Traveling is Good for You

In 2015, Americans left a total of 658 million vacation days unused. Studies show that when you deprive yourself from taking a break, it affects your overall performance. A report came out from Project: Time Off that stated that employees are taking way less vacation time than ever before.  

Recently, The Huffington Post came out with a great article that shared several reasons why traveling is good for your body and soul. If you are interested, you can read the whole
article here.
 Here’s what we learned from this eye opening piece:

1.  You’ll Get Back in Shape – often trips are more active than your daily life so getting out and about can get your body moving.
2.  You’ll Engage in new Surroundings and Eliminate Stress – According to experts, there are psychological benefits to changing your surroundings including resetting your mind and body and reducing stress.
3.  You’ll Wind Down and Rest Up – we have one word for you – SLEEP. In our daily grind, often sleep gets compromised. On a vacation, sleep is often restored to the recommended 7 hours per night.
4.  You’ll Boost Your Mood – Many studies support the notion that the simple act of getting away can change your mood, lower your stress and improve your overall mental and physical health.

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Fractional Ownership

Fractional ownership is a method in which several unrelated parties can share in, and mitigate the risk of, ownership of a high-value tangible asset, usually a jet, yacht or piece of resort real estate. It can be done for strictly monetary reasons, but typically there is some amount of personal access involved.

In the past several years, the term “shared ownership,” has been used increasingly as a catchall phrase to encompass timeshare, fractional ownership and even both types of destination clubs.

At first glance, this seems quite logical and appealing.  Isn’t it nice to have these disparate ownership types classified under one all-inclusive category?

Isn’t it convenient for professionals in different areas of the vacation home industry to attend the same meetings, share ideas online and read the same publications?

While I appreciate the attractiveness of this new-found togetherness, I’ll pass on the opportunity to sing kumbaya.

Fractional ownership, I believe, is significantly different from timeshare and must be clearly distinguished from it in order to maximize sales success.

The reason, simply and bluntly, is that significant numbers of buyers still figuratively “runs for the hills” at the mere suggestion that a property may be a “timeshare.”  (The reason will be discussed shortly.)

I write this reluctantly and with apologies to my numerous friends active in timeshare and to the industry leaders who have labored long and hard over the decades to improve timeshare’s public image.  I believe that a negative attitude toward timeshare is no longer justified; nevertheless, it continues, regrettably, to exist in the mind of some potential purchasers.

For this reason, fractional ownership has everything to lose and nothing to gain by being identified as “shared ownership” or as “timeshare.”

To clarify some of the major distinctions between the two property types, let’s examine some objective differences between fractional ownership and timeshare:

1. Number of owners per unit.

Timeshare is designed to have fifty-two owners per unit.  Fractional properties have about sixteen to four owners per unit.

2. Ranges of owner vacation use per year.

Timeshare owners usually purchase one week of use per year or sometimes a package of two weeks. (Owners on a budget may choose to vacation for one week every other year.)

Fractional owners enjoy from about three to twelve weeks of vacation use per year.

3. Differences in the atmosphere between fractional ownership and timeshare properties.

With about fifty-two owners per residence, timeshare properties will experience considerably more traffic and more wear and tear.

With fewer owners per residence, fractional properties offer a more relaxed vacation experience.  There is far less hustle and bustle from transient vacationers arriving and departing. Also, service is more personalized, since the staff can get to know owners better.

4. Differences in household income of fractional vs. timeshare owners.

The minimum qualifying household income for timeshare starts at about $75,000.

The minimum qualifying household income for fractional properties is about $150,000.  (This is approximately in the top five per cent of American households.)

For private residence clubs, minimum qualifying household income is about $250,000.  (This is approximately in the top two per cent of American households.)

The significant differences in household income result in a clientele for fractional ownership that is distinctly different from the clientele for timeshare.

The fractional clientele is more demanding.   The owners want what they want when they want it.  They require very high levels of quality and personalized service.  They value on their precious vacation time and are willing to pay for the convenience of having others serve them.

5. Differences in quality level between fractional ownership and timeshare properties.

Most fractional properties tend to have a better location within the resort, a higher level of construction and furniture, fixtures and equipment as well as more amenities and services than most timeshares.

Since owners of fractional properties have a larger financial stake in their property and higher disposable household income, they have the motive and means to keep their property in good repair.

6. Differences in numbers of total units in fractional vs. timeshare properties.

Timeshare developments tend to be large—sometimes in the hundreds of units.

Fractional developments don’t often exceed fifty units.  As a result, vacations at fractional properties feel more intimate, personalized and exclusive.

7. Differences in purchase motives of fractional vs. timeshare buyers.

Timeshare purchasers are often motivated more by vacation exchange opportunities than by the particular property to which they have a deeded week.  They may feel little loyalty to the property where they just happened to enter the exchange network.

Fractional owners have usually visited the resort or city where they own their property a number of times prior to purchasing.  They think of their fractional property as their second home, and have feelings of loyalty to it and to the area.

Nevertheless, many fractional owners appreciate the potential of not being tied exclusively to vacationing at their own property.  They are now willing to participate in fractional vacation exchanges offered by several companies—IF the exchanged properties can meet or exceed the quality level of what they own.

8. Differences in the Unique Selling Proposition of fractional ownership vs. timeshare.

Timeshare is offered as a smart, money-saving alternative to hotel stays and vacation rentals.  It is also a way to insulate buyers against inflation in the future cost of vacations.  Timeshare makes vacationing possible for people who would otherwise have been unable to afford yearly vacations.

Fractional ownership is offered as a smart, money-saving alternative to whole ownership. Purchasers buy only the amount of vacation use that they can realistically enjoy and pay only a fraction of the acquisition price and annual upkeep.

In some instances, fractional ownership enables purchasers to own a higher quality property than would have been possible with whole ownership.  Or, fractional ownership makes possible the acquisition of multiple vacation homes at dissimilar destination resorts.

In many cases, fractional buyers present the same economic profile as whole ownership buyers.

9. Differences in resale potential between fractional ownership and timeshare.

Purchasing a timeshare is in a way like taking title to a new car.  The car loses value the moment you drive it out of the showroom.  Similarly, timeshares, if they can be resold at all, tend to depreciate.

Timeshares, in general, do not hold their original market value.  The substantial marketing and sales expenses incurred in selling a single residential unit fifty-two times—which may amount to 50% of the original price—are passed on to purchasers.  When these purchasers try to resell, these marketing and sales costs do not translate on the open market into real estate value.

In addition, the vast numbers of essentially similar timeshares offered for sale must compete for purchasers not only against each other, but also against new product that comes on to the market.

Fractional ownership, on the other hand, is similar to deeded ownership of one’s primary residence.  Historically, fractional ownership properties have proven to perform at resale like whole ownership vacation real estate in their local market.  In fact, in some cases, fractional ownership resale values have out-performed those of whole ownership properties.

Purchasers of fractional ownership obviously seek to enjoy the vacation use of their property.  However, they also expect it to hold its value and appreciate over time.  This is a key reason why buyers who want an investment in real estate prefer fractional ownership and turn away from timeshare properties.

10. Differences in the public image of timeshare vs. fractional ownership.

In the 1960s and 1970s timeshares in the United States had a bad reputation because some developers over-promised and under-delivered.  In addition, high-pressure sales tactics put off many people.

To remedy the situation, all states passed stringent disclosure and other consumer-protection regulations.  Also, the timeshare industry’s professional organization, ARDA, adopted a code of business ethics for its members.

In the 1980s, when major national hotel brands such as Hilton and Marriott entered the industry, they improved the quality of the timeshare experience, legitimized it and lent their credibility to it.

Nevertheless, in the minds of some people today, timeshare has not entirely lost its stigma.

Fractional ownership, on the other hand, is burdened by none of this baggage.

In the United States, it started in the 1980s, primarily in New England and Canadian ski areas, then it spread in the 1990s to western United States ski areas. Toward the end of the twentieth century, national luxury hotel companies, such as Ritz-Carleton and Four Seasons entered the industry, thus adding the power of their branding to fractional ownership.

Around the same time, the fractional jet and yacht industries ran successful advertising campaigns that persuaded consumers that it was smart to share ownership of super-luxury possessions.  The word fractional became associated with glamor, luxury and living the lifestyles of the rich and famous.   So, the fractional industry took off (no pun intended) both figuratively and literally.

And what is the one similarity between fractional ownership and timeshare?

The inconvenient truth is that legally both fractional ownership and timeshare just happen to be defined as “shared ownership” in just about every country in the world and fall under the same or similar rules and regulations.

Now, it seems to me that people who want luxury vacations and a real estate investment need to understand that fractional ownership is the name of what they want.  After all, why should the tail (i.e. a shared legal definition) wag the dog (i.e. the luxury vacation experience and solid real estate value)?

So, how should a sales person respond to a customer asking, “Is this a timeshare?”  How about this answer:

“Are you thinking about resale value?” [Answer, “Yes”]

“Then, you’ll be pleased to know that fractional ownership offers a deed similar to that of your primary home.  You can resell your fractional property through real estate brokers, and resale values typically follow values of whole ownership properties.  Is this something that interests you?”

The bottom line:  Fractional ownership vs. timeshare.

The ten objective dissimilarities outlined above between fractional ownership and timeshare are valid points of difference.

And, the one similarity in legal treatment seems rather minor relative to the quality of vacation experience and real estate investment that fractional ownership offers.

So, let’s stop calling fractional ownership “timeshare” or even “shared ownership.”  Technically, they both may be fruit, but the experience of each is different.  And let’s end this needless confusion and silly discussion once and for all!

It’s high time to find out from prospects what quality of vacation experience they desire and what investment objectives they hope to achieve through ownership.  Then, offer them the type of property they say they want!

What do you think?  Are fractionals and timeshare the same to you?  Should they both be classified, as “shared ownership”?  How do marketing and sales programs differ, if at all?  What other differences do you believe exist between fractionals and timeshare.  We value your ideas and invite your response.

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Can your driving habits save you money?

Could usage-based insurance save you money?

Many auto insurers are offering usage-based policies that base your premium partly on how much or how well you drive. Here are three things to know when deciding if this type of policy is right for you.

1 How does it work?

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Most usage-based insurance policies have drivers plug a small device into their car’s diagnostic port, which is usually under the dashboard. Others use cell phone connections or apps. All of them send information about your driving to your insurer. That information can include where and when you drive, how fast you go, and your braking and acceleration habits, among other things.

Your insurer then uses the data – along with other factors such as your age, type of car, and driving record – to set your premium. Some companies offer discounts if you don’t drive very much. Others look at when and how you drive and give you a discount for things like driving mostly during the day, not exceeding 80 miles per hour, or not braking hard too often.

2 Is it a good deal?

It could lower your premium if you drive safely and don’t rack up a lot of miles. Some companies provide discounts for people who drive less than 10,000-15,000 miles a year, depending on the policy. Be sure to read the policy’s terms closely and know exactly what information your insurer is using and how it will affect your rates.

3 What about my privacy?

Here are some questions to ask when considering this type of policy:

  • What device will my insurer use to track my driving? What exactly will be monitored?
  • Do I want my insurer to have information about my driving?
  • Do I think my driving behavior will help lower my premiums?
  • How much could I save?
  • Could that information be used after an accident?
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Using Facebook for Real Estate

* Note to anyone that may have been influenced by a recent YouTube video claiming that Facebook advertising delivers fake likes/click. We personally use Facebook advertising for FlyerCo and I use it for other personal projects as well. Facebook advertising is amazing.

Key Stats:

Over 1.32 Billion monthly active users [source]

829 million people log onto Facebook daily [source]

The most common reason for a Facebook user uniking a brand is having uninterested posts [source] – Second most reason is too many posts.

The average time spent on Facebook is 21 minutes [source]

An average active Facebook user has 130 friends [source]

 Key Take Aways & Tips:

  • Facebook has the most innovative advertising platform in the world and they’re always trying to improve it. This in my opinion, makes it the best place to send advertising money. Although Google has ‘intent’, the possibilities with Facebook are a lot higher especially when comparing the ad costs to Google
  • Although there is a heated debate about Facebook pages not valuable due to their reach being limited, at the end of the day there are many businesses using their Facebook fan page as a main source of business. If it’s working for them, it can work for you.
  • Post content other than listings. People love to know what’s going on in their community, become a community guide.
  • Focus on growing your local community and don’t buy fake likes. Fan counts are worthless if they’re not engaged.
  • The most effective way to grow your Facebook page is through ads

 

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Life Insurance and Medical History Facts That You Don’t Know

You know you need life insurance to financially protect your family and loved ones. But you’re worried about passing a physical exam or that your family’s medical history means you’ll have to pay too much for coverage.

Maybe your father and grandfather both died young from heart attacks? Or your mother and her mother both battled cancer? Could this history of family medical problems cause your policy rates to skyrocket?

In honor of national Life Insurance Day on May 2, insuranceQuotes wants to highlight the facts regarding your family medical history and applying for a life insurance policy so that you’ll be ready to sign up for coverage.

A spotty family medical history might have less impact than what you think on what you pay for life insurance. And a family history of cancer, high blood pressure, heart attacks and other medical conditions certainly doesn’t mean that you’ll struggle to find a solid life insurance policy.

 

What questions to expect at your physical exam

Family health history can be influential when it comes to life insurance premiums, but never lie or feel you need to keep quiet about something in your family’s past.

Your family’s medical history “won’t keep you from getting coverage, assuming you are relatively healthy,” says Scott Cody, a financial planner with Latitude Financial Group in Denver, Colorado.

“What it can do is keep you from getting perhaps the best or highest health rating.”

The bottom line? A lower health rating means that you might pay up to 20 percent more for your coverage, Cody says. But again, this assumes that you’d qualify for the highest health rating from your life insurer anyway, and that’s often not the case.

When you apply for what is known as a fully underwritten life insurance policy — one that requires you to take a physical, give a blood sample and provide a urine sample — you’ll also be asked a series of questions from your insurance provider. Some of these will cover your family’s health history.

Cody says that most insurance providers will ask whether any of your immediate relatives have had cancer or suffered heart attacks before they reached the age of 60 or 65.

It’s important to note, though, that insurance companies will only ask about your immediate blood relatives: father, mother and siblings.

Tammy Johnston, president and chief executive officer of The Financial Guides in Alberta, Canada, says insurers won’t focus on grandparents, cousins and great-grandparents.

What insurers definitely care about is when a health problem or death occurred.

“If your dad had a heart attack at 68, that would cause few problems with insurers,” Johnston says. “If he had it before 45, that would mean big problems. If both mom and dad had heart attacks, that would be bad. If only one parent had a heart attack, the impact might not be as severe.”

The same type of reasoning holds true for a family history of cancer. Insurers will look at how much a family history of cancer can be attributed to genetics and how much to lifestyle choices.

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How To Improve The Value Of Your Home In 5 Easy Steps

What increases the value of one home might not increase the value of another. A resort-style pool and outdoor kitchen in Wyoming might not hold as much value for buyers as the same resort-style pool and outdoor kitchen added to a home in South Florida. What works and what doesn’t is dependent upon the current market conditions in your area, what buyers in your area want, and the overall feel of your neighborhood. It’s not to say you cannot add something no one else has, but you have to add the right thing.

Building a 4,000-square foot addition to your 1,200-square foot home in a neighborhood that consists of all small starter homes is not a wise home improvement. If you’re looking to add some value to your home, try one of these five easy steps that almost always adds value no matter where your home is located.

Start Outside

What’s the first thing buyers see when they drive up to your home? Your lawn and front door, and they make more of an impression than you might imagine. If your lawn is a mess, your door needs some paint, and your house is dirty, the first thing you do is get it all cleaned up. You’re not going to spend thousands on elaborate landscaping, but you might be surprised just how much of a difference a freshly mowed lawn and some brand-new mulch in the flower beds make.

Move it Indoors

Paint is everything in a home. You can have your home any color you want but if you choose to sell and want to increase the value of your home, you’re going to add value by adding a nice, neutral paint color to every wall. No more personal colors in bedrooms, no more accent walls, and no more old, dirty paint. Even if your paint is only a few years old, you will make a big difference in the overall value with a fresh coat.

Upgrade the Fixtures

Next is the fixtures. It’s time for new door knobs, light fixtures, and faucets in the kitchen and bath. Cabinet and drawer pulls are also important, and every one of these very small details makes a very large difference. You can upgrade these for next to nothing while seeing a significant improvement on the value of your home.

Fix Any Small Issues

If you want to add value to your home, it’s time to fix the small issues. If you have a leaking faucet, get it fixed. If the air conditioner makes a funny noise when it runs, call the home warranty company and ask them to come out and take a look. If it’s broken, they’ll replace it. If it’s fixable, you just got rid of that pesky noise and increased the overall value of your home in the eyes of buyers. Small issues are some of the biggest issues. Repair any little dings or holes in the walls, fix any broken baseboards, and repair anything that’s not quite perfect. These little things add up substantially.

Clean it Up

Finally, it’s time to clean your house. Hire a professional to come in and clean every single nook and cranny. You’re not tidying up for dinner guests anymore. You’re cleaning cabinets, drawers, walls, floorboards, ground, baseboards, trim, and everything in between. You might not think a home that’s clean is worth more, but you’d be surprised. If your sparkling clean house is for sale for the same price as another house down the street that’s almost identical but isn’t spotless and has a lower asking price, people will want your home. Even if it’s more money, it’s less work for them and it’s cleaner.

A house is an investment, and that’s why it’s imperative you do what you can to increase the value of your home without spending much money. It’s not always expensive upgrades and renovations that add a few extra dollars to the overall cost of your home. Sometimes it’s small, easily forgettable details that make the biggest difference to a buyer.

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Uses of life insurance for agricultural families

Life insurance can serve multiple purposes for an agricultural family. Some of these uses are:

1. Income replacement

2. Estate equalization

3. Estate tax liquidity

4. Buy-sell agreement funding

5. Wealth replacement for a CRT

INCOME REPLACEMENT

The most common use of life insurance is to provide money for a family to live on in the event of a breadwinner’s death. A rule of thumb is to purchase five to 10 years annual income of the breadwinner.

ESTATE EQUALIZATION

Life insurance is often purchased as a means to equalize inheritance among on and off-farm children. A common dilemma among agricultural families is how to be fair to their children who are not inheriting the family ranch.

Because the wealth of many agricultural families is mostly comprised of their land and other business assets, with insufficient other assets to provide a fair inheritance, life insurance is often purchased on mom and dad with the off-farm children as beneficiaries.

ESTATE TAX LIQUIDATION

Estate taxes are due nine months after death. Since most families don’t have excessive cash lying around to pay these taxes and because they don’t want their children to be forced into selling property or borrowing money to pay estate taxes, life insurance is often purchased to provide cash for paying this tax. If life insurance is purchased for estate tax liquidity, it is critically important that the parents not possess any “incidents of ownership” in the life insurance policy. If they do, the proceeds will be included in their estate and subject to estate taxes. An irrevocable life insurance trust is often set up to keep the proceeds out of the insured’s estate.

FUNDING OF BUY-SELL AGREEMENTS

Agreements are often established to buy out siblings or other farm/ranch partners. Life insurance is often purchased to have cash available for a buy-out in the event of one of the owner’s death.

WEALTH PLACEMENT FOR A CHARITABLE REMAINDER TRUST

A charitable remainder trust can be used to bypass tax on the sale of ranch property. Since the money remaining in the charitable remainder trust upon the parent’s death passes to charity and not their children, parent’s will often purchase life insurance as a way to replace the wealth in the trust for their children.

How Much Insurance Should I Buy?

Determining the amount of life insurance to purchase is an important decision and depends on many factors. It is best to speak with an experienced life insurance agent to help you determine the amount. Online financial calculators can be helpful tools for helping you estimate an amount of life insurance to purchase.

What Type of Life Insurance Should I Purchase?

There are many different types of life insurance but they all boil down to two main types, term insurance and permanent or cash value insurance. Some needs are best served by term insurance but other needs such as estate planning and wealth replacement may be better served with permanent insurance.

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How to Get Your Offer Accepted

If competing in an multiple offer situation you will have a leg up if you apply these strategies. If you have any questions about offers, buying or selling, feel free to call me 972.679.9029.

Seller’s markets can be fantastic for a home seller and frustrating for a home buyer.  You have spent a bunch of time researching areas & properties and have finally found the perfect home, just to find out that you are one of many other buyers offering on the same house.  How do you make your offer stand out to be the one the sellers choose?  Here are 8 hot tips to help you win that bid and 1 bonus tip.

ACCEPTED!

1) Hire an excellent Buyer’s Agent.

Experience matters.  Your excellent buyer’s agent will be helping you navigate this difficult process and they should have been around the block a few times to be able to best do their job.  There are a lot of newer agents entering the market, and that isn’t all bad – many of them have a lot of time, a lot of zeal and strive to do their best.  However, they may not be able to help you get the one-up in a multiple offer situation, and the listing agent may have never heard of them before.  Which leads me to the next point….

Relationships matter.  Boise is a fairly big market area and it is growing.  But it’s not THAT big yet.  The agents that have been around a long time all know each other and have worked together on transactions before.  This can help or hurt depending on how the previous deals have gone down. What do you think the difference is between a difficult to work with agent versus an easy to work with agent and one that the listing agent knows will get the job done for their clients?  It’s not the ultimate deciding factor, but in a pile of very similar offers, the listing agent can (and does) explain to the sellers their past experiences and if they trust the agent bringing the buyer.  I’ve had buyers win in multiple offer scenarios many times due to my positive relationship with the agent on the other side.

Details matter.  Your excellent buyer’s agent should be able to help you put together the very best offer possible with all details considered – which leads me to my next several tips….

2) Submit a clean, well written, error free offer with all the blanks filled in. 

This seems like a no brainer, right?  You’d be surprised at the messy, incomplete offers we have seen submitted as listing agents.  It matters.  It can be an indication of how the rest of the deal may go.  If an agent can’t properly fill out the paperwork will everything else through closing be a mess too?   Normally, if this is the only offer, these things can be discussed and then fixed in an addendum clearing them up.  In a multiple offer situation?  All things being equal with other offers, a messy offer may put you right at the bottom of the pile.

3) Submit a strong offer that does not request too much of the seller.  

Your excellent buyer’s agent should be able to talk you through some little things that can make a big difference.  Sure, everyone wants a deal and would like to negotiate.  But, in a sellers market with multiple offers, the playing field is different.  You are trying to win among other buyers, right?  So throw out the idea that the seller needs to provide something to you other than offer acceptance and make sure that you make your offer as strong as possible.  That includes paying your own closing costs if possible or raising the purchase price to cover the costs you are going to have to ask the seller to pay so that the net is no different.  Negotiable fees that can be paid by seller or buyer you can offer to pay yourself.  These little things WILL make a difference.  In our area the appraisal can be paid by seller or buyer, as well as the HOA transfer/set up fee.  There are several other items such as this that your excellent buyer’s agent can talk through with you.  Think about it this way: Let’s say you and another buyer both offer full price, you both are paying your own closing costs, your loans are the same, your agents wrote clean offers, but you agree to pay the appraisal and HOA transfer fee and the other buyer requested the seller pay them because it is common to do so in our area.  Guess who has the upper edge?  You do of course!   These little details do matter and can make the difference.

4) Carefully consider offering over asking price.  

Your excellent buyer’s agent should be providing you a CMA (comparative market analysis) which will show you what comparable homes are listed for, those that are under contract and at what price recent properties have sold.  This will help you decide what fair market value is on the property and if it is worth purchasing for a bit more than asking price.  Offering too much over could cause issues with the appraisal, but this is also something to talk through with your agent.   Are you able to cover any costs over appraised value if it comes to that, and if that occurs do you still want the house?  How much is the home worth to you?  These are careful considerations that your excellent buyer’s agent can help you sift through.

5) Or, Consider offering $100 over asking price.

If offering over asking price is not an option for you or simply not worth it, consider an offer just above asking price.  You may be surprised that even in multiple offer situations we see a lot of offers right at asking price.  Offering just $100 over when all other offers are at asking price may just give you the winning bid, and it has on several occasions for our buyers.

6) Provide a loan approval letter and/or proof of funds with your offer.

Multiple offers and no loan letter?  Guaranteed you will be at the bottom of the pile.  Listing agents will undoubtedly recommend to their seller clients that offers with a solid loan approval move up to the top of the list.  The loan approval letter shows the seller you are serious and that you have taken the steps to ensure that you are qualified to purchase the property.  And it can’t simply be a pre-qualification letter either. Read this blog post, 3 Levels of Loan Approval – What’s the Difference? to see what the difference between Pre-Qualification, Pre-Approval and Underwritten Credit Approval are.  Have the best, it will help your offer be the best.

7) Work with a local, well known & respected lender with local underwriting.

Nearly every single time I submit an offer and I discuss with the listing agent that my buyers are working with Guild Morgtage their response is something like “Oh, great!  They are so good to work with and we know they will get the loan done and on time.”   But I can tell you that there are others that are well known for delaying, being difficult to communicate and work with and that when listing agents see the approval or hear the name they sigh and groan.  Listen to your trusted and excellent buyer’s agent.  He/she should give you a list of several lenders you can call and you are free to shop around and choose whomever you’d like.  But, we’ve been around the block and we have the true success and disaster stories to prove it.  Working with a respected lender that everyone has trust in will help your contract jump to the top, while one of those that evokes a groan from all parties on the other side will cause you to sink below the competition.

8) Read, signed & approve all disclosures, CCR’s & HOA docs available.  Have your earnest money check written and provide a copy with your offer.

Show that you have ALL of your ducks in a row.  You already have your Underwritten Credit Approval Letter. In addition, review and sign the Seller Property Disclosure(s), read through the CCR’s and any other available HOA documents to be sure you are satisfied with the rules and restrictions, and provide your earnest money at time of offer.  With all of these things completed upfront your agent can submit the signed disclosures, make known you have read and understand the CCRs and provide a copy of your Earnest Money check with your offer.  In the listing agent and sellers eyes these are contingencies and small hurdles already removed.  You will be one step ahead of all the other buyers who have not gone this far in their due diligence.  Bonus!  Up to the top of the pile.

Each of these items on their own are beneficial and will provide an advantage, but put them all together and you may just have the winning bid!

BUT WAIT, There’s More….

If you still don’t win, I have a bonus tip for you.

9) Request to be accepted in 1st back-up position.

Don’t give up!  If you aren’t the “highest and best” but the seller is still willing to consider your offer, ask them to accept your offer as back-up.  Contracts fall and buyers terminate for various reasons and if you are accepted in back-up that means if/when the first position offer falls through, instead of the home going back on the marketing and you having to go through a multiple offer bid scenario all over again you will just be moved into first position and proceed to closing.  It’s not a guarantee that you will end up with the house, but we have some very happy clients who were accepted as back-up and did end up getting the home after the first buyers fell through.  It’s worth a shot, and it’s a better shot than nothing at all. 

Robert J Russell is a Licensed Realtor in Texas

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Homeowners Insurance vs. Landlord Insurance

Oh, the world of insurance — it can be frustrating to understand and as confusing as trying to do a Rubik’s cube with your eyes closed. As a Licensed Insurance Broker, we know that you need to have insurance to protect against any possible property damage, but which kind do you need and what does it cover? The following is a breakdown of the differences between a Homeowner’s Insurance Policy and a Landlord Insurance Policy.

Homeowners Insurance

Homeowners insurance typically covers a property from forces of nature, such as wind, fire, storm, or earthquake damage. In addition, it protects the homeowners property and belongings from theft and vandalism.  Homeowners are able to rest easy knowing that should something devastating happen to their home, they will be able to receive monetary compensation to complete needed repairs and to replace material belongings.

  Landlord Insurance

Landlord insurance, on the other hand, protects the property from mother nature — including fires, storms, hail, earthquakes, etc. This insurance generally covers the residence as well as other structures on the property. Such structures may include a patio deck, fence, or shed. Landlord insurance typically does not cover against damage to personal belongings of the tenant.

 Coverage

 Loss of Income

Should the rental property fall victim to a disaster, your tenants may have to find another place to temporarily reside until the home is again inhabitable. As a broker in Texas and Florida, this leaves you with the responsibility of repairing the home, without receiving your usual tenant income. If the repairs are extensive, this could cause a big hole in your wallet.

Homeowner’s Insurance does not take this situation into consideration. However, Landlord Insurance does. When necessary, it will cover all or a percentage of the income that the property management company in Atlanta is losing due to destruction on the property.

 Liability

Liability insurance is financial protection in case someone is hurt or injured on your property. If you have liability insurance, you will not be held personally responsible for any monetary needs demanded by the injured party. If you are an Texas or Florida property manager, this is important!

Liability coverage is typically included in Landlord Insurance Policies. However, Homeowners Insurance Policies generally require liability insurance to be added on as an option. In addition, the coverage amounts available tend to be higher for landlords than for homeowners.

Personal Contents

Should damage occur to the property, personal belongings are at risk. But who is responsible for the loss or damage to these? It depends greatly.

Homeowners Insurance Policies typically cover personal property up to a selected dollar amount. And, some Landlord Insurance Policies allow for the coverage of your tenants personal belongings. However, many do not. It is important for the property management company to discuss the possibility of rental insurance with their tenants in order to avoid a loss in personal property should something happen.

 Cost

Obviously the cost of insurance varies greatly on the size of the dwelling, its geographical location, the age of the property, the coverage you are purchasing, as well as many other factors. In the grand scheme of things, however, there is a difference in cost for Landlord Insurance Policies and Homeowners Insurance Policies. Which is more costly?

It seems that Landlord Insurance Policies tend to be approximately 15-25% higher than Homeowners Insurance rates. The good news is that you may be able to consider Landlord Insurance tax deductible when you are doing your taxes. Be sure to discuss this with your accountant!

Considerations

While you must make the decision on the best insurance type for your home, there are a few things to take into consideration or address:

  • How long with the home be rented? (Some homeowners policies will cover tenants if it is rented for just a short time. Make sure to check your policy.)
  • Require or strongly suggest that tenants purchase a renter’s insurance policy to cover personal property damage, if needed.
  • Make sure your coverage includes all structures on the property, not just the home.
  • Confirm that your policy will account for loss of income should the property become uninhabitable.
  • Decide if you reside in a region or area that is prone to flooding or damaging storms. If so, you may want to add flood coverage to your Landlord Insurance Policy.

You never know when disaster could strike — which is why it is so important to make sure you are protected when it does. Review your policy and discuss your options with your insurance agent. Don’t wait until it is too late!

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Moving Fast On Your Offers in This Market

In today’s housing market buyers need to move fast.

 Can you move fast?

Sometimes buyers realize this, sometimes they don’t. But I had a buyer the other day comment, once she started looking at homes in her price range, that “I guess we need to move fast” since homes she liked in her price range were gone in a day.

It can be especially hard as a first time buyer to realize market demands are such that in order to get the home you want means moving forward quickly. Being fully prepared to make such a huge purchase, and then being decisive, can be a challenge. But for those who want to buy in a competitive market, it’s pretty much essential.

Here are 6 strategies to get you there fast.

financing

GET PRE-APPROVED WITH A REPUTABLE LENDER

Yes, we Realtors harp on this constantly. There’s a reason for that. Sellers and their agents want to know you are financially in a position to purchase a home and there is a strong likelihood of you closing.

You need to prove that with a full, written and current pre-approval that will convince a seller you are golden (credit, assets, income, etc.). Your lender should be readily available to make any changes in the pre-approval letter, depending on your offer, and perhaps also to take a call from the listing agent to ask a few questions, or even contact the L.A. once your offer has been submitted to emphasize how qualified you are.

Sorry, but an online lender is not going to impress most sellers or their agents.

Knowing exactly what you can afford to buy, based on your loan qualifications but also your personal budget, will make you more confident, enabling you move ahead quickly as needed.

Learning about the housing market

KNOW AS MUCH ABOUT THE MARKET AS YOU CAN

You need to quickly get educated about the local market conditions. Some of that comes about through research and looking at listing activity, but your Realtor (who hopefully knows the market thoroughly) can and should help you understand what’s taking place in the local market and what this means for making a competitive offer. For example are most properties getting multiple offers and selling for over asking price? Lack of understanding leads to hesitancy to act quickly.

ASSUME OTHER WILL BE INTERESTED

Making assumptions in real estate is generally not smart. It’s better to ask questions and to verify than just assume. But in the case of competition, I feel pretty comfortable telling buyers to always assume there will be competition and act accordingly. That means making a strong offer and without delay.

KNOW WHAT YOU WANT

You really should have a good idea of what you want, but more importantly what you need. And that means realizing there are trade-offs and you simply will not get everything you would like. If you are still waffling about those amenities you would like to have, or are unclear about where you really want to be, you are not going to be able to move quickly. Or if you do make a decision it will be the wrong one. It’s a waste of time and energy, and emotionally draining.

Buyer Handbook

UNDERSTAND THE OFFER PAPERWORK AND THE PURCHASE PROCESS

If you aren’t provided one, ask for it! Understanding the important decisions you have to make (offer price, closing date), the contingencies to include (inspection, appraisal, loan, HOA), and competitive terms and conditions up front will save you time, and you won’t have to angst over it when it’s time for writing that offer

You also want to discuss the purchase process with your Realtor before making an offer so you know what to expect. Confusion around what to expect, or what happens first, then second, etc., will lead to uncertainty, which will not allow you to move quickly when you need to.

HAVE A MINDSET OF DECISIVENESS

In order to move fast you will have to be prepared to decide quickly, not think about it for a day or two. It’s not easy to do, especially with a big purchase like a home. And perhaps you are just a bit more cautious in your decision making…and that’s fine. The important issue is that if you are ready (you are qualified, you know what you want, you like what you found, and there is competition), be prepared to make a decision to move forward fast.

It’s perfectly fine if moving quickly is, well, just too fast for you right now. You certainly don’t want to make a hasty decision. But you must realize there are possible consequences of delaying a decision on a home you really like, want, and can afford. You may have to step outside your comfort zone.

Understanding the market, doing your homework, being prepared, and working with a good Realtor will put you in the best position to react quickly when the right house comes along. Then it’s up to you!

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