Selling a House You Just Built

House in the process of being built

Selling a House You Just Built

There are different reasons people build houses. For most real estate investors, it’s usually for long-term income generation by renting the property out. However, some situations may occur that would require you to sell a house you just built. If you find yourself in this situation, there are certain things you need to know to facilitate selling a house you just built. Selling a House You Just Built Generally, buyers prefer houses that have been occupied for a certain period as this serves as a guarantee of the property’s safety, legitimacy, and value. Nonetheless, newly constructed houses get sold all the time. If you are trying to sell yours, there are certain factors that could affect your sales and profits. Possibility of a Lessened Property Appreciation A property’s value is not only determined by its physical components, its financial history also accounts for a huge part of its value. The only way for a building to have a financial history that convinces buyers that it is a good investment is if it has been involved in several transactions.  However, this is not likely to happen with a new building, and as a result, the amount that it is valued at currently might be less than what it would be valued at in the future. It is crucial that you note this when selling your new property. Capital Gain Taxes When a property is built and then sold, the homeowner needs to pay certain taxes on the profit realized from the property. These are called capital gain taxes. Different rates are used to calculate capital gain taxes, and these rates depend on the duration of time for which the property is held. Short-term capital gain taxes, which are paid on buildings held for less than a year, are typically higher than long-term capital gain taxes which are for buildings held longer than a year. For new properties held for less than a year before getting sold, the homeowner is expected to pay anywhere between 10% and 37% of the profit gained.  Local Market When trying to sell a house you just built, the average cost of similar properties in the area is another determinant of your sales price. If the average cost of similar properties in the area is $450,000, then your property’s selling price would most likely revolve around that price, irrespective of your expenditure.  If you are not looking to sell your new house quickly, however, you could set a selling price that is way higher than the average sales price in the area, and wait until a willing buyer comes along.   Tips to Help You Sell Your New House Fast  If you are trying to sell a home that you just built, especially if it’s an emergency sale, then you would need to close a sale as rapidly as possible. Even if this is not the case with you, it is apparent that a quick real estate transaction saves everyone time and energy.  Employ the Services of a Real Estate Agent  Real estate agents are invaluable to investors. Not only do they help you find the choicest properties when looking to buy a house, but they also help you navigate and find the best buyers when looking to sell.  Experienced realtor agents such as CA Flat Fee, for instance, possess a vast knowledge of the local market and provide full services such as listings on MLS, title search, internet marketing with high conversion rates, and comprehensive services at a more-than-fair flat fee of $5,000. Ensure the Property Is in Top Condition When trying to sell your new property, you need to ensure that it is in a presentable and marketable state. It is a new property and it is expected to be in great shape, however, you would need to ensure that all construction work is over and properly tidied up. The building should also be cleaned by professionals, and you should certify that all systems are working efficiently.  Offer Sale Incentives Every buyer wants to cut a good deal when purchasing a property. Offering sale incentives is a quick way to get buyers for your property. Discounts for early payment or reduced closing costs are some of the incentives you can offer buyers. Ensure Your Documents Are Complete One of the factors that stall the quick sale of a property is an incomplete record. This is because most buyers do not want to be saddled with the complications that may arise due to incomplete documentation in the future. Ensure that documents such as land purchase receipts and survey and building approval by the appropriate authorities are original and have been duly signed to avoid legal complications or delays. Frequently Asked Questions  Can I Sell a House Before It Is Built? Yes, you can sell a house before it is built. The real estate market has grown so much in the last decade that potential buyers do not need to see a finished structure before purchasing it. As a seller, these are some tips that can help you sell your property before it is built: Engage the services of a real estate agent who specializes in the presale of houses under construction  Offer a virtual 3D illustration of the property to help buyers know what they should expect Should I Sell My House Before Buying a New One? There are different factors to consider when looking to buy a new house, and the decision solely rests on you and your unique preferences. However, real estate experts advise selling your property before going ahead to buy a new one. This not only gives you access to the equity accumulated on your existing property but also saves you the strain of paying two mortgages for your existing home and the new one you just purchased, especially when the forbearance period ends. Conclusion  Selling a new property requires an extra level of care to avoid losing money. If you’re considering selling your newly built house, you might want to consider … Read more

published on May 4, 2022

What to Do About Utilities When Selling a House?

Real estate agent explaining the utilities of a house for sale

What to Do About Utilities When Selling a House?

There are several things on your mind when you are looking to sell a house. These could typically include renovations, cleaning, and a range of others. One of the things on the long checklist of things to do in dealing with utilities is what to do about utilities when selling your house.  What to Do About Utilities When Selling a House? A lot of home sellers do not put too much thought into what to do about their utilities until it is time to move and vacate. One reason for this can be because of the distracting and overwhelming nature of the relocation process.  That being said, it is not advisable to cancel your utilities when moving out because canceling them could come with significant consequences. However, you could employ various strategies to reduce what you would pay in utility costs such as reducing electricity usage and regulating thermostat usage.   Reducing Utility Costs During Your Home Sale  There are some tips you can follow to help reduce the utility bill that you will have to cover between when you move out and when the property is closed. All you have to do is follow these few basic steps: Turn off the lights whenever you leave  If you change the temperature on the thermostat, ensure you reset it before leaving  If you open any drapes and blinds, make sure you close them Double-check to make sure all the water valves are not dripping and are tightly closed  Whenever you are in doubt, ensure that the house is well-lit. You also want the house to remain connected to the water lines and function at comfortable temperature ranges depending on the weather till the deal is closed. It is important that you pay attention to the timing when it comes to utilities. When signing the loan documents for the buyer, check with the escrow company to determine the utility companies they routinely notify, if there are any. Typically, at closing, city utilities are informed of a change in ownership by the title company.  Why Is It Important to Leave Utilities Working? Leaving utilities up and running can very well be the reason why the sale doesn’t stall, break-ins do not occur, and the property’s structural integrity is left intact. The potential buyers will also need utilities on to view the home and perform common inspections. Furthermore, other factors such as avoiding pipe bursts in winter or even insurance issues are very much determined by whether or not you leave utilities running.  Easier Appraisal Process If your buyer is getting a mortgage loan, an appraisal has to be done on your property by the lender. During the appraisal, the appraiser will have to perform some tests. The utilities have to be working for some of these tests to be performed. Without performing them, the appraisal cannot be completed. This means that the buyer will not be able to access a loan. Consequently, the buyer will not be able to close the deal. Insurance Issues If you choose to cancel your utilities, it can cause certain difficulties with your insurance. A house without functioning utilities can cost more and be more difficult to insure. Your insurance company can even deny your insurance claim if you fail to notify them that you were leaving your house for some time.  Provision of Security  Keeping your utilities running after moving out helps to provide a layer of security for the vacant property. You can have a timer on the light fixture or lamps installed so that they come on and go off automatically at set times. This discourages potential robbers.  You can also set the porch light to come on at night. This will help to discourage any break-in attempts too. If you cancel your utilities, you cut off electricity to your homes and this makes you susceptible to robbers and thieves.  Home Sale Stall This particularly hits short-sale sellers hard. This is primarily because at closing, they would be saddled with the responsibility of paying off the utility bill if it transitions into a lien. If utility bills remain unpaid as a result of a short-sale seller lacking funds, the buyer could develop cold feet at closing which would stall the sale, and might lead to complete sales failure. If you have sufficient home equity, you might not be too bothered because you would likely get enough capital gains to pay off existing utility bills. Home Inspection Home inspections are another factor that you should consider when determining what to do about utilities. Buyers want to conduct their due diligence and this typically includes a home inspection. If the utilities have been canceled, it can be difficult to conduct a thorough home inspection.  [lyte id=’sTp07cGbtto’ /] Damage Prevention Extreme heat can be damaging to a house. It can lead to damaged hardwood floors, chipped paint, and peeling wallpapers. Rising humidity levels can even increase the risk of the house developing mold. This will eventually lead to high costs in replacements, higher than you would have paid in utility bills. It is a common occurrence for water pipes to explode during winter and flood empty houses when the weather becomes warmer. This occurs because the heat was turned off and the water in the pipes froze, expanded, and broke the pipes. It has been shown that this problem affects all 50 states, not just northern states.  How Do You Change Utilities When Moving? To change or transfer your utilities when selling your house and moving to another city, you would need to follow these steps: Get the supplier name from your real estate agent or present occupants of the home Get in touch with the supplier Provide your details so that a new account can be created Notify them of your moving date  Do a meter reading and send it to the supplier It is ideal to do this ahead of time so that while you are keeping utilities running for the new occupants of your old … Read more

published on May 4, 2022

What Is the Most Common Reason a Property Fails to Sell?

Real estate agent failing to sell a property to potential buyers

What Is the Most Common Reason a Property Fails to Sell?

A whole lot of effort goes into the process of selling a home whether you are doing it on your own or working with an agent. As a result, it can be deeply distressing when your house eventually fails to sell. In the event that this happens, there is a significant likelihood that you may have done something wrong. So, what is the most common reason a property fails to sell? What Is the Most Common Reason a Property Fails to Sell? The most common reason why a property fails to sell is wrong pricing. Some sellers tend to market their property at relatively irrational prices. The asking price is usually ridiculously high, and as a result, potential buyers steer clear of such properties.  Other times, a price point may seem reasonable but sellers fail to accept a high number of showings before an offer or offers that are consistently well below list price as a sign to lower the sale price. Even when a buyer is satisfied with the condition of the property, they can lose interest if your asking price is too high. You would likely need to review your asking price if you are facing difficulties with the sale of your property.  Factors to Consider Before You Change a Listing Price  If you are going to have a successful home sale, you would need to list at a price that is commensurate with the property value. In addition, you would need to consider factors like property location and prices of comparable properties.   Property Location The location of your property has a huge effect on the asking price. For instance, the listing prices for houses in California would significantly vary from the average listing price in some other location that has a lower cost of living like Arizona. Location plays a significant role in price determination and may also impact the speed of home sales as a result of the demand factor. Prices of Recently Sold Properties This factor would help you set your asking price appropriately. It would also shape the decision of your buyer. Buyers typically research the average selling prices of properties in your area and if your asking price is on the high side, you would likely discourage them and probably not get a chance for any proper negotiation.  This is where having a CA Flat Fee agent comes in really handy. Your agent is a local and very familiar with the market, and would therefore be able to advise the best listing price relative to prices of other properties in your area. Real Estate Market Outlook There are 2 main conditions that prevail in the real estate market:  Buyers’ market Seller’s market  They either favor the buyer or the seller. It favors the buyer when there are a lot of home options to pick from, in other words, a buyers’ market. It favors the seller when the buyer doesn’t have many options, so demand for property is higher than the supply, thereby resulting in home prices rising. When you know the prevailing real estate market conditions, you would be able to fix a suitable asking price for your property.  State and Condition of the Property No instant buyers would be inclined to pay for a property in a bad state with structural integrity in terrible condition. If your property is in a less-than-stellar state, the overall value is negatively impacted and the buyer would likely look to pay significantly less than your listing price. Before you put a property on sale, be sure to do the necessary work to present them in great condition.   This could involve having to make minor and major repairs indoors, as well as a seemingly insignificant outdoor activity like mowing your lawns or covering walls in a fresh coat of paint. This increases curb appeal and can greatly improve your bargaining power. It’s important that you take care of these things before even listing your home, as you might just take it off when you need to renovate certain areas. What Are Some Other Reasons a Property Fails to Sell? In addition to the most common factors that prevent a sale such as an irrational listing price or market outlook, some other factors like the very nature of the property or pictures used for marketing can prevent a sale. Unique Property With Limited Buyers Buyers tend to opt for more modern properties that offer the aesthetics that they want. So, if you list a house that is different from what the average homeowner wants, you would likely fail to sell your house. This factor is further impacted by the location of the home. If it is remotely located, this makes getting a sale even more difficult. To achieve a sale in this sort of scenario, you would likely have to carry out some architectural upgrades. Bad Listing Pictures Most of your potential buyers are going to do online research to get foreknowledge of the property. They are restricted to the pictures and information you provide before they can inspect the property in person.  If you provide low-quality listing pictures and basic information, they would probably lose interest even if it is exactly what they want. Be sure to provide accurate details with good-quality pictures to attract more buyers for your property.  Thankfully, CA Flat Fee offers high-quality photography and would help with an impressive description of your property. Location Location can affect your property sales, as it can affect your asking price. When your property is located in a remote or less-than-pleasant area, it would be rare to see buyers show interest.  You would likely need to exercise patience for a very long time to find a buyer or sell it at a pretty ridiculous price.  What to Do if You Can’t Sell Your Property? Considering the reasons a property fails to sell above, you might want to review some things before you put your property up for sale. Selling a property is like trying to entice … Read more

published on May 4, 2022

Will House Prices Drop in 2022?

Laptop showing a graph monitoring house prices

Will House Prices Drop in 2022?

Between 1980 and 2020, home prices have risen by about 416%. Similarly, home prices saw a 16.2% rise from 2020 to 2021. These data are indicative of a steady increase over the years. Now, in 2022, there’s a major question that has been on the lips and minds of many potential buyers and sellers of residential real estate. Will house prices drop in 2022? Will House Prices Drop in 2022? No, house prices are not expected to drop in 2022, and this is evidenced by the early months of the year. Experts predict that home prices might rise an average of 15%, which is impressively lower than the 20% increase experienced in 2021 and may therefore offer buyers a better chance to purchase their dream homes.  Another general prediction is that the shortage of homes for sale, as well as low-interest rates, which led to exorbitant prices in 2021, may continue into 2022, albeit at a much slower pace. Given this, house prices might begin to fall towards the middle and latter months of the year.  Factors That Would Determine the Prices of Homes in 2022 The year 2021 saw an unprecedented increase in the prices of homes as a result of high demand for homes and a pretty low supply. Homes sold within hours of being listed and at really exorbitant prices. While it was a good year for sellers, the same cannot be said for home buyers. In 2022, both buyers and sellers alike are anxious to see what turn the real estate market would take. The truth is various factors would determine whether house prices would drop or rise in 2022.  Inflation Major rises in inflation lead to an increase in the price of things generally, and real estate properties are not an exception. This implies that for house prices to drop in 2022, there would have to be a significant reduction in the inflation rate. So far, the numbers are not encouraging.  In February, the inflation rate increased to 7.9%, its highest rate since 1982. Experts predict that this rate could either remain the same or see a slight increase before finally moderating in the latter months of the year.  An Increase in Supply of Houses The Covid-19 pandemic of 2020 led to high demand for houses, which was met with a low supply. In fact, in 2021, the real estate market recorded the lowest supply of houses ever. This led to fierce competition amongst desperate buyers, many of whom were willing to pay extra to acquire the few homes available. It is safe to assume then, that if the high demand for houses is met by an increased supply in 2022, then the prices of houses would drop significantly. This can only happen, however, if a high number of landlords and homeowners decide to sell their properties.  Here are a few factors that could push more landlords to sell their properties in 2022, hence increasing the amount of supply, and ultimately leading to a drop in the prices of houses: Increased cost of utility and property maintenance  Inability of tenants to keep up with rent  Increase in regulations, fining, licensing and taxes High chances of maximum profit over sales A major influx of newly constructed homes being listed would do some good as well. Interest Rates Interest rates hit rock bottom in 2020, and this led to high competition amongst buyers to get home mortgages, and ultimately, increased the demand for houses. Low interest rates can therefore be considered a two-edged sword, hurting buyers and helping them at the same time.  On one end, mortgages require less in the way of interest , thereby making it easier for buyers to pay back their loans. On the other end, the increased demand met by a shortage of supply causes the prices of homes to skyrocket.  Mortgage rates experienced a slight rise in January 2022 and are expected to rise even higher in subsequent months, especially when forbearance ends. This would make it much more difficult to purchase a home, thereby dampening the level of demand and ultimately doing a bit to moderate the prices of houses.  How to Get a Good Home at a Reasonable Price in 2022 Getting a good home at a decent price in 2022 is not entirely impossible provided you follow the right path. This mainly involves employing strategies like proper timing and hiring a realtor. These factors are the most essential when it comes to buying a home. Timing Timing is very important when it comes to real estate. Shopping or buying a home at the right time has a direct impact on the category of homes available to you as well as price tags you would find. For buyers, the best time to buy in 2022 is when the inflation and interest rates have reduced considerably. At this point, the competition for houses would be less, and prices would have stabilized somewhat.  Hire a Realtor Realtors are the best bet for people looking to buy homes, because of their wide reach and knowledge of the local market. For example, CA Flat Fee realtors would help you find a home that suits your budget, provide guidance to make sure you make the right decisions, assist you in choosing the right zip code area for your needs, and ultimately ensure that you have a stress-free home acquisition process. Related Questions Is It Cheaper to Rent or Buy a Home? In 2020, as a result of the increase in home prices, it became cheaper to rent a home than to buy one. But does cheaper mean better? Due to the high demand for rental apartments, the cost of renting is also on a rise, and eventually, buying a home would likely become a better financial decision.  Some research has shown that it is currently more affordable to own a home than to rent a similar one, even after factoring in the cost of mortgage payment, taxes, insurance, and maintenance. Additionally, the low … Read more

published on March 28, 2022

MLS Acronyms

Realtor showing his client available MLS listed homes

MLS Acronyms

There are several unique abbreviations and acronyms used in real estate, specifically those relating to the Multiple Listing service. Having a proper understanding of these terms can be very beneficial to both home buyers and sellers in that it allows you to understand vital information. The following MLS acronyms are some of the most common and important that would help in your real estate journey. MLS Acronyms The MLS, or Multiple Listing Service, refers to an online database of property listings. Real estate professionals and potential homebuyers use the MLS to view properties that are for sale within a particular region. Brokers can easily use the MLS to find properties, compare them, make contractual offers, and share information among themselves. Home sellers usually work with a broker or a real estate agent to list their property on the MLS. However, if you are a home seller who wants to list your property For Sale By Owner (FSBO) to avoid commissions eating into your profit, you can use a flat fee realtor like CA Flat Fee to list your property. An extra benefit of opting for flat fee real estate is that you do not necessarily have to go the FSBO way. If you are looking to save on commissions, CA Flat Fee, charging a fixed flat fee for the entire transaction helps you save thousands of dollars. In addition, you get to avoid the stress that accompanies handling a home sale. MLS Acronyms You Should Know Potential homebuyers may come across diverse abbreviations and acronyms in their search for a property on a multiple listing service. While this is not a list of all acronyms there are, these ones are need-to-know.  AC When a property on a multiple listing service is listed with the acronym AC, it means that such listed property has an air cooling system. BMT In MLS listings, BMT is an acronym that stands for basement. It means that the listed property with BMT has a below-ground space or a basement.  BD3 Properties that are listed as BD3 in MLS listings refer to homes that have three separate bedroom units within the building. There are a few variations like BD2 which would mean that there are two bedroom units in the building. CAC CAC stands for central air conditioning in MLS listings. When a property is listed with this acronym, it means that the property has a central air conditioning system or a whole-home air-cooling system. FDR When you see FDR on a listing, it means that the property has a “formal dining room.” This means that there is a room or space in the home that is designed specially for a sit-down dining room table and other pieces. This space is typically not a part of the kitchen.  FSBO FSBO, when used on an MLS listing, is a commonly-used acronym that stands for “For Sale By Owner.” It is a designation that shows that a property has been listed by the property owner instead of through a broker or real estate agent. One of the main reasons why property owners choose to do this is to save money. They can simply use a flat fee service to list their home without having to worry about realtor commissions. GAR In MLS listings, GAR (also written as gar) is used to mean “garage.” This means that the property listed on the MLS platform has a part of it that has been designated for car storage.  On certain MLS listings, you may see “1C” or “2C” which stands for a one-car or two-car garage. You may also see the abbreviations “att” which means attached garage or “det” which stands for a detached garage. HB If you see a house on an MLS listing with the acronym HB, it stands for “half bath.” This means that the listed home has a bathroom with a toilet and sink. This is compared to properties that are listed with FB that have full baths which includes a bath or shower setup. HOA HOA stands for Homeowners Association. This refers to a private community organization that oversees, determines, and enforces sets of local rules and regulations known as CC&Rs (covenants, conditions, and restrictions).  If you choose to buy a listed property labeled HOA, it means that you are buying a home in a community with an HOA. Upon purchase, you automatically become a member of the association and you may be required to pay a monthly or yearly due, which is used by the elected board of directors to make neighborhood improvements. HVAC HVAC, in MLS listings, stands for “heating, ventilating, and air conditioning.” This means that the property listed with the tag HVAC has systems throughout the building responsible for warming and cooling the air within such property. MB If you see a home on an MLS listing with MB, it means that the property has a “master bedroom.” This indicates that the listed home has a specific bedroom that is significantly bigger than the other bedrooms within the home. LR When a listed property is tagged with the abbreviation, LR, it shows that the property has a “living room.” This means that the listed property has a designated space or room that is separate from the bedrooms or kitchen, one where the occupants can typically gather and relax. REO REO stands for Real Estate Owned. It refers to a property that is owned by the lender instead of a homeowner as one would expect. Typically, homes that do not sell at auction and are foreclosed can become REO. RTO  The acronym RTO stands for Rent to Own. Homes listed as RTO indicate a type of renting structure that creates room for potential buyers or renters to make monthly payments over a period of time with the eventual option of purchasing the property instead of just paying rent. This type of property typically includes lease-purchase agreements.  SFH SFH on MLS listings refers to properties that are single-family homes. This means that the … Read more

published on March 28, 2022

Does FHA Help With Closing Costs?

Realtor showing the closing costs of an FHA loan to a buyer

Does FHA Help With Closing Costs?

Most people consider FHA loans to be better than conventional loans because their requirements lean closer to the friendly side. However, initial requirements aside, how different are FHA loans from conventional mortgages when it comes to closing costs? Does FHA help with closing costs? Does FHA Help With Closing Costs? No, taking an FHA loan does not help with closing costs. The closing costs of a real estate deal funded by an FHA-approved lender are about the same amount range for deals funded by traditional creditors: 2% to 6% of the property’s cost price. In some cases, in fact, you might have to pay more.  What Are FHA Loans? FHA loans are mortgages whose requirements are specially designed to favor low or medium-income borrowers looking to purchase a home. FHA loans are guaranteed by the Federal Housing Administration and can only be issued by FHA-approved institutions in order to protect the interests of lenders. Because of this, it is easier to qualify for them than conventional loans.   With FHA loans, the rules are simple – the higher your credit score, the lower the down payment you would be required to make. For instance, if your credit score falls between 500 and 579 points, then you would be required to part with 10% of the property’s cost price as a down payment.  However, if your credit score is higher than 580, then you would only be required to pay as low as 3.5% of the property’s value, to get a mortgage that covers up to 97.75% of the property’s value. These requirements are way easier than that of conventional lenders, some of whom require minimum credit scores of 680.  What Are FHA Loans Closing Costs? The closing costs on an FHA loan include the fees charged by the lender, third-party fees, insurance mortgage, and all other costs involved in the real estate transaction. It typically costs between 2% and 6% of the total value of the sales price of the property.  While FHA loans help you to save more cash by requiring a low down payment, there are a few factors that come into play with FHA loans that make their closing costs slightly higher than those of conventional lenders. These factors are: FHA Home Appraisals  If you are looking to get an FHA loan, you are required to carry out a property appraisal that meets the standards of the FHA. An FHA home appraisal consists of two stages. In the first stage, the FHA appraiser visits the home in person and thoroughly inspects the property, and in the second stage, market research is conducted.   This home appraisal would cost a few hundred dollars and is higher than the price of a traditional home appraisal.  Mortgage Insurance Premium (MIP) FHA loans require an upfront Mortgage Insurance Premium (MIP) that constitutes about 1.75% of your loan amount.  For example, if your loan amount is $300,000, 1.75% of that would be $5,250. On the bright side, you have the option of including this fee in your loan amount. This means that rather than receiving a mortgage of $300,000, the total amount you would be getting would be $305,250.    How to Reduce Closing Costs for Buyers  If your closing costs seem too overwhelming, there are a couple of ways through which you could get help to reduce them. Here are the most popular ones: Negotiate With Seller With FHA loans, sellers are allowed to contribute up to 6% of the property purchase price to cover a buyer’s closing cost. For instance, if the purchase price is $300,000, then your seller can assist you in covering closing costs worth $18,000. This mostly works if you have a motivated seller who is looking to close the transaction as soon as possible, or if you are paying a good price for the property. FHA guidelines apply here. Roll Closing Costs Into Mortgage In the event that your seller is not willing to help you with your closing costs, then you have the option of requesting your lender to roll some closing costs into your mortgage amount. Technically, you still pay this back and if your lender agrees to do this, then they would charge you a higher percentage of interest on your mortgage.  However, at the point of closing, you would have successfully reduced closing costs to be paid out of pocket.  Frequently Asked Questions Are FHA Loans Better Than Conventional Loans? The choice between an FHA loan and a conventional loan should be made depending on your financial conditions. FHA loans are more lenient on people with lower credit scores and so, they might be a better option for you if you are experiencing some financial challenges.  However, if you do have a pretty solid financial footing, then you could decide to go for conventional loans.  Why Do Home Sellers Prefer Conventional Loans Over FHA Loans? Some home sellers may prefer conventional loans over FHA loans because the latter requires a special FHA home appraisal before closing.  These home appraisals are usually more thorough, and for the deal to continue, the property has to meet the standards of the Department of Housing and Urban Development. This extra step and the added uncertainty that it brings might easily put some sellers off.  Are realtor fees included in closing costs? Yes, realtor fees are included in closing costs. However, they are paid by only the seller. These fees cover the costs of the real estate agents involved in the transaction, which are the listing agent and the buyer’s agent. Basically, there are two types of realtors: traditional realtors and flat fee realtors.  With traditional realtors, the amount the fee costs usually varies based on the value of the property. This is because they typically charge a fee of around 3% each of the property’s sales price. With flat fee realtors, however, the cost of realtor fees is a fixed price that does not change, irrespective of the price value of the home. For instance, with CA Flat … Read more

published on March 17, 2022

Is It Cheaper to Live in Arizona or California?

Los Angeles and Arizona road signs

Is It Cheaper to Live in Arizona or California?

While Arizona and California share borders, there are a lot of differences between them. Some of these differences include culture, climate, weather, and more importantly, the cost of living. Since living costs constitute a major factor in choosing where to live, is it cheaper to live in Arizona or California? Is It Cheaper to Live in Arizona or California? It is cheaper to live in Arizona than it is to live in California. Arizona is known to be one of the cheapest states to live in and this is chiefly because of the lower cost of housing and a generally lower cost of living as well.  Most people living in Arizona spend just around 70% of their income on bills compared to the national average of 81%. If you are relocating from California to Arizona, you should experience a significant drop in your expenses. California has shown to be one of the most expensive states to live in. Why Is It Cheaper to Live in Arizona Than California? California ranks third on the list of most expensive states to live in the United States with a cost of living index of 138.5 according to World Population Review. Arizona has a cost index of only 97 making it a significantly cheaper place to live. The major differences between both states can be found in taxes, rent prices, traffic, public transportation, and median home price, amongst others. Cost of Living Since Arizona became a state in 1912, its population has increased from about 200,000 to over seven million. A large part of this population came as a result of the migration of people from other saturated states including California. More and more people are leaving states like California because of the high cost of living. The daily costs and average rent obtainable in Arizona are way lower than what is currently obtainable in California. The costs of groceries, housing, utilities, transportation and healthcare are generally lower in every city in Arizona as opposed to most of the cities in California. Taxes In Arizona, as of 2022, single taxpayers earning incomes of up to $27,272 will pay a 2.55% tax on their income, while taxpayers earning above this will pay a 2.98% on their income. This is a lot lower than what taxpayers are required to pay in California. In California, single taxpayers with incomes up to $9,326 will pay a 1% tax. Those earning incomes between $9,326 and $22,107 will pay a tax of $93.25 plus 2% of the amount that is above the minimum.  Taxes rise alongside pay with people earning between $22,108 and $34,892 paying a tax of $348.89 plus 4%. Aside from state income taxes, other taxes like property tax and sales tax are significantly higher too.  Median Home Price On average, it is cheaper to purchase a home in Arizona where the median home price is just about $225,500. In California, on the other hand, you may have to spend almost double this amount with the median price of home slightly falling short of $505,000. Though home prices have significantly increased over the last year in Arizona, demand is beginning to decline. With a decline in demand, home prices are likely to fall. However, things are quite different in California where there is a home-buying frenzy in areas like Pasadena and San Diego. Generally, median home prices vary based on the county and city where you live in. City Median Home Price Phoenix, AZ $425,000 Scottsdale, AZ $760,000 Tucson, AZ $308,000 San Francisco, CA $1,300,000 Los Angeles, CA $912,000 San Diego, CA $811,000 Rent Prices Arizona is considered to be one of the most affordable states to rent a home with an average rent of $1,052 across the entire state. Actual rent depends on the specific county and city you choose to live in. Scottsdale is about the most expensive city to rent a home while Tucson is the most affordable city for renters in Arizona.  City  Average Rent Tucson, AZ $1,150 Mesa, AZ $1,479 Phoenix, AZ $1,477 Avondale, AZ $1,628 Tempe, AZ $1,818 Scottsdale, AZ $2,072 Traffic and Public Transportation Another major expense you should consider when moving to California or Arizona is transportation. As a state, Arizona lacks a public transportation system. However, there are individual agencies all over the state that handle this.  If you plan on living in any of the major metro areas in Arizona, you can save costs on transportation by ditching your car and using public transportation. This is almost identical in California, however, higher fares are charged there. Ultimately, this leads to higher transportation costs in California than in Arizona. This reflects in the transportation cost index with California ranking higher at 136.1 when compared to Arizona at 98.8.  Related Questions Why Are So Many People Moving to Arizona? One of the reasons why a lot of people are moving to Sun Belt states like Arizona is to escape the harsh winters. There are a few other reasons why most people are moving to Arizona. They include: Job availability  Low costs of living Lower priced homes  Little or no traffic Breath-taking attractions Is It Worth Moving to Arizona?  Aside from the great weather and beautiful landscape that the Golden State offers, Arizona has a very good economy. If you are a young professional looking to start your career or a retiree looking to settle down, then Arizona is worth moving to.   What Is the Moving Cost From California to Arizona? The average cost of moving to Arizona from California is between $2,300 and $3,800. The exact amount depends on route, size and timing of your move.  If you are leaving California for Arizona and you are looking to sell your house, you can get a CA Flat Fee agent to handle the sale of your home for a flat fee. This helps you save in the way of agent commissions.  [lyte id=’49CJjCtuWmI’ /] Conclusion  If you are willing to trade a few months of heat for lower living costs, … Read more

published on March 17, 2022

What Percentage Do You Lose When Selling a House?

Stacks of coins beside a wood carved house

What Percentage Do You Lose When Selling a House?

Selling your house can bring you good returns. However, the numerous costs of selling a house such as moving fees and agent commissions can eat into your profit. So, what percentage do you lose when selling a house?  What Percentage Do You Lose When Selling a House? Typically, sellers pay about 6% of the selling price in realtor’s commissions and 2% to 4% in closing costs bringing the total expenses close to 10% of the sale price. While those numbers are the standard, you can lower those costs through negotiation or choosing a non-traditional real estate transaction process. Other additional expenses associated with selling your property include transfer taxes, mortgage pay off, and title insurance cost. If you are planning to sell your home, it’s important you understand the fees you need to pay, what way you’re carrying out the sale, and how they can affect your profit margins. What Is the Real Estate Realtor’s Commission? This is a fee paid to a realtor for the services offered to home sellers and buyers and is split between the buyer’s and seller’s agent.  Although the commission can vary depending on where your home is located, it’s usually around 5-6% of your home’s sale price. For instance, if your home sells for $200,000, a 6% commission would be $12,000. So each agent will receive $6,000. Who Pays the Commission? The seller pays the commission in most cases. However, the buyer can also cover part of this commission because it’s included in the listing price. Note that both agents receive the commission after the seller and buyer sign the contract and agree on terms and the sale is completed.  What Does a Realtor’s Commission Cover? The real estate realtor commission covers the services a realtor offers during a home sale. For seller’s agents, it compensates them for coordinating prospective buyer visits and for the buyer’s agent for showing properties.  What Are the Closing Costs? Closing costs are the fees you pay after closing on your home and usually range from 2% to 4% of the sale price. However, they vary depending on the loan program of the buyer. Also, the amount you will pay depends on your location and the price of your house. Two of the most important closing costs are transfer and property taxes. [lyte id=’nkia30I2i0Q’ /] Transfer Taxes These taxes apply if you are transferring the title of your home to another person. The tax can be inspected at municipal, county, and state levels. However, the money you pay depends on where your house is located.  For example, 12 states charge no transfer tax while Arizona charges a $2 flat transfer fee. The transfer taxes for the remaining states range from 0.01%-5% of the selling price.  The title or escrow company will also have a fee to manage this process. Property Tax Property taxes are only paid if they are escrowing into your mortgage. You should pay the tax up to the closing day and place the money in escrow.  However, if you have paid your taxes and want to sell your home, you may be given a rebate at closing. This means the buyer will reimburse you for the taxes you may have paid after the closing day.  How to Estimate Closing Costs For buyers, after submitting your mortgage application, you will get a Loan Estimate (LE) from your lender within a few days. So if your mortgage is $300,000, expect to pay $6,000 to $15,000 in closing costs. The costs are divided into two categories: Property-related expenses: They cover the fees your lender incurs when assessing the home you are financing. Mortgage-related expenses: They cover your application processing fees. It’s also a good idea to speak to your lender and check your mortgage documents to know what you are expected to pay. Depending on the loan type, the seller may have costs they are legally required to cover. Additional Factors That Affect How Much You Lose Keep in mind there are other factors that affect the percentage you lose when selling a house. Here’s an overview of the several costs related to selling a house. Home Transition Costs The transition period between moving into a new house and selling your current one can make you pay ownership expenses for two houses if you have closed on a new one. The costs can include property taxes, utility fees, and mortgages. Also, if you are still looking for the perfect home or you haven’t closed on your new house, you will have to pay for temporary living. However, if you sell with CA Flat Fee, you will save money on the listing commission which helps offset any of these other expenses you may face. Mortgage Pay Off Before closing the sale, you will need to clear your mortgage. Your home sale proceeds will be used to clear the mortgage. If the amount on your mortgage is less than what you owe, you will have to add the accrued prorated interest to the total balance.  Also, if your mortgage has a prepayment penalty, you may need to pay a small fee. To know if your loan has this penalty, call your current lender or check your loan documents. Prepayment penalty ranges from 2% to 4% of the initial loan amount. Relocating Costs You may relocate before or after the closing. However, the three factors that affect moving costs include: Whether you are hiring expert movers or moving yourself The distance you are moving, whether short or long The number of items you are transporting Professional movers can pack your items, transport them to your new house and unpack them. However, you may have to pay an hourly or flat fee for such services. Keep in mind that movers also charge more to transport heavy items and for moves involving longer distances. Title Insurance In some cases, the seller may be required to pay for a separate policy to protect the buyer if the home has ownership issues. The average cost … Read more

published on February 14, 2022

Can You Negotiate the Realtor Fee?

Two people shaking hands in front of house

Can You Negotiate the Realtor Fee?

While there’s no fixed commission rate that real estate brokers charge, the industry standard is 6% of the final selling price. On an $800,000 property, that can add up to $48,000, which is a lot of money. So, can you negotiate realtor fee? Let’s find out. Can You Negotiate the Realtor Fee? You can always negotiate the realtor fee, as it is not fixed by any law or governing body. The industry standard of 6% commissions have become increasingly negotiated, while other models like flat fee purchasing have entered the market.  You can also negotiate the realtor fee if your property is highly-priced, move-in ready, or if you’re working with the realtor on multiple transactions. There are also agents willing to reduce their commission rates if your home is in a place where properties sell quickly. However, negotiating commissions is more likely to work with experienced brokers who have more leeway. For newer agents, a brokerage firm tends to dictate the commission rate and not the agents decision. Why Don’t All Realtors Charge the Same Commission? Despite the industry norms, realtors are paid based on local rates and customs. They also have different services and work differently. That being said, we recommend you choose a realtor based on the services they offer rather than on commission alone.  Generally, more expensive realtors provide profit models and high-end services for their clients that less expensive realtors don’t offer. At CA Flat Fee, you get full-service brokerage with complete closing coordination, marketing, and professional photography. We also coordinate negotiations, offers, and all showings for a low flat fee. Reasons Realtors May Lower Commission Fees Realtors may consider lowering their fees by a half percentage point and in certain circumstances, a full point when: You Buy and Sell With the Same Realtor Sometimes realtors may represent you when you’re selling your old house and buying a new one. If your realtor is your buying and listing realtor, they may receive both commissions. In this situation, you may negotiate a lower commission.   While some real estate brokers may give you a discount if you buy and sell your house through their agency, others may refuse to discount fees. This is because they believe the two transactions are different from each other.  Each transaction involves separate work whether the buyer or seller are unrelated individuals or the same person. Bear in mind that realtors may not discount their commission while doing double work for less money. However, you may negotiate a lower rate based on referrals you may send them in the future.  The Same Realtor Represents You and the Buyer This is also known as dual agency and it’s illegal in some states. In areas where it’s allowed, a broker may earn both selling and listing fees. In such transactions, your broker accepts liability when they’re a dual agent.  This is because they’re dealing with two different parties, with separate interests, the same property, and different abilities to sue in case something isn’t handled properly. Some states require dual agents to work as transactional agents without taking anyone’s side.  This means they don’t provide much assistance or offer advice. They only process paperwork. Some sellers in certain areas use this tactic to ask a listing agent to reduce their fees if they represent both the buyer and the seller. Note that you typically negotiate all commissions when signing the listing agreement.  You Have Several Listings With the Same Seller Lowering commission fees in exchange for multiple listings from the same seller can be possible depending on the following three variables: Sales prices of transacted homes Ease of closing a sale Market mobility If all the above variables are in the realtor’s favor, negotiating a reduced commission becomes easier. Also, if your realtor has a strong income stream from you, they may not refuse.  The Realtor Controls the Neighborhood Realtors who conduct much of their business in certain locations may offer you a discount. These are realtors who may ask for higher rates and quickly agree to reduce their rates if there’s competition from other realtors. Look for a Realtor that has a preferred vendor’s program, which in turn could help you with your costs. If you like a broker who quoted you higher fees and interviewed another who agreed to complete the task for less, contact the first realtor and offer the second realtor’s rates. However, don’t focus so much on commissions that you end up not hiring the best realtor you can afford.  Negotiating as a Seller Sellers are usually shocked when they receive different commission prices, marketing tactics, and listing prices. If you’re a seller, interview at least three brokers. Some brokers can promise you a high sales price just to buy the listing while listing agents can suggest a lower listing price to sell a home with little effort. However, you can make your broker’s job easier by renovating your property before a sale. You can either get your backyard landscaped, the carpets cleaned professionally, or paint your house. Bear in mind that a staged property sells quickly, for more money. Negotiating as a Buyer It’s unreasonable to negotiate your broker’s commission if you want high-end services from a realtor that’s ready to sacrifice evenings and weekends to show you every house available in town. However, you can negotiate it in certain situations.  For instance, if you’re buying an expensive or a newly constructed home and completed most of the legwork yourself, you can ask for a lower rate. A good idea is to formalize your business relationship from the outset in a buyer’s contract.  We recommend working with a committed buyer’s agent who takes their duties seriously. Related Questions Do Realtors Earn a Salary in Addition to a Commission? No, most real estate realtors do not earn a regular salary, they only work on commission.  When Should You Negotiate Realtor Fees? You should negotiate realtor fees if you sell your property during off-peak seasons when your realtor may want more business. … Read more

published on February 14, 2022

What Fees Do You Pay When Selling a House?

Man giving money to another person

What Fees Do You Pay When Selling a House?

Real estate fees can add up to 10% of your property’s sale price after factoring in additional expenses like repair costs. While some expenses are negotiable, you should expect to pay for several costs associated with selling a home. So what fees do you pay when selling a house? What Fees Do You Pay When Selling a House? When selling a house, the highest fee you pay is the real estate realtor commissions, which can be 5 to 6% of the sale price. For instance, if you are selling your property for $248,000, you may pay up to $14,880 in commissions, which are split between the buyer’s and seller’s agent.  According to the National Association of Realtors, 77% of sellers bear this cost. However, you can pay less by negotiating a lower real estate realtor commission if the sale price is high or when the local market is strong. You can also pay a whole lot less by using a full-service brokerage that charges a flat fee. Why Do You Have to Pay Real Estate Realtor Commissions? Although real estate agents update your listing and arrange tours, their services aren’t free. Sellers pay 5 to 6% of the selling price as commission charges. However, if you’re selling to CA Flat Fee, you get a full range of services like closing and showing coordination, professional photography, and more for a low flat fee that costs a lot less. Granted, you can also sell your property without an agent. However, be ready to perform the duties of the agent including hiring an attorney to prepare the contract, handling title transfer, negotiating, and showing your home to potential buyers. Below is how commission rates breakdown by sale price assuming the commission cost is 5%. Sale Price 5% Commission Rate $350,000 $17,500 $450,000 $22,500 $550,000 $27,500 $650,000 $32,500 $750,000 $37,500 Can You Negotiate Real Estate Realtor Commissions? There are no state laws that regulate commission costs. So realtors can negotiate lower fees depending on the required services. However, a lower commission isn’t the best option.  This is because part of the realtor’s rates covers the advertising budget and may hinder the agent from marketing your home properly. That said, CA Flat Fee provides no-hassle pricing. In every home sale, we show you the amount you will pay and the money you will save.  Do You Pay Commission Fees Even if You Don’t Sell a Property? Realtors usually get paid after closing the sale. This means they won’t receive payment if you don’t sell a property. It may also be difficult to work with another realtor if you have already signed a contract with them.  However, if you choose to back out, you may still have to pay commissions depending on what point in the process you cancel. So before signing a contract, ask the following questions: If I decide not to sell my home anymore, do I still owe the agent a commission? Will my house be inspected after or before signing the sales contract? Can I sign a sales contract if I don’t have a mortgage contingency? If I have a lawyer, do I still need an agent to sell my property? What Other Fees Do You Pay When Selling a Property? Before listing your property, you’ll need to make sure it’s market-ready to attract potential buyers. Below are the fees related to staging and prep costs you need to consider while preparing your house. Home Repairs Repair issues are one of the major reasons why home sales fail at closing. If you are selling to CA Flat Fee, we simplify the repair process to ensure you have a competitive offer.  While you are preparing to sell, inspect your property to see if there are any rooms that need to be cleaned, have any broken appliances or damages. Repairing common items such as your roof and HVAC system can significantly increase your home’s value.  Home Improvements Apart from repairs, decide if you want to renovate your home, the amount you are willing to spend and the potential ROI (return of investment). For instance, a minor kitchen remodel can cost you $23,452 on average. However, you will recoup 81% of the sale cost if you renovate the kitchen yourself. While hiring experts can save you time, it can be costly. You can also work on smaller upgrades to add value for interested buyers. For example, little things like upgrading your cabinet pulls can catch prospective buyers’ attention and increase your property’s value. Landscaping Expenses It’s also important to ensure the exterior of your home is looking good before listing it for sale. An attractive curb can entice buyers who rely on pictures to compare homes while shopping online. Landscape maintenance includes things like planting flowers, reseeding the lawn and weeding. If you are sprucing up your flower garden or applying fertilizer to the lawn, expect to pay a few hundred dollars for landscaping costs at the lower end. However, the average cost of comprehensive services can be around $3,240 depending on the extent of the project and your lawn’s size.  Staging Costs Buyers love visualizing what a home may look like after moving in. So as the seller, focus on your property’s best features such as installing new flooring and arranging furniture to make your home appealing to buyers. The average cost to hire an expert stager is between $2,300 – $3,200.  Although you can save money if you choose to stage your home yourself, you will spend a lot of time preparing each room. You may also have to buy the following items: Decorative accessories Light fixtures New furniture Paint Curtains You may also have to hire a deep cleaner to clean your carpets and pay $35-$50. Professional carpet cleaning can cost you $80-$550 per day. However, staging can pay off because 21% of sellers’ agents reported that staging boosted property value by 6%-10%.  [lyte id=’hPNc99iFf4Q’ /] Closing Costs Both sellers and buyers pay this fee at the close of a transaction. … Read more

published on February 14, 2022