the long term, it is always good to view your property as an investment.  With that in mind, here is a very informative guide to investing in the right type of property for you by The Bigger Pockets Real Estate Blog

    In a nutshell, before buying a property, evaluate:

    1.  What are your individual goals? 

    -You must first figure out what your real estate goals are.

    2.  What is your strategy? 

    -Flipping, Buy-and-Hold, etc.

    3.  What are your location criteria? 

    For example,

    -Within an hour driving to/from

    -Increasing population over the past 10 years

    -Local businesses offering jobs, etc.

    Once you have these three questions thoroughly answered, you can begin your search.  Target the area that fits your criteria and analyze growth in that area, focusing particularly on your goals, strategy and location criteria.  Monitor rental activity and compare that to properties for sale in that area, possibly creating a spreadsheet.  Analyze the ratio of housing purchasing prices compared to rents in that area.  Compare ratios of various zip codes within your target area.  This allows you to "score" zip codes and narrow down where you should look to buy a property and the type of property that fits your goals.  Read the full article on The Bigger Pockets Real Estate Blog for more details and contact us today to assist you in finding the right property for you!  

  • Home Buyers Should Have Easier Time This Spring

    According to Zillow's blog and Zillow's latest Home Price Expectations Survey, home shoppers should have an easier time finding the home of their dreams this spring.  The survey consisted of over 100 economists, real estate experts, and investment and market strategists, who predicted that real estate investors would take a step back from buying up lower priced and foreclosed upon homes this spring.  

    This will create less competition and more opportunities for home buyers.  Real estate investors are an important piece of any real estate market recovery.  However, once the market starts to rebound, their decreased participation may be another sign of the market's recovery.  

    In regards to home appreciation, the survey participants said they expected home value appreciation of 4.5 percent through the end of this year.  This percentage would decrease by 2015 to 3.8 percent, then to 3.3 percent by 2018.  They also predicted home values could exceed their April 2007 peak by the first quarter of 2018.

     To read the full blog post, click here!  And as always please contact us with any questions or to assist you with any real estate transaction!

  • 8 Places To Go If Your Mortgage Lender Says No

    New mortgage rules draw specific lines as to whom should and shouldn't get a mortgage.  If your lender says no or you know you fall outside the new lines for obtaining a mortgage, here are 8 alternative sources.  HouseLogic.com came up with this list, and also provides links to the criteria lenders use to evaluate whether you qualify for a mortgage loan.  NAR predicts that the new mortgage rules may cut out 5-7 percent of borrowers from the market, and the rules have eliminated balloon loans and interest-only loans.

    In a nutshell, here is HouseLogic.com's list of alternative options for obtaining financing for the home buyer:

    1.  Your State Housing Finance Authority

    State Housing Authorities often give you a below-market interest rate or the option of putting down as little as 3%.  However, you’ll likely have to agree to complete a financial education course and provide a detailed breakdown of your income.

    2.  A Small Bank

    Banks and credit unions that have less than $2 billion in assets and make 500 or fewer first mortgages don’t have to follow the same rules as larger lenders.  But, small lenders can charge higher fees and interest rates than big banks, which they need to do if you have a tiny loan amount, because some fees, like a title search, cost the same no matter how big or small your loan is.  

    3.  A Government-Guaranteed Loan

    The new rules set a clear line for how much of your income, max, you should be using for debt: 43%. If you’re above that limit because you have too much debt or not enough income, there’s a work-around.

    You can go over the 43% limit if your loan is guaranteed by Fannie Mae, Freddie Mac, the Federal Housing Administration, the VA, or the U.S. Department of Agriculture’s rural housing loan program.

    4.  Community Development Non-Profits

    Nonprofit lenders who work with low-and moderate-income borrowers don’t have to follow the new mortgage rules. As long as they don’t make more than 200 loans a year, they can create special loan programs to help the people in their community.

    5.  Homeownership Preservation and Foreclosure Prevention Programs

    If you’re underwater on your mortgage, meaning you owe more than your home is worth, you can get still a loan from a foreclosure prevention program or a homeownership stabilization organization. Because these groups have a history of knowing how to help troubled homeowners, they don’t have to follow the new mortgage rules.

    6.  A Safer Loan

    If you’re in a dangerous, unfair loan right now and you want to refinance into a safer loan, your lender doesn’t have to follow the eight standards when it gives you a better loan. There’s an exemption from the ability to repay standards when a lender is moving a borrower out of:

    • An adjustable-rate mortgage that’s about to adjust to a much higher payment.
    • An interest-only loan.
    • A loan with negative amortization (meaning the amount you owe can go up even if you make all your payments).

    Your new standard loan:

    • Has to have a fixed rate for the first five years.
    • Must lower your monthly payment.
    • Can’t have fees of more than 3% of the amount you’re borrowing.

    7.  A Work-Around

    If you have enough money such that your bank has assigned you a personal wealth manager, that’s the person to talk to when it’s time to refinance. Your bank will want to keep you as a customer and will find a work-around to fund your loan.

    For example, if you’re using more than 43% of your income for debt but you can show you have a lot of money in assets, your personal banker will make the case that you’re quite able to repay your mortgage even though you don’t meet the debt-to-income rule.

    8.  Another Kind of Loan

    The new mortgage rules don’t apply to all loans. It specifically doesn’t include:

    • Open-ended loans.
    • Timeshare loans.
    • Reverse mortgages and others.
    If one of those types of loans will work instead of a mortgage, you won’t have to meet the new mortgage rules.

  • Signs Of An Up And Coming Neighborhood

    If you're a buyer looking to invest in a neighborhood before it becomes the next trendy or upscale area to live, here are some signs to look for in a neighborhood according to Trulia.com:

    1.  On-trend businesses are moving in.  Are the latest popular grocery stores or coffee shops moving in (ie, Wholefoods)? Larger businesses usually do their research on a neighborhood before moving in.  Are small local businesses moving into the neighborhood?  They tend to follow where people with disposable income live or will soon live.  These could be 2 predictors that an area is about to increase in value before it actually does.

    2.  Uber-convenient location in a land-impacted metro.  If you live in a densely populated metro area – especially one that is coastal – or an urban setting with intense governmental restrictions on building, demand for homes will continue to grow as the population does, but the supply will remain somewhat limited. In many of these situations, neighborhoods that have been downtrodden but have very convenient proximity to employment centers, public transportation, freeways and bridges tend to be prime for whole-neighborhood remodeling in times of population growth or rapid real estate price rises in already-prime areas.

    3.  Negatives to a neighborhood are eliminated.  If a neighborhood has been plagued by certain stigmas for years and those stigmas disappear (crime decreases, accessibility/public transportation increases), then that neighborhood may be primed for development and home value increases.

    4.  Architecture within a neighborhood suddenly is on trend.  If a neighborhood is primarily composed of a certain style of home such as Tudor or Victorian, and that style becomes popular again, then that neighborhood may see a resurgence in popularity and value.

    5.  At least one major economic development is brewing.  Is big business coming to town?  Is there a new line of transportation being integrated in an area?  Never underestimate these factors bringing more people to the area and home values increasing.

    6.  Renovation and development is in the air.  If you see numerous homes being remodeled/renovated and/or commercial developments beginning, this may be a sign of an up and coming area.  It is advised to visit your local City Building Permit office and investigate what developments are in works.  Whether it be commercial or governmental backed, development in an area is usually a good indicator of a soon-to-be upscale area.

    7.  Slow but steady decrease in DOM.  If days on the market (DOM) are steadily decreasing for homes in a area, this shows that an area may be ripe for growth.  If you notice this steady decrease of DOM before home values are increasing, you may want to talk to your agent further about it and investigate the area. 

    Now, get to it, Mr. Sherlock Homebuyer.

  • Aland Realty Winter Edition: What To Do With Frozen Pipes

    With frigid temps outside this time of year, today we focus on frozen pipes.  Zillow's blog reported that an 8-inch crack in a pipe can leak up to 250 gallons of water per day and each winter nearly 250,000 U.S. homes are destroyed or disrupted by frozen pipes.  Before you turn down that thermostat before leaving for your snowbird trip to Florida, read this!  It could save you more money in the end.  

    When water freezes in pipes, it expands and can cause pipes to crack or burst.  In turn, that can lead to water damage and mold in the house...from the attic all the way down to the basement.  

    Here are some tips to manage and prevent frozen pipes from Zillow's blog:

    If Your Pipes Freeze

    1.  Immediately turn off your home's main shut off valve and call a plumber. 

    2.  You may be able to thaw a frozen pipe with warm air from a hairdryer. Start by aiming the air at the part of the pipe closest to the faucet and move toward the coldest span of pipe. Never use a torch or other open flame to attempt to thaw a pipe.

    To Prevent Frozen Pipes

    1. Let a trickle of water run from indoor faucets located along exterior walls. This dripping water provides relief from the excessive pressure that builds between the faucet and the ice blockage when freezing occurs. If there is no excessive water pressure, the pipe won’t burst – even if the water inside the pipe freezes.

    2.  Open cabinet doors to allow heat to get to pipes under sinks along exterior walls.

    Prepare For Winter Before Winter

    1.  Insulate the pipes in your crawl space and attic, which are especially susceptible to freezing. Pipe insulation cannot prevent water from freezing in pipes, but it can increase the time needed for freezing to occur.

    2.  Heat tape or heat cables can be used to wrap pipes. Use these products only for their intended use (interior or exterior) and follow the manufacturer’s instructions for installation and use.

    3.  Seal leaks that allow cold air inside, especially near pipes. Double-check around electrical wiring, dryer vents and pipes. Caulk or insulation can work wonders when it comes to keeping cold air out and warm air in.

    4.  Disconnect garden hoses when garden season ends. If the faucet drips even a small amount, water will eventually fill the hose near the faucet, as well as the faucet and the span of hose just inside the house. When temperatures drop, that water will freeze and damage will likely result.

  • The Lowdown On Your Appraisal Report

    In order for you to get a loan to buy or refinance a home, your lender will first require an appraisal of the property.  Why?  The appraisal will help your lender determine how much your property is worth, and in turn, how much collateral they will have after granting you a loan.  Zillow's blog recently featured a very helpful guide to interpreting an appraisal report.  

    Page 1 - Home Facts

    The first page of the appraisal report will contain basic facts about your house.  It will include any improvements/additions to your home and any neighborhood/community it is located in.  It is important to scan this page and verify its accuracy.  The appraiser will use this information to obtain comparable properties in the area for determining your property's market value.

    Page 2 - Comparable Homes

    The second page of the appraisal report will contain comparables in a chart/table format.  The first column will list your property, then each additional column will contain other properties that the appraiser deems worthy of comparison.  These are referred to as "comps."

    The appraiser will include comparable homes sold within the last 6 months, most likely in the same neighborhood or area as yours to minimize differences in value.  The price that each comparable property recently sold for will be under each comparable property's column.  It is very difficult to compare even properties that are similar to yours due to the uniqueness of each property.  It often becomes a point of contention between the homebuyer and the appraiser, when the homebuyer believes comparable properties don't take into account features that his/her own property may or may not have.  However, the appraiser makes adjustments to each comparable property's sale price based on its differences to your property...thereby, negating differences and making the final arrival at a market value of your property more accurate.

    In addition, it may be noted that not all adjustments reduce the estimated market value of the subject property. Zillow's blog notes that "if the best comps available are smaller homes, for instance, it could lead the appraiser to make a net positive adjustment to the estimated value on the report. All of the adjustments are then combined into a gross adjustment, which is used in the estimate but also serves as a gage of the confidence the lender should have in the final value. The higher the gross adjustment, the less reliable the report should be considered."

    Finally - Estimated Market Value

    At the bottom of the second or last comparables page, the appraiser will reveal his/her estimated market value of your property based on the comps in the above chart.  The lender will use this value (estimated market value) to determine how much the lender will loan you.  The estimated market value is also the basis of the loan-to-value ratio that is important in the home finance process.

    The appraiser may also include an estimated cost value, which is the cost of replacement of the home. This is often used to obtain home insurance for the homeowner and lender over the life of the loan.

    Other pages included may expand on comparable properties or features of your home.

    If you have any questions about the appraisal process or would like to discuss the home buying or selling process further, please contact us and we would be happy to assist you in your real estate endeavors.  

    Email us at  contactus@alandrealty.com or call us at 207-251-4762.  You can also visit our Facebook page at www.facebook.com/alandrealtygroup or Tweet us @AlandRealty!  

    Happy New Year!

  • The Home Inspection: An overview

    It is well known that a home inspection is a key part of buying a home once the home is under contract.  But, it is also important for you, the home buyer, to do an initial inspection yourself PRIOR to making an offer.  This is in addition to the formal home inspection performed by a licensed home inspector once you make an offer.

    By doing an informal inspection yourself before making an offer, you may notice obvious deficiencies that would eliminate this house from further consideration and prevent you from wasting your time putting an offer in on a property.  Again, this is not meant to replace the formal home inspection performed by a licensed home inspector after you make an offer on a property.  

    For Your Own Initial Inspection

    Here is a checklist brought to you by Zillow and featuring our additional remarks for your own initial inspection:

    Foundation: In each room of the property, look at the base of the walls and ceilings.  Are there cracks or apparent shifts in the foundation?  Then, go outside and note if there are any trees encroaching on the foundation. 

    Lot: Are there any noticeable soggy areas and does drainage appear to be away (and not toward) the house?

    Roof: Again, this is just a cursory inspection by you and it is not recommended to climb onto the roof!  But from plain view, what is the overall condition of the roof and when was it last replaced?  Are there any tree too close to it? 

    Exterior: What is the condition of the siding?  Will it need repainting soon or will it need repairs?  Are gutters and downspouts firmly attached? Are there any loose boards or wires?  Is there asbestos in the exterior material that would require remediation and added costs if needing repaired or replaced? 

    Attic: Can you see any signs of leaks?  What is the general appearance of the interior of the roof? 

    Interior evidence of leaks: Look at the ceilings and windows for any signs of leaks. 

    Basement: Is there dampness? Odor? Adequate insulation?  And again, don't venture into a crawlspace, leave that for a professional home inspector.  

    Electrical: Do the switches work? Are there any obvious malfunctions? Have the outlets been grounded? Is the panel updated and expandable for additional appliances or a potential remodel?

    Plumbing: Any unusual noises or malfunctions? Has the sewer line been scoped to check for potential cracks?

    Appliances: If these are included, what is the age and condition of the stove, dishwasher or refrigerator?

    Heating/cooling system: Does it seem to do the job? How old is the furnace? If the system has been converted, are the old systems or tanks still in place?

    Odor: Is there an odor in the house? Can you detect what it might be and whether it could be fixed? Beware of musty odors which could signal a wet basement.

    What a Formal Home Inspection By a Licensed Home Inspector Should Cover

    Once you make an offer on a property and it is accepted, you, the buyer, will work with a licensed home inspector who will perform a formal home inspection.  Realtor.com lists the following items as mandatory items to be inspected by the licensed home inspector.  Also try the virtural home inspection at ASHI.org (the official website of the American Society of Home Inspectors).

    Structure: A home’s skeleton impacts how the property stands up to weather, gravity, and the earth. Structural components, including the foundation and the framing, should be inspected.

    Exterior: The inspector should look at sidewalks, driveways, steps, windows, and doors. A home’s siding, trim, and surface drainage also are part of an exterior inspection.

    • Doors and windows
    • Siding (brick, stone, stucco, vinyl, wood, etc.)
    • Driveways/sidewalks
    • Attached porches, decks, and balconies
    Roofing: A well-maintained roof protects you from rain, snow, and other forces of nature. Take note of the roof’s age, conditions of flashing, roof draining systems (pooling water), buckled shingles, loose gutters and downspouts, skylight, and chimneys.

    Plumbing: Thoroughly examine the water supply and drainage systems, water heating equipment, and fuel storage systems. Drainage pumps and sump pumps also fall under this category. Poor water pressure, banging pipes, rust spots, or corrosion can indicate problems.

    Electrical: Safe electrical wiring is essential. Look for the condition of service entrance wires, service panels, breakers and fuses, and disconnects. Also take note of the number of outlets in each room.

    Heating: The home’s heating system, vent system, flues, and chimneys should be inspected. Look for age of water heater, whether the size is adequate for the house, speed of recovery, and energy rating.

    Air Conditioning: Your inspector should describe your home cooling system, its energy source, and inspect the central and through-wall cooling equipment. Consider the age and energy rating of the system.

    Interiors: An inspection of the inside of the home can reveal plumbing leaks, insect damage, rot, construction defects, and other issues. An inspector should take a close look at:

    • Walls, ceilings and floors
    • Steps, stairways, and railings
    • Countertops and cabinets
    • Garage doors and garage door systems
    Ventilation/insulation: To prevent energy loss, check for adequate insulation and ventilation in the attic and in unfinished areas such as crawlspaces. Also look for proper, secured insulation in walls. Insulation should be appropriate for the climate. Excess moisture in the home can lead to mold and water damage.

    Fireplaces: They’re charming, but they could be dangerous if not properly installed. Inspectors should examine the system, including the vent and flue, and describe solid fuel burning appliances.

    Source: American Society of Home Inspectors and Realtor.com, as well as Zillow.com

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