A man, as he almost always did, came home late from work one night. He was tired and irritated. Upon his arrival he found his six-year old son waiting for him at the door.
"Daddy, may I ask you a question?" "Yeah, sure, what is it?" replied the father grumpily.
"Daddy, how much money do you earn in an hour?" "That's none of your business! What makes you ask such a thing?" the man responded angrily.
"I just want to know. Please tell me, how much money do you make in an hour?" pleaded the little boy.
"If you must know, I make $30.00 an hour" " Oh," the little boy replied, head bowed down and a tear in his eye. Looking up, he asked, "Daddy, may I borrow $15.00, please?"
The father was furious. "If the only reason you want to know how much money I make is just so you can borrow some to buy some silly toy or some other nonsense, then you march straight to your bedroom and go to bed. Think about why you're so selfish. I work long, very hard hours and I don't have time for such childish games."
The six-year old child went to this room and shut his door.
The father sat in the living room and became even angrier about the little boy's request for $15.00.
How dare he ask such questions only to get money?
After some time passed, the man had calmed down. He started to think about how hard he had been on his son. Maybe there was something he really needed to buy with that $15.00. He really did not ask for money very often.
The man went to his son's door and knocked. "Are you asleep son?" he asked. "No daddy, I'm awake." Replied the boy. "I've been thinking, maybe I was too hard on you earlier," the man said. "It's been a long day and I took my aggravation out on you. Here is the $15.00 you asked for.
The little boy sat straight up, beaming. "Oh, thank you daddy!" he yelled. Then, reaching under his mattress, he pulled out several crumpled dollar bills.
The man, seeing that the boy already had money, started to become angry again. The little boy slowly counted out his money, and then looked up at the man. "Why did you want more money if you already had some?" the father growled.
"Because I didn't have enough, but now I do," the little boy answered. "Daddy, I have $30.00 now...Can I buy an hour of your time?"
The old-time father who used to wonder where his boy was now has a grandson who wonders where his father is.
Cut Your Closing Costs
Closing is the point at which a contract between a buyer and a seller is executed, and the title to the property changes hands. This process has a variety of associated costs, most of which are paid at closing.
Normal Closing
CostsClosing costs can be highly variable since they're dependant on the size of the mortgage and the value of the property. Typically, closing costs are between three and five percent of the property's value, and may include the following:
* Loan origination fees - also called points (one point equals one percent of the mortgage). The standard fee is one point. Paying more points can secure a lower interest rate.
* Title search and insurance - a title search examines a property's historical records to ensure that the seller is the legal owner of the property. Title insurance protects the buyer if tax liens or unpaid mortgages are overlooked in the examination.
* Inspection fees - includes pest and property inspection.
* Mortgage broker fee - applicable only if you use a broker.
*Tax service fee - if the lender chooses to hire an independent service to monitor property tax payments.
*Document preparation and administration fees.
Payable in Advance
Most closing costs are paid when the sale of the property is finalized. However, some fees must be paid in advance, including:
* Application fee - the cost of processing the loan, usually payable at the time of application.
* Credit report fee - the buyer's credit history is reviewed as part of the application process.
* Appraisal fee for the property.
* Pre-paid interest - the interest on the loan from the day of closing until the first monthly mortgage payment.
* Escrow account funds - may include two months' worth of advance payments for mortgage insurance, hazard insurance, homeowner's insurance and property taxes.
Hidden Costs
So-called hidden costs are those which lenders are not required to disclose in the Good Faith Estimate. These can include:
* Courier fees
* Notary fees
* Documentation fees
* Overnight delivery fees
* Processing fees
You can save money on these hidden costs by asking lenders to send documents by regular mail rather than by overnight delivery, or by asking if they can transfer documents electronically.
Who Pays?
In a typical situation, the buyer of a property will pay closing costs. However, you can sometimes persuade the seller to pay for some or all of the closing costs. If your immediate finances are tight, reducing the amount of cash you need to pay at closing can be very helpful.
If you ask the seller to pay some or all of your closing costs, it is essentially the same as negotiating a lower sale price for the property. To a seller who is asking $200,000 for their property, there is no difference in accepting an offer of $190,000 and accepting an offer of $195,000 which includes agreeing to pay $5,000 in closing costs. To you as the buyer, however, it means that you've reduced the amount of cash you need by $5,000. You may not save any money overall, but if the seller pays for closing, it means you pay less cash up front. If you want to ask the seller to pay for closing costs, it can be as simple as deciding what you want to offer for the property, adding your estimated closing costs to it - and then making that offer contingent on the seller paying for closing. Note that if the market is slow or the seller needs to sell quickly, you stand a better chance of negotiating successfully.
Normal Closing
CostsClosing costs can be highly variable since they're dependant on the size of the mortgage and the value of the property. Typically, closing costs are between three and five percent of the property's value, and may include the following:
* Loan origination fees - also called points (one point equals one percent of the mortgage). The standard fee is one point. Paying more points can secure a lower interest rate.
* Title search and insurance - a title search examines a property's historical records to ensure that the seller is the legal owner of the property. Title insurance protects the buyer if tax liens or unpaid mortgages are overlooked in the examination.
* Inspection fees - includes pest and property inspection.
* Mortgage broker fee - applicable only if you use a broker.
*Tax service fee - if the lender chooses to hire an independent service to monitor property tax payments.
*Document preparation and administration fees.
Payable in Advance
Most closing costs are paid when the sale of the property is finalized. However, some fees must be paid in advance, including:
* Application fee - the cost of processing the loan, usually payable at the time of application.
* Credit report fee - the buyer's credit history is reviewed as part of the application process.
* Appraisal fee for the property.
* Pre-paid interest - the interest on the loan from the day of closing until the first monthly mortgage payment.
* Escrow account funds - may include two months' worth of advance payments for mortgage insurance, hazard insurance, homeowner's insurance and property taxes.
Hidden Costs
So-called hidden costs are those which lenders are not required to disclose in the Good Faith Estimate. These can include:
* Courier fees
* Notary fees
* Documentation fees
* Overnight delivery fees
* Processing fees
You can save money on these hidden costs by asking lenders to send documents by regular mail rather than by overnight delivery, or by asking if they can transfer documents electronically.
Who Pays?
In a typical situation, the buyer of a property will pay closing costs. However, you can sometimes persuade the seller to pay for some or all of the closing costs. If your immediate finances are tight, reducing the amount of cash you need to pay at closing can be very helpful.
If you ask the seller to pay some or all of your closing costs, it is essentially the same as negotiating a lower sale price for the property. To a seller who is asking $200,000 for their property, there is no difference in accepting an offer of $190,000 and accepting an offer of $195,000 which includes agreeing to pay $5,000 in closing costs. To you as the buyer, however, it means that you've reduced the amount of cash you need by $5,000. You may not save any money overall, but if the seller pays for closing, it means you pay less cash up front. If you want to ask the seller to pay for closing costs, it can be as simple as deciding what you want to offer for the property, adding your estimated closing costs to it - and then making that offer contingent on the seller paying for closing. Note that if the market is slow or the seller needs to sell quickly, you stand a better chance of negotiating successfully.
How to Find a Good Investment Property
In 2005, 23% of all homes sold were investment properties, according to the National Association of Realtors. There's no question that investing in real estate can be lucrative, but it's important to choose your properties carefully to make sure you don't end up getting burned.
Choose the Right Neighborhood
Just like with any other real estate purchase, location is all-important. Whether you're buying an investment property to rent or to renovate for resale, a large part of your success will come down to the neighborhood you buy into. Developing or undervalued neighborhoods are both good prospects for investment buying. The easiest way of getting a feel for good prospects is just to jump in your car and drive around your area. Look for areas with a lot of development going on, or where new housing projects are planned. If you're buying a rental property, bear in mind that if you're going to be doing maintenance and repair work yourself, somewhere relatively close to your own home is a good idea so that you don't have to spend a lot of time traveling to the property.
Don't forget the old rules still apply - buy the worst house in the best street, not the best house in the worst street. You don't want to end up buying a property that's worth significantly more than neighboring houses, as this will mean your investment has no room to appreciate in value because the surrounding properties are dragging its value down.
Foreclosures
Buying foreclosures can be risky, much more so than buying property in the traditional fashion. However, if you're aware of the risks beforehand and take steps to minimize them, you can end up with a great deal. Before you even consider buying in this way, you should be very familiar with foreclosure laws in your state, in addition to knowing as much as possible about the neighborhoods you're interested in.
To find foreclosures, look in your local newspapers for advertisements with key words such as "bank-owned," "foreclosed," or "REO" (real estate owned). Look on lender websites to check for foreclosure listings, and call lenders and ask to speak to someone who handles foreclosures.
As a final caveat - don't buy anything without having it inspected first, no matter how good the property looks on the surface. Property inspection is the best way of ensuring you end up with a profitable deal.
Why Good Credit is Important
When it comes to financing the purchase of rental property, lenders often require larger down payments and higher interest rates. This is because lenders know that owners of rental properties are more likely to default on loan payments than on payments for their personal homes. Simply put, you pay more because rental property is a higher risk investment. To improve your chances of getting a good loan, it's important to have good credit and to reduce your credit card and other consumer debt as much as possible.
It's also important to ensure you have a good-sized cash reserve left over after you've bought your property, to help pay for surprise expenses such as repairs (and periods when the house is vacant, if you've purchased a rental property).
Get to Know the Tax Laws
Owning investment properties can provide big tax benefits. Getting to know your state and federal tax laws is important for maximizing the profits you can make from investing in real estate. For example:
*Depreciation on an investment property is tax-deductible at an annual rate of 3.64% of the home's market value.
* Mortgage interest on investment properties is tax-deductible.
Do your homework, choose your properties carefully and watch your investments grow!
What's Your Sales Strategy?
If you've decided to go ahead and sell your house, it's important to have a sales strategy planned out before you even put your house on the market. It's also important to have a strategy that both you and your agent agree on, right down to the last detail. With all the details of your plan firmly in place, you'll have a strategy that will help your sale go more quickly and more smoothly when you start receiving offers from buyers.
What Should a Good Strategy Include?
Your sales strategy should incorporate two mini-plans, one for marketing your property, and the other for financial considerations and interacting with buyers.
Marketing your house effectively is a crucial part of the sales process. Marketing is designed to get as many people as possible through your front door, because the more interest you create in your property, the better your ability to negotiate a good sale price. This section of the plan should include things such as:
* Advertising, photographs, and signage.
* Whether or not you decide to hold open homes.
* How you're going to "stage" your property to increase its appeal.
* Ways to emphasize the strengths and downplay the weaknesses of your property and neighborhood
The second part of the plan should include the following considerations:
* Your initial asking price. Do you want to consider a range pricing strategy?
* If the market is slow, how long will you wait before making a price reduction, and how much will the reduction be?
* Negotiation with potential buyers.
Click below to see The Davidson Team's Customer Marketing Plan!
http://www.wenatcheehouses.com/marketing_plan.php
Range Pricing Strategies
Range pricing is a way of getting more buyers through your front door. Using a range pricing strategy means listing your house at a price range you find acceptable, rather than a firm price. For example, if your home is valued at $275,000, you might list your range as $250,000-$275,000. This way, you get more buyers coming through your home, and while they may offer bids that are lower than you want to accept, you have the option to negotiate a price that's more to your liking. Range pricing strategies are an excellent way of generating interest in your property in a slow market, but are less useful when the market is strong.
Negotiating with Buyers
During the offer and counter-offer process, what do you want to stand firm on, and where are you willing to compromise? Consider such things as:
* The length of the closing period.
* Who pays closing costs?
* Who pays for repairs that might be needed. Will you pay for the repairs yourself or negotiate a reduced sale price to compensate the buyer for repair costs?
* Beware of so-called "open-ended contingencies" when negotiating with potential buyers. An example is a buyer who makes an offer subject to them selling their own property before buying yours. If you end up negotiating with such a buyer, counter with a clause that states you have the right to accept a better offer if it should be offered to you.
Other Things to Consider
Will you hire a home inspector to do your own inspection before putting the house on the market? It's an extra expense, but it can give you a firmer negotiating position if you're aware of problems the house may have before it goes on the market.
Review your strategy regularly. If something isn't working for you, don't be afraid to change it if you and your agent can work out a better one.
What Should a Good Strategy Include?
Your sales strategy should incorporate two mini-plans, one for marketing your property, and the other for financial considerations and interacting with buyers.
Marketing your house effectively is a crucial part of the sales process. Marketing is designed to get as many people as possible through your front door, because the more interest you create in your property, the better your ability to negotiate a good sale price. This section of the plan should include things such as:
* Advertising, photographs, and signage.
* Whether or not you decide to hold open homes.
* How you're going to "stage" your property to increase its appeal.
* Ways to emphasize the strengths and downplay the weaknesses of your property and neighborhood
The second part of the plan should include the following considerations:
* Your initial asking price. Do you want to consider a range pricing strategy?
* If the market is slow, how long will you wait before making a price reduction, and how much will the reduction be?
* Negotiation with potential buyers.
Click below to see The Davidson Team's Customer Marketing Plan!
http://www.wenatcheehouses.com/marketing_plan.php
Range Pricing Strategies
Range pricing is a way of getting more buyers through your front door. Using a range pricing strategy means listing your house at a price range you find acceptable, rather than a firm price. For example, if your home is valued at $275,000, you might list your range as $250,000-$275,000. This way, you get more buyers coming through your home, and while they may offer bids that are lower than you want to accept, you have the option to negotiate a price that's more to your liking. Range pricing strategies are an excellent way of generating interest in your property in a slow market, but are less useful when the market is strong.
Negotiating with Buyers
During the offer and counter-offer process, what do you want to stand firm on, and where are you willing to compromise? Consider such things as:
* The length of the closing period.
* Who pays closing costs?
* Who pays for repairs that might be needed. Will you pay for the repairs yourself or negotiate a reduced sale price to compensate the buyer for repair costs?
* Beware of so-called "open-ended contingencies" when negotiating with potential buyers. An example is a buyer who makes an offer subject to them selling their own property before buying yours. If you end up negotiating with such a buyer, counter with a clause that states you have the right to accept a better offer if it should be offered to you.
Other Things to Consider
Will you hire a home inspector to do your own inspection before putting the house on the market? It's an extra expense, but it can give you a firmer negotiating position if you're aware of problems the house may have before it goes on the market.
Review your strategy regularly. If something isn't working for you, don't be afraid to change it if you and your agent can work out a better one.
Blaine's Recipe of the Week - 5/24/07
My wife and I are going out to dinner at one of the local standards for steak dinner in Wenatchee at the famous Windmill Restaraunt. So, I'm craving either a rib eye or tenderloin and thought it would be fitting to post my favorite way to prepare a tenderloin or filet.
Dijon Filet/Tenderloin with Red Reducation
Preheat over to 450 degrees. Season 8 oz. filets with kosher or sea salt and course ground pepper, and pan sear in olive oil for two minutes on each side. Make sure you get the pan as hot as possible before searing. Spread Dijon on top of filets. Transfer to oven and bake for 3-5 minutes for rare to medium rare.
Reduction: ½ cup port or dry red wine, finely chopped shallots, peppercorns, salt and Cointreu or Grand Marinier to taste. Reduce to ½ to ¾ over medium heat. Drizzle over meat.
Enjoy!
How to Avoid 8 Costly Moving Mistakes
If you have a move in your future, there are definite ways to make the process go as smoothly as possible. Plan ahead and you'll avoid these 8 costly moving mistakes.
1. Scheduling your move on the same day of closing
While most buyers take possession of their new home on the day of closing, there are a lot of conflicts that can arise unexpectedly. Be sure to keep in constant communication with your escrow company so as not to delay your moving plans.
2. Not requiring a written estimate
It's fine to have moving companies give you an estimate over the phone or Internet. But to get a firm price, you need to ask the company to send a representative to walk through your home while you point out exactly what you want transported. Be sure you understand the conditions of the estimate - can they raise your bill on delivery? Does the contract allow them to bill you for more later?
3. Choosing a moving company based on price alone
You could end up spending more time and money in the end trying to fix a moving disaster. Check out the company's references (try to get two), licensing, insurance and length of time in business.
4. Not making a first night survival kit
Better to be safe than sorry. If your shipment hasn't arrived or you're simply too tired to unpack everything, you'll be thankful to have an accessible overnight bag with some essential items you'll need for the first night in your new place. Don't forget toiletries, medication, children's and pet's necessities - and maybe even a bottle of champagne to celebrate.
5. Not using a dolly or a hand truck
Whether you're moving yourself or just rearranging things after a professional move, the money you spend to rent or buy moving equipment will pay for itself by dodging back strains and chiropractic visits.
6. Refusing extra coverage for loss and breakage
The basic limited liability coverage offered to you, free of charge, by the movers will not be sufficient. And most homeowners' policies don't cover items broken or lost in a move. Extra insurance can be purchased through an independent insurance company, which will cover you for the duration of the move. Your mover will be able to direct you to a company that will bind your move.
7. Not labeling boxes
When packing boxes, make sure you label the top and sides of boxes with contents, location of contents in your house and any special instructions, such as "fragile" or "open first." Also, by keeping a list of the contents on the outside of the box, you won't have to dig through several boxes marked "kitchen" just to find a pan.
8. Not keeping your receipts
If you're moving closer to a job, your moving costs may be tax-deductible. Keep receipts for moving household goods, utility change fees and lodging and travel expenses. However, if your employer covers those costs, you won't be allowed to deduct them.
1. Scheduling your move on the same day of closing
While most buyers take possession of their new home on the day of closing, there are a lot of conflicts that can arise unexpectedly. Be sure to keep in constant communication with your escrow company so as not to delay your moving plans.
2. Not requiring a written estimate
It's fine to have moving companies give you an estimate over the phone or Internet. But to get a firm price, you need to ask the company to send a representative to walk through your home while you point out exactly what you want transported. Be sure you understand the conditions of the estimate - can they raise your bill on delivery? Does the contract allow them to bill you for more later?
3. Choosing a moving company based on price alone
You could end up spending more time and money in the end trying to fix a moving disaster. Check out the company's references (try to get two), licensing, insurance and length of time in business.
4. Not making a first night survival kit
Better to be safe than sorry. If your shipment hasn't arrived or you're simply too tired to unpack everything, you'll be thankful to have an accessible overnight bag with some essential items you'll need for the first night in your new place. Don't forget toiletries, medication, children's and pet's necessities - and maybe even a bottle of champagne to celebrate.
5. Not using a dolly or a hand truck
Whether you're moving yourself or just rearranging things after a professional move, the money you spend to rent or buy moving equipment will pay for itself by dodging back strains and chiropractic visits.
6. Refusing extra coverage for loss and breakage
The basic limited liability coverage offered to you, free of charge, by the movers will not be sufficient. And most homeowners' policies don't cover items broken or lost in a move. Extra insurance can be purchased through an independent insurance company, which will cover you for the duration of the move. Your mover will be able to direct you to a company that will bind your move.
7. Not labeling boxes
When packing boxes, make sure you label the top and sides of boxes with contents, location of contents in your house and any special instructions, such as "fragile" or "open first." Also, by keeping a list of the contents on the outside of the box, you won't have to dig through several boxes marked "kitchen" just to find a pan.
8. Not keeping your receipts
If you're moving closer to a job, your moving costs may be tax-deductible. Keep receipts for moving household goods, utility change fees and lodging and travel expenses. However, if your employer covers those costs, you won't be allowed to deduct them.
Increase Your Home’s Value through Energy Efficient Upgrades
Increasing energy efficiency in the home is becoming more important for several reasons. It is, of course, a great way to reduce your monthly utility bills, but it's also important because the world's sources of energy are not infinite, and more people are recognizing this and looking at ways to make their homes more energy-efficient. Lastly, remodeling your home with energy efficiency in mind increases its value due to the resulting lower monthly utility costs.
Insulation
Good insulation is perhaps the most effective way of improving the energy efficiency of your home. However, some insulators are better than others. Fiberglass, once the most commonly-used insulator, is no longer as popular as it once was. Most fiberglass insulators are made using formaldehyde, and can release gas which decreases your air quality. Cellulose is a more efficient option; however some cellulose insulators may be treated with formaldehyde, so it pays to check before you by. Superior cellulose insulators are treated with ammonium sulfate or borates, both of which are non-toxic. Cotton insulation has been increasing in popularity, due to its efficacy and the fact that it is environmentally-friendly. Cotton insulation is treated with boron, and is fire-retardant, pest-repellant, and completely non-toxic.
Windows and Doors
The average home loses up to 30% of its heat (or air-conditioning) energy through windows. Well-sealed windows and exterior doors are just as important as insulation for preventing energy loss. However, many frame materials require maintenance and choosing framing material that provides greater energy efficiency is often a trade-off in which more frequent maintenance is required. Wood frames are the most efficient in terms of energy loss and cause less condensation than other materials, however they will require painting or staining to keep them looking attractive. Aluminum frames, on the other hand, need very little maintenance but they are at the bottom of the list in terms of energy efficiency. Aluminum-clad windows are much more efficient. These are wood frames with an aluminum exterior, and combine the efficiency of wood with the low maintenance requirements of traditional aluminum frames.
Cooling
Many of the measures you take to prevent heat loss in your home will also help keep it cooler during warm weather. In addition, consider installing ceiling fans in your home. These are a more energy-efficient way of cooling than air-conditioners.
Efficient Lighting
When it comes to installing energy-efficient lighting, there are two main options - light dimmers and motion sensors. Light dimmers are switches which allow you to control the intensity of lighting in a room. Motion sensors turn lights on and off automatically by sensing when people enter and leave a room. These are particularly effective in rooms which are used irregularly, and in outdoor areas.
Outdoors
In the outdoors, trees and large shrubs are a less obvious way of making your home more energy efficient. With the additional advantage of adding appeal to your yard, careful planting of trees can add windbreaks which shield your house from wind, helping to prevent heat loss. Trees can also provide shade during the summer months, and help keep your home cool.
Using an Energy-Efficient Mortgage to Finance Remodeling
Major remodeling jobs that are planned with energy efficiency in mind can be expensive. This kind of remodeling will save you money in the long term, but the start-up costs are high. One way of financing such remodeling is with an Energy-efficient Mortgage. To qualify for an EEM, the money you save on your monthly utility bills must be greater than the monthly repayment of the EEM, and your total savings must also be more than your total costs (including maintenance). When you are granted an EEM, you have 90-180 days to carry out the remodeling work. Additionally, you cannot be granted an EEM if you apply after remodeling has started, or if you apply after any other financing has been granted.
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