Want a home that’s for sale by owner?
Top 10 Threats to Real Estate in 2019
Rising interest rates and the economy are the top two current issues to watch in real estate, according to the Counselors of Real Estate’s Top Ten Issues Affecting Real Estate 2018-2019, a list of the biggest threats to the housing market. For the first time, CRE broke its annual list down into current and longer-term issues to watch during the industry’s next year.
Top Current Issues to Watch
1. Interest rates and the economy: As interest rates rise, commercial and residential real estate markets are seeing several changes, such as decreasing demand for commercial property and higher home mortgage rates. Rate increases are making homes less affordable and are also limiting the value appreciation for commercial real estate. “Lack of wage growth for all but the wealthiest population segment is dampening housing demand, and limiting consumer spending that the economy needs for growth,” the report notes.
2. Politics and political uncertainty: Tax reform and policies aimed at balancing trade with other countries will have an impact on jobs, incomes, and both commercial and residential property, according to the report. “Congressional action to relax certain bank lending and asset management regulations was also among developing trends that may improve access to capital,” the report notes.
3. Housing affordability: The lack of affordable homes across income brackets, excluding the most wealthy, is being fueled by low wages, rising mortgage rates, and the underproduction of housing for nearly two decades, according to the report.
4. Generational change/demographics: Four distinct generations are exerting influence on commercial and residential real estate, such as in office design, student and elder housing, amenities, and location preferences.
5. E-commerce and logistics: Volatility in the retail sector, such as from the increase of e-commerce, is leading to a growth in warehouses.
Top Longer-Term Issues
1. Infrastructure: Roads, bridges, airports, water and sewer lines, electricity, and public transit are rapidly deteriorating, the report notes. An estimated $4.5 trillion is needed to improve critical infrastructure by 2025, according to the American Society of Civil Engineers. “The lack of serious effort by the U.S. to address its condition and much-needed revitalization leads the list of broader and emerging issues affecting real estate,” the report notes.
2. Disruptive technology: The report highlights advances in robotic manufacturing and warehousing; driverless cars and trucks; the extensive availability and utilization of personal and transactional data (aimed at enhancing business decisions); “smart” building technology that enables efficiency; global connectivity; automated business processes; and information protection through cybersecurity. “Nearly every aspect of real estate is undergoing dramatic change as these types of technology are adopted,” the report notes.
3. Natural disasters and climate change: The ongoing threat of natural disasters and climate change can result in high-priced property and environmental damage. This includes everything from severe storms, wildfires, and floods to earthquakes, volcanic activity, and rising sea levels.
4. Immigration: “If reduced by law, will have a negative impact on new housing starts and home purchases as well as worsen the current skilled labor shortage in the U.S.,” the report cautions.
5. Energy and water: Natural resources that are vital to property and quality of life are being threatened by environmental damage (manmade and from changing climates) as well as “entangling state and local regulations that are complicating development and lack the standardization that national regulations would provide.”
CRE additionally notes several other issues making its “watch list,” including rising construction costs; urbanization/suburbanization (with suburbs adapting citylike development and amenities); tax cuts (which may positively impact commercial properties; legislation is still developing); and societal leadership (social activism among younger Americans that is fueling business and social reform at many levels).
Portability Initiative Is Designed To Help 55 and Over To Sell Their Homes And Buy Another
The California Association of REALTORS® (CAR) is attempting to qualify a ballot initiative, The Property Tax Fairness Initiative, that will restructure the way property taxes are calculated for buyers over the age of 55 (and also the disabled and/or natural disaster victims). In many cases REALTORS® are already circulating petitions asking for ballot-placement of the initiative, and, in short order, professional signature-gathering organizations will be engaged as well.
CAR’s approximately 200,000 members have been assessed $100 each in support of the effort; and there are expectations that the Association’s substantial reserves will also be tapped in efforts to support the initiative’s passage.
What would this accomplish and why is it needed? In what follows I will seek to summarize CAR’s answer to those questions. First: the why?
As is well-known, California is currently experiencing a shrinking inventory of housing available for sale. This lack of supply has driven up prices, which makes it extremely difficult — in many cases, impossible — for first-time buyers to enter the market. In many cases, it also makes it difficult for move-up buyers to find replacement property.
There are, no doubt, multiple causes for this, but, no doubt, a major one is this: nearly 75% of California homeowners 55 years of age and older have not moved since the year 2000!
Why? Because of the way property taxes are calculated under California’s Proposition 13. For tax purposes, properties are valued on the basis of purchase price, not current market conditions. (Example: Suppose I bought my house for $600,000 a few years ago; and that my neighbor bought the same model — as identical as can be — in this heated market for $800,000. My tax will still be calculated on $600,000, whereas his will be based on $800,000.)
CAR says, “A large part of the reason why [55 and overs are not moving] is that, even if they want to downsize or move closer to family, the prospect of a property tax increase of 100, 200, or even 300 percent, effectively locks our parents and grandparents in their homes.” Thus, CAR maintains, “…The Property Tax Initiative…will help these homeowners to sell their current homes and move without being subjected to a what is effectively a massive “moving penalty.”
How will it help? By modifying current law to expand the conditions under which those over 55 would be allowed to transfer their current tax base — based on their original purchase price — to a replacement home that they are purchasing.
Currently there are only limited conditions under which someone over 55 may transfer his or her old tax base to a newly purchased home. The Initiative would expand this. “C.A.R.’s Property Tax Fairness Initiative would allow homeowners 55 years of age or older to transfer their Prop. 13 tax base to a home of any price, located anywhere in the state, any number of times.”
CAR’s talking points offer two examples of what would happen if the Initiative should pass.
Buy Up Example
- Original Purchase Price: $100k
- Estimate Property Taxes: $1K/annually
- Existing Home Sale Price: $300k
- New Home price: $400k
- New Property Taxes: $2k/annually
The $100k difference between the $300k sales price and the $400k purchase price is added to the original Prop.13 property tax base of $100k for a new Prop. 13 tax base of $200k. The buyer still pays their fare share of taxes but isn’t blocked from making the move.
Buy Down Example
- Original Purchase Price: $100k
- Estimated Property Taxes: $1k/annually
- Existing Home Sales Price: $300k
- New Home Price: $200k
- New Property Taxes: 1/3 of $200k = $67k [value] or $670/year for property taxes
If a homeowner buys a less expensive home, the property taxes will be proportionally the same as for the original home. In other words, if the tax base was one-third of the sale price, the new property tax would be one-third of the new sale price. Buying down reduces the homeowner’s annual property tax bill.
Among the objections raised to the Initiative is that it will reduce revenues to local governments. In response to this, CAR says: “The revenue loss is the result of a ‘static’ analysis — it only looks at the revenue lost, not the revenue gained which a ‘dynamic’ analysis would do. All buyers of homes formally owned by a senior homeowner will have the home reassessed to market value and pay property taxes based on the reassessed value.”
Lots to think about. There’s an election coming.
WRITTEN BY BOB HUNT
Home Negotiation tips to close the deal
There is no simple formula for home negotiations. There is no if C happens then you should go to counter F. It’s not that simple. Some of it comes with past experience. Some if it comes with being able to read the opposite party and to read between the lines. This home negotiation tip is for both buyers and sellers. Negotiating the sales price or repairs on a home is so different than many other types of sales negotiation. That is what confuses people. Here in Detroit we have many Tier 1, Tier 2 and 3 negotiators that deal with Ford, GM, and Chrysler. These negotiators are hard nosed and good at what they do, and they wonder why the tactics they use everyday do not work with home sales. In most cases you cannot be a hard nosed negotiator and expect the other party to succumb to your demands or to close the deal.
There are a few reasons why hard nosed negotiations do not work and why some negotiators end up frustrated and not at the closing table. After all the ultimate goal is to get to the closing table.
1.) There are emotions involved. Sellers have an emotional attachment to the house because they have remodeled the home, or raised their children there, or think the house is the greatest in the world even though it needs major updating. Seller’s sometimes have the rose colored glasses on. Buyers are usually less emotional about the house, but they too get emotional sometimes when the negotiations get tough. In car sales, equipment sales, and many other types of sales and sales jobs there is no emotions. It’s about product and price. Not so with all home sales.
2.) In equipment sales or negotiating with the big auto companies both sides want to make the deal work and work hard to come to an agreement. They are negotiating to meet in the middle because there are a limited amount of companies to deal with. There is may be prior relationships between the companies. In house sales that is not always the case. Seller’s usually DO NOT HAVE TO SELL THE HOUSE, nor DO BUYERS HAVE TO BUY. The buyers can move onto the next home, and the sellers can keep turning down offers as long as they want. In equipment sales there are usually only a few companies to choose from. Not in real estate there are always more homes coming to the market. They may not be as nice, or as updated, but there will be more homes coming to the market if you are willing to wait. They can put up the house for sale next year, or wait until spring to buy.
It is the same with sellers. I just heard yesterday about a seller that has turned down 5 offers. After 5 offers you should get an idea of what a buyer is willing to pay for your home. Yet there are some unreasonable sellers that will still want more after multiple offers on their house. The seller just rejected my clients offer that was higher than the previous 4 offers. Sellers and buyers do not have to close the deal. And it is common for buyers or a seller to quit negotiating and walk away from the deal. Sometimes they just don’t care or are unreasonable in their demands and wants. It is common for one party to base their price in reality and the other party in the transaction living in dream land.
So when negotiating on a sales price you want to be the one grounded in reality. You want your agent to look at the recent solds in the neighborhood. That way the agent or you can look at the recent sold prices of comparable homes and be able to give a range of what the home is worth. That is so important whether you are the seller or buyer. Know what the current market value of the home is your priority.
Having the knowledge of the range of what the home is worth gives you a basis of what to offer (if you are the buyer ) or what to accept (if you are the seller). If you are unreasonable in what you want then do not be surprised when the other party stops negotiating or walks away. It is the same way for you. If the other party is unreasonable in their demands then it is smart for you to walk away. The other party has an incentive to close on the home, but they cannot be forced to accept what you think or what you want. Even if you are right on, they may be the unreasonable one. There is nothing you can do about it. Many buyers do not have to buy the one house or the seller does not have to sell. That is the difference in home sales in most cases…. they do not have to. If you are a hard nosed negotiator you may learn the hard way and lose the house. So the key is how bad do you want to buy or sell?
I hope this negotiating tip of understanding the mind set of the opposite party, and what has to be done in the home sales process will help make your home sales negotiation more fruitful. It will save you aggravation if you understand this up front. It does not matter if it is waterfront home for sale in Oakland County or any home in Mesquite, NV. …..realize that many times hard nosed negotiations fail in the real estate business.
The goal should always be to find a win win for both parties.
Why Do Home Buyers Wait For Spring?
Search Mesquite NV. homes for sale at; Mesquite-realestate.com
Why do they wait until the competition ramps up and all the other buyers are ready to buy? Why do buyers wait for the “hot” spring market with its price increases and multiple offers?
- Some buyers delay because they are doing what is expected – “we’re always done it this way” thinking is common in real estate.
- Others may need the first warm rays of sun and the fragrance of spring flowers for motivation.
- There may be more listings later in the spring, as sellers react for the same two reasons above, but increased buyer competition may cancel out advantages.Indications are that this will be an active spring market with real estate price and mortgage rate increases which extend deep into 2017. Getting ahead of this momentum may bring benefits and real estate you can love.
You’re got nothing to lose by shopping now and a lot to gain. Here are Five Smart-Buying Tips for Getting a Jump on Spring:
Tip #1: Find a real estate professional who is has a lot of experience in the locations you’d consider and with the type of property (detached house or condominium) you want to own.
Learn what you need to do to prepare to make an offer and what to look for in the properties you’ll view. You’ll also discover the listing price range to shop in and which are the best locations in your buying range. If you don’t start this strategic relationship first, you’ll miss out on many of the advantages of an early start.
Tip #2: Build your professional team to be ready for offer time.
Your real estate professional may have recommendations for mortgage brokers, home inspectors, real estate lawyers, and surveyors. Take three names for each and interview them to determine the fit and what they consider the extent of their professional responsibilities to you.
- For example, concentrate on locating a mortgage broker who has the experience, contacts, and interest to help you finance your purchase. The questions you ask the real estate professional about price range, size of mortgage, and steps in the buying process should also be directed to the mortgage broker. The mortgage pre-approval letter, which may be essential at offer time, will only be truly useful when you’ve been professionally vetted and stamped as mortgage-worthy.
#Tip 3: Stop Wasting Time and Concentrate on Real Estate.
There’s a lot to learn and to think about when buying real estate, so your productivity matters. The US 2016 versionof Deloitte’s sixth annual Mobile Consumer Survey revealed more online time wasting than ever:
- More than 40 percent of consumers check their phones within five minutes of waking – text messages (35%) and email (22%)
- Each day is disrupted since we look at our phones approximately 47 times. Sleep is disrupted: more than 30% check their devices 5 minutes before sleep and about 50 percent in the middle of the night.
- Every 60 seconds on Facebook, 510,000 comments are posted, 293,000 statuses are updated, and 136,000 photos are uploaded. The average Facebook visit is 20 minutes; Facebook reports visitors spend more than 50 minutes a day using Facebook, Instagram and Messenger. (Source: Zephoria)
- Millennials (25 to 34-year-olds) demonstrated higher levels of mobile device interest and use than the phone-hooked younger demographic.
- Postpone binge watching the latest hyped series until after you buy your dream home.
Tip #4: Sell Yourself on Success
According to sales inspiration Dale Carnegie, author of How to Win Friends and Influence People, “The only way to influence someone is to find out what they want, and show them how to get it.” To achieve success, clarify, with the help of professionals, exactly what you want and need from a real estate purchase. Then decide to get it. The professional team you select will provide the know-how and will help you refine your dreams into an achievable goal for the location and price range involved. Do your homework, so you understand what they show you.
Tip #5: Motivate Yourself During This “Buy-athon”
What motivates you to want to own real estate? Postpone as many non-real-estate distractions as possible. Clarify what will sustain you through the often-stressful buying process. Use slogans, affirmations, or whatever it takes to persist. You may make offers and lose out on one or more properties before you find yours. Persist using self-motivation – that’s your job. No one else can motivate you. No one cares as much about the outcome as you do.
What are you waiting for? Get the jump on spring!
Final Smart-Buying Tip:Don’t get in the way of the professionals finding out what you want and helping you get it.
To Avoid Contract Disputes, Itemize Items That Convey
Question. We have signed a contract to buy a house. When we first saw it, before signing the agreement, there were two refrigerators. One was in the kitchen and one was in the basement. The real estate agent told us that both refrigerators would stay with the property. Settlement is scheduled for next week, and we have now been told that the basement refrigerator has been removed. Our mortgage lender, however, insists on our signing a statement that the refrigerator remains as part of the house, and as part of the lender’s security.
I do not understand when a refrigerator is a fixture and when it is not.
Answer: Your question has stumped a lot of people, including several law professors to whom this question was posed.
There is no easy answer as to what is a fixture. An item, standing by itself, may not be a fixture, but when made part of the property, it can change its characteristics. For example, a kitchen sink in a plumber’s shop window is personal property. Once it has been installed in your house, however, it becomes a fixture and is part of the real estate.
Generally speaking, and in the absence of a contractual agreement to the contrary, fixtures remain with the house. Personal items can be removed by the seller.
As you can see, it certainly makes a difference if an item is characterized “personal property” or “fixtures.” For example, can a seller take a removable wet bar from the basement, even though the plumbing is hooked up? Does a window air conditioning unit convey with the property?
There are no easy answers to any of these questions. The courts have applied a number of tests, including:
- The manner in which the article is attached to the real estate. If the article can be removed without substantial injury to the building, it is generally held to be personal property.
- The character of the article and its adaptation to the real estate. If, for example, an article was fitted or constructed specially for a particular location or use in a house, one can argue the article becomes a permanent part of the building, and thus a fixture.For example, the courts have held these items to be fixtures: pews in a church, screens and storm windows specially fitted to a house and electronic computing equipment installed on a floor specially constructed for it.
- The intention of the parties. What would the average person consider the article to be? Gas stoves, for example, are intended to remain in a house permanently, and thus are fixtures. The so-called “Murphy beds” fastened to the wall on pivots are considered fixtures. But roll-away beds that are not fastened to the wall are not fixtures (except in Wisconsin).Going through this fascinating history of fixtures, one important caveat comes to mind.When in doubt, spell it out in the contract. Furthermore, if the seller or the real estate agent verbally advise you that a particular item will convey, again spell it out in the real estate contract. If you want the refrigerator to convey with the property, put it in the contract to avoid any confrontation in the future.
Too many homebuyers are often disappointed because they relied on what the agent or the seller said — or what they thought the agent said — and just did not reduce those representations to writing into the sales contract.
In your case, I would argue that the second refrigerator stays with the property. This is based not necessarily on the fact that it is a fixture, but on the promises made by the seller’s agent — and on which you relied.
Custom in the area is also important. I understand that in the Western part of the country, refrigerators do not necessarily convey; however, they do in the Eastern states. But don’t rely on custom. If you are the seller and want to take a particular item with you, spell it out in writing in the sales contract. And if you are the buyer and want a particular item to stay in the house, spell it out in writing in the sales contract.
WRITTEN BY BENNY L. KASS