Archives for December 2014

By Joe Szabo, Scottsdale Real Estate Team For many buyers and sellers, December is still an active real estate market. Serious buyers will view homes and negotiate contracts right up until Christmas Eve. It’s a good time for sellers to have their homes listed, because competition is slim — conventional wisdom and history trend toward listing in the spring. But listing a home in December begs the question: should you decorate your home for the holidays, or skip it? Prepping a home for sale is a dilemma for many sellers, at any time of year. After spending considerable time and energy decorating their home to express their personality, they feel reluctant to take down their photos and put away treasured items. The same goes for holiday decorations, which hold sentimental value for many homeowners. But as much as the seller would like to show off their holiday decor and create a festive atmosphere for their family, it may be better to hold back while the home is on the market.

Less is more in real estate

No matter what time of year a home goes on the market, real estate agents always advise sellers to keep it simple when it comes time to list. An over-personalized home with bright paint colors, lots of family photos or off-putting art on the walls can turn off buyers. For sellers, presenting their home to the market in the most neutral light is a better strategy. The more neutral the home shows, the more marketable it will be, and the wider the net it can cast. The same is true for holiday decorations — understated is better.

Religion can be off-putting to buyers

If you live in a part of the country where Christianity is less common, your fireplace nativity scenes or religious decorations may alienate some buyers. It’s best to keep them packed away. These suggestions are not meant to insult a seller’s religion or beliefs, but simply reflect the business aspects of selling a home. Sellers must remember that, once their home goes for sale, it is no longer their home, but a product on the open market. To best position their product for a swift sale, it’s important to appeal to as many buyers as possible.

Commercial decorations are more acceptable

For a family with small children, typical commercial holiday decorations such as Christmas trees, stockings and lights may be unavoidable, even if their home is on the market. To some degree, people will expect this. Will it still alienate some non-Christian buyers? Possibly, but it won’t have the same effect as more religious decorations. While it is impossible to define what would be inoffensive to every person in every market around the country, sellers should be mindful of who their potential buyers are and how their home and its decorations show. For fear of insulting them, many agents avoid having this conversation with their clients — but it’s an important one nonetheless. If your home is on the market, take a step back and evaluate before you decorate. Please note that this Scottsdale Real Estate Blog is for informational purposes and not intended to take the place of a licensed Scottsdale Real Estate Agent. The Szabo Group offers first class real estate services to clients in the Scottsdale Greater Phoenix Metropolitan Area in the buying and selling of Luxury homes in Arizona. Award winning Realtors and Re/MAX top producers and best real estate agent for Luxury Homes in Scottsdale, The Szabo group delivers experience, knowledge, dedication and proven results. Contact Joe Szabo at 480.688.2020, info@ScottsdaleRealEstateTeam.com or visit www.scottsdalerealestateteam.com to find out more about Scottsdale Homes for Sale and Estates for Sale in Scottsdale and to search the Scottsdale MLS for Scottsdale Home Listings.  

By Joe Szabo, Scottsdale Real Estate Team When it comes to buying a new home, most people decide to trade up to gain additional space, live in a better neighborhood, move to a home in better condition — or any combination of these. For many home buyers, particularly those with a good deal of equity in their current home, it begs the question: Do I have to sell in order to buy? Real estate is always meant to be a long-term hold. Building equity and passive income are why so many people turn to real estate to build wealth. If you can afford to keep your home while purchasing another, do so. If you want to make your first foray into real estate investing, you’ll need to take several steps. Meet with a mortgage and real estate pro, and do some early research to determine if owning two homes is feasible for you.

Determine your current purchasing power

If you were to sell your home and take out that equity, how much can you afford to spend on a purchase, and what type of home will that get you? Check with your real estate agent and go to open houses to see what you can buy for your money. This number is going to be high because you would be putting all your eggs into the new purchase. If you choose to keep the old home as a rental, you may not be able to buy your dream house. Understanding what you are giving up will help inform your decision of whether you want to be a landlord.

Calculate your purchasing power without that equity

If you keep your old home, you will likely have to compromise on your new home’s location, size or condition. Go check out homes at lower price points to understand what you will get for the money. If you are open to becoming an investor and building wealth in real estate, this compromise won’t be a big deal. But if you aren’t comfortable with your purchasing power without your existing home’s equity, then it might not make sense for you.

Understand your monthly income and expenses

If you are open to taking the plunge, the next step is running the numbers to understand your potential new financial reality. First, understand the rental market. You’ll have to know how much rent you can fetch for your current home. Browse rental listings online or ask your real estate agent to show you comparable rental properties. Will the rent cover the mortgage exactly? Could it be a small loss? Sometimes an investor will be open to taking a small loss in the near term to build equity in the long term. As you run your numbers, take off 10 percent to account for issues like vacancies, necessary improvements and repairs.

Move forward with your decision

Just like someone who would be buying at the same time they are selling, someone who is keeping a home as a rental should prepare for stress. Timing it is never easy, and nobody likes to carry two mortgages for too long. Unlike buyers — who can shop and make offers knowing they won’t move in for two to three months — renters generally search within weeks of their desired move-in date. Once your new home is under contract and you have removed your contingencies, it’s time to get the existing property on the rental market. It’s better to show the home with your furniture than empty. If you can manage it, start showing the home for rent within a few weeks of your purchase closing.

Choose a renter wisely

Becoming a landlord means starting a business. You tenant will become your customer, and it’s better to have a good customer than a bad one. You’re better off with a pleasant, reliable tenant paying a little less than market value than a cranky or difficult tenant paying market value or more. You also want a tenant who plans to stay. Turnover means wear and tear, and potential lost rental income.

Arrange for a helping hand

If you are moving out of the area, consider hiring a property manager to handle your new rental home. Not only can they deal with repairs or complaints from the tenant, but they collect the rent and enforce the terms of the lease, if necessary. Property managers have teams of repair specialists and contractors who can fix problems.

Research tax considerations

Owning real estate as an investment opens up a new world of tax issues and events. Before you sign on the dotted line, check with your accountant. Understand the following important points:

• Your new rental income is taxable.
• Improvements and repairs have tax consequences.
• You may lose the homeowner’s tax benefit when you sell the rental property. If you’ve lived in the home for two of the past five years, then you won’t pay taxes on any gain ($250,000 for individuals and $500,000 for married couples) when you sell it. Once you pass this time frame, you are on the hook for the gain.

Being a landlord is not for everyone. As with any real estate transaction, never rush — and never go in with blinders on. Please note that this Scottsdale Real Estate Blog is for informational purposes and not intended to take the place of a licensed Scottsdale Real Estate Agent. The Szabo Group offers first class real estate services to clients in the Scottsdale Greater Phoenix Metropolitan Area in the buying and selling of Luxury homes in Arizona. Award winning Realtors and Re/MAX top producers and best real estate agent for Luxury Homes in Scottsdale, The Szabo group delivers experience, knowledge, dedication and proven results. Contact Joe Szabo at 480.688.2020, info@ScottsdaleRealEstateTeam.com or visit www.scottsdalerealestateteam.com to find out more about Scottsdale Homes for Sale and Estates for Sale in Scottsdale and to search the Scottsdale MLS for Scottsdale Home Listings.