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Is Now a Good Time to Buy a Home?

by Mark Rieger, Mark Rieger Realty

 

The recent downgrade on the U.S. debt should technically raise interest rates on consumer loans; however, the cost to borrow has actually decreased. The average 30-year fixed rate mortgage hit a low of just 4.32% last week, according to Freddie Mac.

 

Many analysts believe that the worst of the price decline is likely over. While we won’t see a drastic increase in prices, we likely won’t see much more decrease either. Once there are clear signs of recovery, demand will pick up and your competition will increase, so now might be a great time for you to Buy a house.

 

If you’re a potential homebuyer, this news alone might compel you to run out and start house hunting, but just because mortgage rates are at an all-time low and housing prices have declined, there are other financial factors you may want to consider.

 

  • Getting preapproved. Have you been preapproved for a home loan? Because home prices and interest rates have decreased, buying a home has become easier for some people. However, qualifying for a home loan has become increasingly more difficult. It takes a higher credit rating and more financial responsibility to own a home today than it did during the housing boom around 2005 when nearly anyone could qualify for a home loan.
  • Down payment and closing costs. Remember that buying a home includes upfront fees and costs. If you haven’t saved, now may not be the right time to Buy a home.
  • Maintenance and repair. According to the guidebook Home Buying for Dummies, you should budget 1% of the home’s purchase price annually for maintenance.
  • Utilities. A single-family home is generally larger than an apartment. You will need to factor this into your monthly costs.
  • Property taxes. The median property taxes paid on homes in the U.S. is almost $2,000 per year, according to the U.S. Census Bureau. Aside from the mortgage itself, this is generally the biggest cost of home ownership. Taxes can increase as time goes on, so make sure you can be financially prepared for that.
  • Homeowners insurance. Your home has to be insured, so ensure you can afford it.
  • Homeowner association (HOA) fees. If you live in a condo, townhome, or neighborhood that is regulated by an HOA, you could pay up to several hundred dollars each year in HOA fees. These costs are not fixed and can increase over time.

As far as the market goes, now is a great time to Buy. Many buyers are finding beautiful homes at affordable prices for less than what they’re paying for rent. If you feel that you are prepared, you’ve saved enough money, you qualify for a mortgage, and you know you can afford all the costs involved, then now is a good time for you to buy a home.

How Long do Negative Items Stay on my Credit Report?

by Mark Rieger, Mark Rieger Realty

 

 
 

Have you recently been turned down for a loan due to negative information on your credit report? Are you just curious about how long items can remain on your credit affecting your score?

Accurate negative information will generally be reported for seven years, but there are exceptions:

  • Bankruptcy information can be reported for 10 years;
  • Information reported because of an application for more than $50,000 worth of credit or life insurance has no time limitation;
  • Information concerning a lawsuit or a judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer;
  • Default information concerning U.S. Government insured or guaranteed student loans can be reported for seven years after certain guarantor actions; and
  • Tax liens stay on 7 years from the date paid.

Some other rules to keep in mind:

The Statute of Limitations has nothing to do with the length of time something can stay on your credit report. They are two completely separate things. The length of time a negative mark can stay on your credit report starts from the time you were late or the late payment went into collection, not from the last time you made a payment on the account.

Sometimes negative items can be overlooked and not removed when they should be. That’s why it is important to check your credit report at least once each year (it’s free to view your report at annualcreditreport.com). Review all the items on your credit report to ensure there are no errors and that anything that can and should be removed is deleted.

Negative items on your credit report don’t necessarily mean that you absolutely can’t qualify for a home loan. There are loan options for those without glowing credit scores. Contact me today if you have any questions, and if you're looking to either Buy or Sell a home here in Central Oregon. I am here to help!

Pick Up After Your Pet!

by Mark Rieger, Duke Warner Realty
 

We had a slight increase in temperatures this week, so I took advantage of the sunshine and headed outdoors. As I walked into my yard, I began dodging countless piles of animal waste before I even hit the sidewalk. And I don’t own a dog or a cat.

Don’t get me wrong; I love animals, but it’s infuriating and unnecessary to have to clean up after someone else’s pet.

Have you reached the end of your leash because your neighbor lets his dog defecate on your lawn? Here are some tips for dealing with pet poop:

If your own yard is suffering from someone else’s pet:

  • The best approach is to confront your neighbors directly. Respectfully and politely approach them (and it wouldn’t hurt to take them some goodies), and let them know you enjoy their friendship, but you don’t enjoy cleaning up after their pet.
  • There are some safe, non-toxic, effective, eco-friendly repellents you can consider using on your lawn, garden, trees, and shrubs. They include: BioDefend’s natural animal repellent, Liquid Fence animal repellent, and Ropel animal repellent. These products have an unpleasing scent to animals and deter them from hanging around your yard.
  • Most communities have strict rules regarding cleaning up after pets. If the offense doesn’t stop, contact your homeowners association or non-emergency city police department to inform them of the situation. Use this as a last resort, though, because it could affect your neighborly relations.
  • Never blame the animal. They are only doing what comes naturally. The behavior needs to be controlled by the pet’s owner or discouraged by you. There is never any excuse for animal cruelty.

If your pet is a potential culprit:

  • Be aware of your community’s rules regarding pet clean up and follow them.
  • Bag it. Take a large enough bag with you when you are with your pet. Once your dog does his business, put the bag over one hand, pick up the poop, then turn the bag inside out with your other hand, leaving the poop inside the bag. Knot the bag and toss it in the trash.
  • Scoop it. There are many pooper-scoopers available for animal owners. Check out your nearest pet supply store.
  • Many dogs can be trained to go to the bathroom in the same place, leaving clean up an easy task.
  • Never let your animal roam around the neighborhood without a leash.
  • Don’t rely on curbing. Curbing is when a dog is trained to defecate in the street near the curb, so the next rainstorm can sweep the deposits into the nearest gutter. Curbing is questionable because dog poop is a major cause of water pollution, which poses a significant hazard to us. Curbing can also jeopardize your dog’s safety putting him dangerously close to fast-moving vehicles.

Being a responsible pet owner includes taking responsibility for your pet’s messes.

6 Ways to Help Victims in Japan

by Mark Rieger, Duke Warner Realty
 
 

Japanese news services have announced that the death toll from last Friday's devastating earthquake and tsunami is expected to exceed 10,000. Search and recovery teams from many different countries are working in conjunction with the Japanese government to provide aid in the heavily devastated areas.

If you have wondered what you can do, here are 6 simple ways to help the victims in Japan:

1.     Charity watchdog Charity Navigator has published donating tips and a list of responding charities. This list will continue to be updated as the group learns of more charities assisting with the relief efforts.

2.     The American Red Cross is accepting online donations for disaster relief efforts.

3.     If you prefer to donate via text, here are a number of reputable charitable causes that will charge the donation to your next wireless phone bill:

Text “REDCROSS” to 90999 to donate $10 to the American Red Cross.

Text "JAPAN" or "TSUNAMI" to 20222 to donate $10 to Save the Children’s Children’s Emergency Fund.

Text "4JAPAN" or "4TSUNAMI" to 20222 to donate $10 to World Vision’s Disaster Response Fund. 

Text “JAPAN” or “QUAKE” to 80888 to donate $10 to the Salvation Army.

Text “TSUNAMI” to 50555 to donate $10 to Convoy of Hope.

Text "MERCY" to 25383 to donate $10 to Mercy Corps.

4.     Doctors Without Borders sent a team to the area and is assisting in the relief effort. If you’d like to support their efforts, you can donate online.

5.     GlobalGiving is working with other organizations such as the International Medical Corps and has launched the Japan Earthquake and Tsunami Relief Fund, which will give aid to organizations providing emergency services. They are accepting online donations with a funding goal of $2,000,000. 

6.     If you have a Facebook page, and you’re a FarmVille fan, you can support children affected by the earthquake and tsunami by playing certain games on Facebook. Zynga, the company behind some of the most popular social media games, is partnering with Save the Children to support relief efforts. Through playing the company’s most popular games including Café World, CityVille, FrontierVille, FarmVille, YoVille, Zynga Poker, Words With Friends, and zBar, players have the opportunity to donate to Save the Children’s Japan’s Earthquake and Tsunami Children Emergency Fund.

FHA Loan Application Process

by Mark Rieger, Duke Warner Realty

 

According to the Federal Housing Administration, the FHA provides mortgage insurance on loans made by FHA-approved lenders. FHA insures these loans on single family and multi-family homes in the United States.

Completing the application is the beginning of the loan process. With the assistance of a mortgage lender, you will complete the application and provide all necessary documentation.

Before applying for an FHA loan, you will need to gather the following information to provide to your lender:

  • Address to any place of residence you've occupied in the past two years;
  • Social Security numbers / copy of your social security card;
  • Copy of your driver's license;
  • Names and locations of your employers for the past two years;
  • Gross monthly salary at your current job(s);
  • Most recent three months complete bank statement for all checking and savings accounts;
  • Pertinent information for all retirement, 401K, mutual funds, money market, stocks, etc.;
  • Pertinent information for all open loans;
  • Complete information for other real estate you own;
  • Approximate value of all personal property;
  • Certificate of Eligibility and DD-214 (for veterans only);
  • Most recent pay stubs covering a one-month period;
  • Most recent two years W-2s, 1099s, etc.;
  • Personal tax returns from the past two years; and
  • Current income statement and business balance sheet for self-employed individuals.

Additional documents may be needed upon review of your file and on a case-by-case scenario, but having all the above-referenced documents available prior to filling out your application will make the loan application process go more smoothly and quickly.

Home Security Options

by Mark Rieger, Duke Warner Realty
 

 

There are many effective security options that protect your family and home and give you peace of mind. From inexpensive Do-It-Yourself methods to pricier security systems with monitoring centers, here are a few different home security products and methods to consider.

  • Installed Security Alarm Systems with Monitoring Services

These systems are the most expensive, typically costing $25 - $50 per month. You pay for the installation and the equipment as well, which is generally in addition to your monthly fee. Many of the companies that provide these systems also require you to sign a contract, which can keep you committed from 3-5 years. Although, you may be able to find companies who will negotiate month-to-month options.

In the event that you need assistance, you have direct access to help once the alarm is activated. Maintenance of such systems should be minimal, and most of these systems are accompanied by a warranty.

If you enter into a contract for a security alarm system, it can be difficult to get out of without paying a large fee. Also, unintentionally activating these alarms can cause problems if you aren't home to turn them off, resulting in annoyed neighbors and a possible visit from your local police department.

  • DIY Security Alarm Systems

Much less expensive than the monitoring systems are basic sensor alarm systems. You can usually install these alarm systems yourself with the ability to connect the system to your phone lines to dial preselected numbers if the home's security is breached. Many of these systems allow for a number of points of contacts at various doors and windows around the home. These security systems typically have alarms and flashing lights to alert anyone nearby of a potential problem.

Since these systems don't have monitoring services, they rely on those in the home or around the home to contact the police as well as the reliability of the dialer to dial preselected emergency contacts. Many of these systems have warranties, and you typically don't sign any contracts.

  • Surveillance Cameras

The cost for a full video surveillance system for many homeowners can be pricey, but if it's something you'd like to consider, it should be used as a backup device to a basic home security alarm or installed system. Cameras can only deter someone from breaking in. Also, many people who have security cameras around their home neglect to actually monitor and record the activity around the home. There have been many reported thefts from homes with surveillance systems that were never resolved due to the fact that the homeowners could never refer to any footage because the cameras weren't recording. So, if you choose to install surveillance cameras, make sure you use them properly.

  • Man's Best Friend

Although you wouldn't get a dog for the sole purpose of protecting your home, Fido can be a great alarm system when anything or anyone suspicious may be threatening your home.

  • Simply Advertising an Alarm

it's not a necessarily an effective or reliable source of protection in the event of an actual burglary, but sometimes simply placing an alarm system advertisement outside can be enough of a deterrent to keep anyone away who may consider breaking into your home.

  • Reliable Locks on all Windows and Doors

Use sturdy, dependable deadbolt locks on all your doors. Keep windows locked when they're not in use. Block your sliding doors or windows from being opened from the outside by measuring the window track when the window is open, and purchasing a piece of wood that will fit in the slot yet is sturdy enough not to break with force.

When leaving your home or going to bed, always ensure that your doors and windows are securely locked. Keep your home well lit, especially from the outside. Also, let your neighbors know if you are going out of town so you have someone aware of any suspicious activity happening around your home while you're gone.

   

Managing Your Investment Property

by Mark Rieger, Duke Warner Realty

Real estate can be one of the best investments you can make. If you plan on investing in and managing rental property, organizational and management skills are a necessity, along with a working knowledge about real estate matters. Here are 5 tips for managing investment property.

Screen Tenants Well

Evaluate prospective tenants by utilizing background checks, credit histories, personal references and employment histories. Require every applicant to provide credit and employment references. Don't be influenced by personal references. Contact previous real estate agents, landlords, employers, accountants, and/or bankers. Ask the question:

Do you believe the applicant(s) would be able to pay $x per month for y months and keep the property clean and in good condition?

Set Expectations for Tenants

Talk with your tenants and set expectations. Ensure that payment arrangements are clear verbally and in the lease. Be consistent. Make late fee assessments clear in the lease agreement and collect late fees when necessary.

Let all tenants know upfront they need to get any changes to the property approved by you. Let them know that any unauthorized changes can result in a loss of the security deposit. When managing investment properties, you want them to appeal to a broad population. Keep carpets and walls relatively neutral and avoid any exotic colors. Ensure that your tenants know they are free to make cosmetic upgrades as long as they are approved by you first.

Take pictures of the inside and outside of the house before a tenant moves in and/or out. Be sure the pictures are dated.

Consider Using a Professional Managing Agent

Utilizing the services of an experienced, professional managing agent can save you time and hassle. Professional Managing Agents have detailed up-to-date knowledge of the residential tenancy legislation, an understanding of local vacancy and rental movements, a background in repairs and maintenance, a reliable network, an awareness of housing price movements, and knowledge of insurance and property taxation.

A Professional Managing Agent can help you manage inspections, property showings, tenant issues, and hiring an agent allows you to remain somewhat anonymous acting as the buffer between you and the tenant.

Consider the cost carefully as hiring a Professional Managing Agent will reduce your income. Across the country, property management fees normally run from 7% to 10% of income on average.

Cover Your Assets

Obtain liability, fire, theft, and other insurance on rental property. As a landlord, you should have commercial insurance, not a typical homeowner's policy. In addition to insurance, you need to have at least one Limited Liability Company (LLC) to protect your assets rather than owning the property personally.

Be Realistic

Have reasonable expectations as an investor. Don't expect to Buy an investment property and immediately enjoy a positive cash flow, meaning the rent you collect exceeds all of your out-of-pocket expenses. Many investment property owners go 3 to 5 years before cash flow turns positive. Immediate positive cash flow usually happens when the investor makes a large down payment and has relatively low mortgage costs.

Have an idea of how much rent you can charge. Research how much comparable properties rent for. A good rule of thumb is to set the rent at 95% of the current market value. Rental properties which are listed just below market value attract the best referenced tenants and maintain minimum levels of vacancy and repair/maintenance.

Owning investment property can be very rewarding, but you can't expect to sit back and collect income year after year without doing any work on your property. Investment real estate can be a worthwhile investment if you are well prepared to face any challenges that may come along.

If you are looking to Buy or Sell an investment property somewhere in Central Oregon, give me a call. I can help.

About Appraisals

by Mark Rieger, Duke Warner Realty
 

A home appraisal is an important part of every real estate transaction. An appraisal is an independent, detailed report that helps establish a property's market value. The buyer's lender usually determines whether the buyer will pay for the appraisal upfront or if the appraisal will be included in the closing costs, which are sometimes covered by the seller.

The Lender generally orders the appraisal through an Appraisal Management Company (AMC). In the past, Lenders ordered appraisals directly from appraisers; however, all Lenders must now order the appraisal through an AMC. This process ensures that the appraisal is unbiased and is in no way influenced by the Lender. Lenders use the appraisal to determine the mortgage loan amount.

All appraisals are performed by a licensed appraiser who should be an objective third party with no financial connection or other connection to any person involved in the transaction. The appraiser will usually inspect the property - inside and out - and take interior photos including all bathrooms, kitchen(s), and living areas. Appraisers will also measure the house to obtain an independent opinion on square footage. By obtaining this detailed data, appraisers can conclude the current market value of the property.

Appraisals are very detailed reports, but here are some things they include:

  • Details about the subject property, along with side-by-side comparisons of three similar properties.
  • An evaluation of the overall real estate market in the area.
  • Issues the appraiser feels are detrimental to the property's value.
  • An estimate of the average sales time for the property.
  • What type of area the home is in.

The appraiser can determine a property's market value using the following 3 methods:

Sales Comparison Approach

The Comparison Approach is the most widely-used approach and the most accurate because of the fluctuation of the market. Appraisers identify homes in the area that have recently sold and compare them to the subject property. Lenders generally expect appraisals that analyze three comparable properties. Proximity in both timing and location are important in a sales comparison analysis. Ideally, the appraiser uses sales that have concluded within six months of the appraisal and within one mile of the subject property. Price adjustments are made for differences in the comparables and the subject property.

Cost Approach

The Cost Approach combines an estimate of land value with an estimate of depreciated reproduction or replacement cost of the improvements. This approach is a best estimate of what it would take to replace the existing structure at current market rates. The Cost approach is commonly included in every appraisal.

Income Approach

The Income Approach is usually used for investment properties or typically used only if the home is in an area with a lot of rental properties.

There are a number of reasons why an appraisal may come in low. Here are a few:

  • Declining market values due to fewer buyers shopping among a larger inventory of homes.
  • An abundance of foreclosures or short sales in the neighborhood.
  • Overpricing by the seller.

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