Hi all! Today we’re going to start a series of blog posts getting back to basics! We realize that real estate can be confusing when you’re not a Realtor – heck, we even get cases that challenge our problem solving skills! We thought it might be a good idea to, at least once in awhile, answer the most common questions we hear. Two things before we get started:
Good question! Simply put, home equity is the market value of your home minus the total of any liens against it. In non-Realtor-speak, it’s the amount your home is worth minus what you owe. Make sense? For example, let’s say the fair market value of your home is $250,000 and you still owe $200,000 on your mortgage loan. The difference between the two, in this case $50,000 is what you have in equity. It’s the real property value of your home to you.
Better question! Home equity is an awesome thing to build and there are a few ways to go about it! The first is to put a down payment on your home when you purchase it. If you purchase a home for $250,000 and immediately put $50,000 down on it, you now have $50,000 in home equity (leaving closing costs and other fees out of the equation for the moment).
Another way to build home equity is to pay against the principal of your mortgage. Let’s say you’re paying an extra $1,000 per month on your mortgage payment. A percentage of that will go toward paying down the principal balance of the mortgage faster, so you’ll build home equity faster.
As the fair market value of your home increases, like we’ve seen in recent years with rising property values, the home equity of your loan increases similarly. If you can sell your home that you purchased for $250,000 at $300,000 – boom, $50,000 more in equity.
A riskier way of building home equity is through renovation. Let’s say you spend $20,000 on a kitchen renovation that increases the market value of your home by $25,000. Excellent! You’ve earned $25,000 of equity and profited $5,000. The flip side (get it?) of the renovation strategy is that there are a number of scenarios where you don’t build as much equity as the cost of your reno – if you over-renovate for the neighborhood, spend money on something that doesn’t traditionally get as much back (we’re looking at you, swimming pools), or renovate to your specific taste without considering a buyer’s perspective, you may lose money on your renovation.
Unfortunately, no. While homeownership is one of the most stable investments, as we’ve all seen, it’s not without a certain amount of risk. When you’re riding the market to build equity, it’s just as possible that home values decrease than increase. If that happens, you’re losing equity. If you get locked into a mortgage with an unfavorable rate or repeatedly refinance, you could lose equity even as you make timely payments. These are obviously situations to be avoided, so it’s important to work with a Realtor and a mortgage lender you trust to steer you away from these possibilities.
Home equity is, by definition, not liquid (when you can repeatedly buy and sell and investment without affecting its price). For that reason, it’s important to consider how you might make that equity work for you. Home equity management is the process by which you invest the equity in your home, usually through loans then further investments, with liquid assets. Yes, all of this takes a lot of math, careful planning, and a certain amount of risk, but it’s how you can put the equity in your home to work for you.
Phew, that was a lot!
We know it is. While we handle scores of buy/sell transactions every year, the average person only moves 11.3 times in their entire life (as of 2015) and obviously not all of those involve buying and/or selling a home.
It’s our job to know how to navigate the real estate world and our privilege to assist you in the process! Connect with us today – via text, phone, or social media – so we can talk about how to figure out your home’s fair market value and how much equity you likely have in your home. Even better, we can talk about listing your home now while the market is favorable to maximizing equity and putting it to work for you in your next home!
Unless you have been completely ignoring the real estate market (and you haven’t been, because you’re reading this), you are probabaly aware that it is without a doubt a sellers market right now. In this blog post, we will go over what it really means to be a sellers market, how we know it is, and how to take advantage of it.
In short, it’s all about supply and demand. Right now, demand is very high thanks to steady job growth over the last few years. More people are employed and incomes are (believe it or not) rising, so more people can afford to enter the market as buyers.
Statistics can be confusing, but they tell a pretty clear story about the current housing market. Here are a few keys takeaways:
The moral of the story right now is that sellers are at an advantage. Home builders cannot keep up with demand and existing home sales remain high, which leads to a decrease in supply.
HIGH DEMAND + LOW SUPPLY –> Prices stay high, days on the market decrease, and sellers are at an advantage.
All the housing market stats continue to point for a tough road for buyers – there is more competition among buyers for fewer homes, and prices will likely continue to rise. Buyers are feeling the squeeze and it’s for a good reason.
So how can you take advantage of the sellers market? The first step is to call us for a market analysis of your home! We’ll talk you through how sales are in your specific area, what you might be looking at for a reasonable listing price, and approximately what to expect for days on the market. Connect with us today!
*All statistics are drawn from the National Association of Realtors Quarterly Metropolitan Median Area Prices and Affordability report and are based on existing home sales.
Throughout the summer, the Home Connection Group would like to honor and recognize the commitment and sacrifice of our military servicemen and women and the first responders who protect and serve our communities. For any new listing between now and the end of August we will give 5% of our listing commision to the seller upon closing.
While this gift in no way matches the sacrifice you show everyday, we want to at least honor that sacrifice in a small way. We know these careers make your lives hectic and unpredictable at times, so we want to ease that burden in any way we can.
If you are interested in selling your home and have questions about the market or the home-selling process – connect with us! We would love to walk you through the process step-by-step and answer any questions you may have. You can email Becky at [email protected] or call 863-602-8605. Let us put our connections to work for you!
April 2017 marks the 49th anniversary of the Fair Housing Act passed in 1968. Aft er decades of start and stop legislation, differing by state, area of the country, and now-protected classes of citizens, President Johnson signed into law the Civil Rights Act of 1968, also known as the Fair Housing Act.
In short, the Fair Housing Act put in place federal prohibitions against discrimination on the basis of race, color, religion, national origin, sex (since 1974), and disabilities and families with children (since 1988). Refusing to sell or rent housing, changing the terms or conditions of a sale or rental, discriminatory language in advertising, or threatening housing in any way to people in protected classes became illegal.
The National Association of Realtors obviously takes the Fair Housing Act very seriously. Their Fair Housing Declaration, which the Home Connection Group subscribes to wholeheartedly, outlines our beliefs and practices in accordance with the law. In addition, as Realtors, we also agree to take a positive and proactive approach to eliminating housing discrimination and to carry out the spirit of the law, not just the letter. Included in that are things like not discriminating on the basis of sexual orientation, avoiding social steering, and staying informed about fair housing practices. We take this promise very seriously and work hard to promote fair housing in our community.
We love helping new visitors and transplants to the Polk County area discover Lakeland and the surrounding cities! It can be stressful, however, to move to a new place thanks to work/family/etc. without much info. Here are several tools to give you all the data on the key factors that you may want to know when looking at a new neighborhood:
Foursquare, and it’s social media sister-site Swarm, is a great resource when you’re looking for a new location or for when you’re traveling. You can get a great overview of everything an area has to offer by searching categories like “coffee” or “breakfast”. You can also search based on businesses or locations that are trending, so you can get a feel for the up and coming things a city has to offer.
For the math geek in all of us, there is City-Data.com. It has all the info you could ever hope to have about a city, compiled from public records and government data. One of the things we love about this site is that it not only gives you current stats, but also shows historical data (where available) so you can get a feel for how things change over time.
This site is the user-friendly version of City-Data.com. It’s got all the same info, but it’s presented in easier to view formats with eye-catching charts and graphics. We also love their Top lists, highlighting interesting points about what makes a great city for entrepreneurs or people who are self-employed!
You’ve probably already heard of this one – it’s the gold standard for area school research based on the most current available data. You can search for specific cities, then narrow down your search for elementary/middle/high schools and other options. There is good content on the site as well, including info for college prep and planning.
It can be hard to get an accurate view of the crime in a particular neighborhood. Spot Crime does a fair job of reporting all of the official incidents in an area within a giving time frame. You can also use the map feature to see where incidents are reported most frequently and the types of crimes that occur, information that can be hard to discern from simply search police records.