Sunday, June 8, 2008

Do it yourself! When you can...

DO YOU ALWAYS ASSUME: •Plumbers fix your toilets and water heaters. •Electricians fix outlets and install ceiling fans. Well, some of these jobs are simple enough that a homeowner could do it his or her self. Why pay for something that you can do for free. Take that money you saved and buy yourself something you want. You deserve it!

There are plenty of books and websites available to show you what you need to do. There are also very helpful people at the local hardware stores. Talk to them- they are paid to answer your questions and get you what you need. Ask about air filters, flush valves, gaskets, and every term in the book to educate yourself.

Calling a professional can be expensive and may not be the best decision. Sometimes they won't even want to make the service call. It works this way in real estate as well- there are certain initiatives that need to be taken by the client. Clients need to decide if this is the right style, size, neighborhood, school district or overall location for buying a home. A real estate agent is a professional. You don't need an agent to go site seeing around a neighborhood or to get a feel for homes. You need an agent to deliver their expert opinion on the home price based on location and condition of the property, as well as negotiate the best possible deal. has a good number of articles on how to get some small projects done on your own- but they'll tell you when you need to call a licensed professional. Of course there is also DIY Network, Lowes, and Home Depot. Try to find a hardware store with people who communicate well and will give you their time. Educating yourself about the different parts of your new home is a great way to avoid future pitfalls and spend money wisely. Hopefully, you can avert a problem ahead of time instead fixing a big thing later.

Tuesday, May 27, 2008

A Home with a Warranty

Most people think that a warranty is only good for when you buy an appliance and want to protect your investment for many years. Many sellers don't think a home warranty is anything more than a marketing instrument. It actually has value to the seller as well.

Imagine that when you listed your home with an agent, the dishwasher was working. You have moved to your new location, and your agent has brought in a buyer with a home inspection contingency on the contract. A home inspector inspects your home, and now finds that the dish washer is NOT working. Small things like this can be bothersome to sellers who would now try to either pay for fixing, replacing, or offering a credit. However, it may be to a sellers benefit to have a home warranty that covers many of the mechanical and plumbing issues that are covered by the terms of the sales contract or home inspection contingency. It could be just a dishwasher, or something as big as a water heater.

For buyers, there is an incentive towards buying a home where a warranty is offered. Many times it just gives them peace of mind to know that they won't have to spend any large amount of money to repair or replace appliances in the home for the term of the warranty. It's important for buyers to ask questions about the home warranty:

What does the warranty cover? Appliances, heating, air conditioning, plumbing are all standard coverage. Check to see what is covered.

What is the deductible? Does it cover the cost of labor and/or the new equipment? It may seem like an obvious question, but read the service contract to see just what is covered. I've negotiated tons of contracts- leave no questions unanswered.

Ask about plan coverage for 13 SEER: The Department of Energy has phased out many old systems that may still be in use. Review your home warranty service contract if the the home (you are buying or selling) uses anything less efficient than 13 SEER to heat or cool the home.
There are special clauses in the contract about replacing an entire unit if the parts for less efficient equipment are no longer available.

Next time: DIY for the Home Owner

Tuesday, May 13, 2008

Rent or Buy? One of life's toughest questions.

It can be really difficult to move to a new place, especially if it is unfamiliar. Many times people relocate because of opportunities in their schooling or in their career. Sometimes it is family related: they get married and need a larger place, or maybe a separation and divorce and need to downsize. Whatever the reason, people keep on moving and with that move comes a tough decision- how do I find that new place to live?

There are all kinds of statistics out there that can break down a community based on every possible detail- income, education, population, density, marrieds, singles, with or without children, how much rain, how much sun, and so on. There are even calculators to determine how much money you can save by buying over renting. I will tell you that within a certain range, buying will always beat renting. Let's use an example: Susan, who makes $40,000 per year, can afford around $1100 per month for housing costs. The assumption is that, after taxes and other expenses, no more than 35-40% of income should go towards her housing. The question is whether or not the $13,200 she spends on housing that year is going to be taxed. If it goes towards rent, it gets taxed. If it goes toward interest on a home loan, it's not. I am not an accountant, and you need to check with one to verify the accuracy of this information. The basic idea is all I am trying to get across.

After thinking about the money that can be saved by buying as opposed to renting, you have to ask yourself if you are ready for the commitment to buy a home. A renter can pick up and leave after a year or two, nothing holding them back. A buyer has a responsibility towards his home, and the bank from whom he mortgaged that home. If Susan rents a home at $1100, then she can just pay bills and call the landlord when the fridge stops working. If Susan buys a home between $150,000 - $200,000, she gets that nice tax write off but has to go buy herself a new fridge. She also has to make sure that her property taxes are payed. Let us not forget that she had to pay thousands of dollars towards owning the home as well, including earnest money, down payment, loan and title fees, transfer and recordation taxes, and maybe some points or other costs associated with purchasing a home. Not everyone has $15,000 lying around for buying a home.

When looking for a home you have some very important questions to ask:
1. How much can I afford every month?

2. How long do I plan to stay? If I need to leave, can I wait to sell or must I leave immediately? Do I want to worry about selling?

3. Do I want to be the one in charge of my house? Or do I just want everything to work and not have to worry about if it breaks or not?

4. Do I have enough cash on hand to buy a home? Do I understand all of the costs associated with buying a home? Do I also understand all of the costs associated with maintaining a home?

These are some questions to consider before jumping in and buying a home. Step back, look at the pluses of buying, and look at the pluses of renting. I work with renters and buyers and try to help them make the best possible decision based on their current financial situation, and help them get the guidance they need to make a fiscally sound decision.

Next time... Home Warranties and Do-It-Yourself projects

Sunday, May 4, 2008

How to beat traffic in Maryland

It can be really difficult getting around this town from 7:00am until around 9:30 am and even more difficult from 3:00 pm until 7:00pm. The peril that we face- traffic. We have some of the longest commute times in the nation, at a staggering 30-40 minute commute on average. It can leave people being frustrated and has added to stress levels at work and home (Check out this article from Reader's Digest)

When buying a home in this area, the commute to work should be just as much of a consideration as monthly payments and hardwood flooring. You may want to sacrifice some amenities (and sometimes even a bedroom) in your home in order to be walking distance to a train station. An agent who really knows the area can advise you on your commute depending on where you buy your home.

If your home is still farther away from work, strongly consider public transportation or telecommuting. The State of Maryland has a website to help ease your traffic troubles. Taking the train or the bus is good way to relax with a book, the newspaper, or some of your favorite music before reaching your regularly scheduled destination. Metro has an online interactive site to plan your trip around Washington, DC. Check county websites for their Department of Transportation to get bus and rail information.

It is also noteworthy of the positive impact public transportation has on the environtment.

The advantage of driving your own car to work is the flexibility, the privacy, and the control it gives you over your schedule. It may also be less expensive than bus and rail, or may afford you more sleep in the morning because driving is faster than public transportation. Also, many people relax by listening to their radio or carpooling with friends/colleagues.

My recommendation- live closer to where you work when possible. The stress of commuting can really get to you, and there will never be enough roads to accommodate everyone who wants to use them.