Monthly Archives: May 2014

realagentWhy not just be more direct with your potential buyers or sellers? Why add another layer to this already complicated process? In reality, a real estate agent actually makes this process less complicated. A real estate agent is your liaison. They work for you and have a wealth of experience and utilities to help you make the best decision possible. Here are several reasons why a real estate agent is a smart choice to save you time, money, and effort:

•Access to more houses. That dream house may not be listed on the market in the usual sense. A real estate agent can expose these houses to you, giving you more choices. They can also set you up on a website that automatically emails you listings that meet your criteria.

• Negotiation. Offers and counteroffers can be a tricky business. By having someone experienced in this environment, you can ensure that you’re getting the best deal. In addition, this is where your real estate agent can negotiate to have new appliances or fresh carpeting installed without the hassle of you doing it.

• Statistics. While it may not be the most charming word, your real estate agent can give you easy to digest information on the house you’re interested in. This information could be concerning resale value, the local community, the schools, the infrastructure, and other items of interest.

• Protection. A house is a huge investment. And while it’s important that you like how it looks on the outside, the inside also matters. Your real estate agent will advise you to hire a home inspector who will inspect the house thoroughly for any major problems such as foundation issues, water damage, heating, electrical and plumbing concerns.  Your agent may provide you with a list of competent home inspectors.

• Legal advice. Your real estate agent will point you in the right direction for legal advice.  Attorneys can handle all the paperwork in the real estate transactions, including reviewing offers, purchases, leases and inspection and appraisal reports. They also can resolve title and environmental issues.

I have just touched the surface on why you should use a real estate agent.  Buying  real estate is a very complicated endeavor.  If you were taking a road trip wouldn’t you consult a map? Think of your agent as a map to your future home.

Patty 2About the author: Patricia Lovett is a Realtor at RE/MAX Legacy and is part of The Alliance Home Team.  You can learn more about Patricia by visiting her website www.pattylovett.com


appraisal guy 2There are a lot of misconceptions concerning the purpose and process of the appraisal report and the appraiser.
Let’s start with the person.  According to The Appraisal Foundation, “an appraiser is one who develops and reports an opinion of value on a specific type of property”.

 

This definition leads us to the purpose of the appraisal.
The reporting of the OPINION of value is what we call the appraisal.  Note, my over exaggerated bold and capped OPINION.  I state this because most people believe that valuing a property is a science because it has all those numbers and numbers belong with equations which prove or disprove results.  This is not entirely the case for appraisals.  Appraisals are more like finely crafted pieces of art.  All kidding aside, the reason the appraisal is an art is largely in part because of the amount of emotion in real estate transactions.  How do you quantify emotion?  You step into your 49th open house and you just know.  You KNOW, again over-emphasizing here, this is your home and you are not going to lose it without a good fight to the finish.  You are even willing to, dare I say, over-pay for it.  Because you have falling for it.  Your emotions have made your decision for you.  Now don’t worry, you are just like the rest of us.  We all purchase based on how it makes us feel and how we believe it will make us feel in the future.  I do it every day.

 

The purpose of the appraisal report is primarily for the lenders (aka the Bank).  The appraisal simply reports to the bank what similar properties are selling for in the neighborhood.  The bank wants to know if similar “emotional” responses are consistent in the neighborhood.  Why?  Because every purchase of a home defines the market value of your property.  Market value, according to The Appraisal Institute, “The most probable price that the specified property interest should sell for in a competitive market after a reasonable exposure time, as of a specified date, in cash, or in terms equivalent to cash, under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, for self-interest, and assuming neither is under duress.”

 

For example, currently in the Metro Boston and Woburn area we are seeing some days on market, the number of days a property lists on the open market, at or below one week and we are seeing selling prices above asking prices (list price).  The appraisal report must report this and be consistent with what is happening in the current market.  This leads us to the process of the appraisal.

 

The process is similar for most appraisers.  The appraiser guy or gal comes to the property for inspection, interior and exterior.  They will research and view the neighborhood.  They will verify property data with the assessor and/or building inspector. They will research the market trends of the past year paying particular attention to what the current trends are within the past month to 3 months.  Then they will research sales in the neighborhood and pull the best available sales that most accurately reflect the subject property in terms of Location, Square Footage, Style, Age, Condition, Bedrooms, Bathrooms, Acreage, Amenities, Topography, View, Date of sale, Type of sale, Days on market, etc…  The comparable selection is like 5th grade science class when you dissected the frog saturated in formaldehyde.  It’s that experience you wish you could remember to forget.  After all the differences are valued out there is a range of value from the adjusted comparable sales.  The final estimated opinion of value is typically within this range.  The range, again, reflects the art of the appraisal because it is an opinion with the range.

 

There are various reasons, other than for a lending transaction, to have an appraisal completed on your property.  If you are ready to embark on a renovation project, better hold the horses and find out if your investment will have a good return.  I’ve saved families from making this mistake a few times.  What about if a loved one is reaching the end of their life and you are doing the final preparations for their will.  Finding the value of the home can help sort out any loose ends and help the family focus on what matters.  One other reason would be if a couple finds themselves unable to continue in marriage and needs to divorce.  Typically the largest asset to divide is the property.  You need an unbiased appraisal on the property in all these scenarios.

You can go to our website www.theappraiserguy.com to learn more by clicking the links.  The document added to this blog is from The Appraisal Institute and helps further distinguish the purpose and process of the appraisal.

 

TAF BorrowersInfographic

Vacation Cabin (2)Have you ever thought about owning a second home?  Perhaps a cottage on a lake or a chalet near a ski area is a goal or dream of yours?  It might even be a boat, provided it meets the IRS criteria as a second home.  The question you need to ask is “am I ready and able to own a vacation home?”

I owned a vacation home once, and at that time in my life, it provided weekends of fun and relaxation on a lake in New Hampshire.  It sometimes caused stress and financial burden too.  For instance, once a tree fell on the roof and caused some significant damage.  This is not an easy situation to handle when you live 100 miles away.  And when you close it up in the fall, you never know what you will find when you reopen in the spring or “who” has been living there.

So let me share some of the benefits and pitfalls of owning a vacation home.  Then you can decide if it’s right for you.

The obvious benefit is that a vacation home provides an escape from the hectic pace of everyday life.  Pack up the car on Friday night and off you go for a fun filled weekend.

There are potential tax benefits and deductions that can be taken with a second home.  Follow the guidelines that the IRS offers regarding qualifying second homes.  When in doubt, check with your tax professional to get a better understanding of your deductions.

It is an investment, and like your principal residence, could result in increased value over the years.

There are always projects in the vacation home, and if you would like to become a qualified do-it-yourselfer, then it’s a great place to practice and learn how to do things you might eventually need to do at home.  Small carpentry projects, plumbing repairs, and the like, are commonplace in a vacation home.

On the downside is the potential for your vacation home to drain your finances with maintenance and repairs.  Just like at home, taxes and association cost can increase.   Even the cost of going there could increase with the cost of gasoline.

Just like in the movie “Field of Dreams”, if you build it they will come, well, with a vacation home, if you own it, you must go.  If it’s there, there is an expectation that you must use it.  So you will go to your vacation home and perhaps you didn’t handle a home project or attend a back home activity that was important to you.

When I owned my cottage, it was truly a place to relax, unwind, socialize with friends and neighbors, get a tan, and get in better shape through physical projects and recreational activities.  I owned it for 7+ years, and regretted selling it when I did for financial reasons.  My kids were disappointed at the time and still will comment over 25 years later “I wish we still had the cottage”.  At least they still have the memories of the fun times.

In making your decision, think about the things I’ve outlined above.   Weigh the plusses and minuses and hopefully you will have your answer.  Good luck and enjoy!

Roland Crop 2011 jpeg (1)About the author: Roland Spadafora is one of the Broker Owners at RE/MAX Legacy.  Roland has experienced the fun and frustrations of owning a vacation home.  He can be contacted through his website at www.spadaforateam.com


Category: Family, Home Buying