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Month: January 2021 (Page 2 of 10)

Tempted by Those “We Buy Houses” ads? Weigh the Pros and ConsAudra BarberHomeLight Blog

If you’re in a pinch to sell, you might consider dialing the number on those yellow billboards exclaiming “WE BUY HOUSES FOR CASH” that are plastered along the highway.

‘We buy houses’ operations are flippers who purchase properties “as is” for cash and renovate them to generate a profit at resale. According to ATTOM Data Solutions, 245,864 single-family homes and condos in the U.S. were flipped in 2019; that’s 6.2% of all home sales in the country.

Flipper operations offer sellers speed and convenience, but those perks come at the cost of a low sale price. If you’re considering selling your house for cash, you need to weigh the advantages and disadvantages before signing a contract. With help from real estate experts, we’ll guide you through the pros and cons of ‘we buy houses’ deals.

A home renovation sold to we buy houses.
Source: (Riley Pitzen / Unsplash)

How ‘we buy houses’ companies work

‘We buy houses’ operations are cash buyers or house buying companies that purchase homes directly from homeowners. There are three primary types of cash buyers: iBuyers, buy-and-hold investors, and fix-and-flip investors.

  • iBuyers, or “instant buyers,” refer to property tech companies who run large scale cash offer businesses, including Zillow Instant Offers, Redfin Now, and Knock. These companies use automated valuation models (AVM) and web platforms to provide an efficient and simplified process for sellers whose homes are in sellable condition.
  • Buy-and-hold investors are individuals who offer competitive prices for market-ready homes. Often, they look for investment properties that they can turn into rental properties.
  • Fix-and-flip investors, or house flippers, include the companies responsible for the yellow ‘we buy houses’ signs and individual investors who have the resources and penchant for remodeling. Unlike iBuyers and buy-and-hold investors, fix-and-flippers buy homes in poor condition for considerably less than market value.

Let’s focus on ‘we buy houses’ fix and flip investors

‘We buy houses’ operations will purchase a house in poor condition “as-is” for less than market value (generally between 50% to 70%). After renovating the house, the company sells it at a significantly higher price — sometimes in a matter of weeks! According to ATTOM Data, flippers received a 40.6% return on investment in 2019.

You may be familiar with some of the big wigs in the house flipping industry, such as We Buy Ugly Houses, owned by HomeVestors. We Buy Ugly Houses will buy your home regardless of its condition. Not only do they guarantee a cash buy, but they also extend a no-obligation offer, and if you decide to accept, We Buy Ugly Houses swiftly purchases your home within 30 days.

Pros of selling to a ‘we buy houses’ operation

Selling your home for cash to a ‘we buy houses’ operation is tempting for a good reason. It’s quick, hassle-free, and a sure bet. Let’s walk through some of the advantages of this option.

You’ll sell your house FAST

The allure of selling your house fast is unequivocally one of the most appealing aspects of a ‘we buy houses’ operation. According to top real estate agent Thomas Taranto, who represents real estate clients and investor pools, a traditional home sale transaction takes around 60 days, while a cash offer generally only takes 10 to 14 days.

The offer is guaranteed

A cash offer from a fix-and-flip investor is more guaranteed than an offer from a traditional buyer with contingencies — specific requirements that must be met for the sale to close. For reference, here are some common contingencies in a traditional offer:

When you sell to a ‘we buy houses’ operation, you won’t deal with contingencies and the uncertainty they entail.

No staging or remodeling, no problem

Since ‘we buy houses’ operations purchase your home “as-is,” you can skip the elaborate pre-listing home preparations, including:

  • Deep cleaning
  • Painting
  • Replacing old carpet
  • Installing new appliances
  • Landscaping
  • Repairs
  • Bathroom and kitchen updates
  • Improving curb appeal

Contactless transaction

In light of the COVID-19 pandemic, many homeowners seek to reduce physical contact when selling their home. Taranto shares:

“A lot of people are worried about COVID, and they don’t want a whole bunch of people coming in and out of their house. So, an instant offer from one party would minimize the number of different people coming into their house.”

Even in post-COVID times, the notion of fewer people coming in and out is enticing for some homeowners.

Money you will lose when selling your house to we buy houses.
Source: (Riley Pitzen / Pexels)

Cons of selling to a ‘we buy houses’ operation

Now that we’ve highlighted the benefits of selling to a ‘we buy houses’ company, let’s explore the disadvantages. Convenience comes with a price tag, after all.

You’ll net less money than you would selling with an agent

You will walk away with significantly less money if you sell to a ‘we buy houses’ operation than you would selling your home with a real estate agent. Flippers typically offer between 50% to 70% of the home’s actual market value. The lower the purchase price, the more profit the company can make when they flip the house.

When you sell with a real estate agent, they work with you to sell your home for the most money possible. They’ll advise on repairs and staging to add value to your home, attract more buyers, and ultimately receive higher offers. According to the National Association of Realtors (NAR), the purchase price of homes sold in 2020 was 99% of the listing price.

Cash buyers may have hidden fees

Some cash buyers rope sellers in with an attractive offer only to tack on fees that ultimately lower the price before the sale closes. Though Taranto shares that iBuyers are more likely to have hidden fees than ‘we buy houses’ operations; iBuyer service fees are usually 6% to 15% of the purchase price.

The bottom line is, always read the fine print when you receive a cash offer.

‘We buy houses’ scams exist

Unlike real estate agents, real estate investors do not need a license. Yes, there are many legitimate ‘we buy houses’ operations. Nonetheless, it is still essential to research your investor to verify that they are legit. Here are red flags that a ‘we buy houses’ company is a scam:

The third red flag indicates an equity skimming scheme, one of the most detrimental scams in real estate. The “cash buyer” offers to either pay the homeowner a large sum of money when the property is sold or to take over their mortgage payments while the homeowner continues to live in the house.

When the homeowner transfers the title of the property to the buyer, the buyer collects monthly rent payments from the homeowner and pockets the money instead of paying the mortgage. Eventually, the mortgage lender forecloses the home, and the buyer disappears, leaving the homeowner with no home and significant financial loss.

Compare reputable cash buyers before you make a deal

If you’re considering selling to a cash buyer, don’t just ring the number on the first ‘we buy houses’ sign you see. Instead, plug your home details into HomeLight’s Simple Sale platform.

We’ll gather offers from our network of pre-approved cash buyers, including local real estate investors who purchase a couple of properties a year and large corporate investors who buy hundreds of homes each month. Once all offers are in, we’ll show you the highest offer on your home with a side-by-side comparison of what you could sell your home for on the market with the help of a top real estate agent.

Header Image Source (re-sized): (Baltimore Heritage / Flickr via Creative Commons Legal Code)

Tempted by those ‘we buy houses’ ads? Weigh the pros and cons before you sign a contract.HomeLight Blog

Selling FSBO? Tally Your Closing Costs Without a RealtorLori LovelyHomeLight Blog

If you’re selling For Sale By Owner, you’ll save on the listing agent’s commission. Other than that, you’re on the hook for the same closing costs as any other seller. Closing costs without a Realtor® typically average 1% to 7% of the final sale price.

Mandatory costs include a long list of fees and taxes from involved parties such as the local and state government and mortgage lenders. Additional closing costs may include any seller concessions, attorney fees, and the buyer’s agent’s commission.

Beyond these closing costs, FSBO sellers cover expenses normally included in a listing agent’s commission, such as marketing costs. All and all, FSBO sellers don’t save as much money on their home sale as you might expect — just one reason why only 8% of sellers chose to sell their home without a real estate agent in 2020.

We’ll breakdown FSBO closing costs line by line to prepare you for the sticker shock. Our analysis includes data from nationwide studies and surveys, government revenue websites, and on the ground insight from top real estate agent, Jay Pitts, who works with 72% more single-family homes than the average Louisville, KY, agent.

A realtor working with a seller to pay closing costs.
Source: (Gustavo Fring / Pexels)

You’re still likely on the hook for the buyer’s agent commission

The national average real estate agent commission is 5.8%, though the percentage may vary slightly from market to market. The listing agent and the buyer’s agent split the commission at the close of the sale.

When you sell your home without a Realtor®, you save on the commission you would pay a listing agent. However, if you sell your home to a buyer represented by an agent, you’re still likely on the hook for the buyer’s agent commission (2% to 3% of the sale price), as this cost is customarily paid for by the seller.

“A great percentage of buyers are represented by agents. Some sellers attempt to waive the fee and sell direct, but it doesn’t go well. First-time and infrequent buyers are not comfortable with the process without a broker,” Pitts observes.

Closing costs without a Realtor®

There’s a laundry list of closing costs a seller is saddled with, regardless of if they sell their home with or without a real estate agent. While closing costs for sellers vary state to state (see this chart for a full breakdown), they typically average 1% to 3% of the final sale price — that’s excluding any agent commission. Here’s an overview of the most common closing costs for sellers without a Realtor®:

Escrow fees: Typically split between buyer and seller, escrow fees cover property tax payments paid in advance to the lender to hold in escrow. Escrow generally costs 1% to 2% of the final price, so sellers can expect to pay 0.5% to 1% of the sale price in escrow fees.

Title fees: These fees include a title search to verify that the seller owns the property, and without any conflicting liens. Depending on the sale price and the location, title fees can range from $300 to $1,500.

Reconveyance fees: Once your mortgage is paid off, you’ll have to obtain a reconveyance deed to prove it — typical fees for this range from $50 to $65.

Recording fees: After obtaining a reconveyance deed, the seller must have it recorded, usually at the county recorder’s office. Some municipalities include recording fees in the transfer taxes, while others charge them separately. The cost differs from county to county. It could be as low as $15, or it could start at $60 for the first page, with an additional dollar or two for every page after that.

Transfer taxes: These taxes are imposed by the city, county, or state to transfer title and register change ownership of the property. They are either calculated as a percentage of the sales price or as a flat fee. See our state-by-state guide to transfer taxes for a local estimate.

A gavel used by an attorney who reviews closing costs.
Source: (Tingey Injury Law Firm / Unsplash)

Hold on: Some sellers pay these closing costs too

Depending on your home sale, you may owe additional closing costs, such as the following:

Attorney fees
If you have an attorney represent you at closing, you’ll pay for the attorney fees. An attorney may charge by the hour — $150 to $350 an hour is standard according to Thumbtack), or they may charge a flat fee for outlined services such as preparing closing documents.

“Sometimes closing attorney’s fees are split. But a FSBO seller must pay wire fees,” Pitts says. Sellers are usually responsible for the cost of closing document preparation, as well.

Note that some states require a real estate attorney to be present at closing, whether you have an agent or not. See this state by state guide for details.

Seller concessions
Buyers may negotiate a financing concession, in which the seller pays part or all of the buyer’s closing costs. Often, a buyer negotiates for concessions, so they owe less in cash at the time of closing.

“At 3% of the sales price, that’s a substantial amount,” Pitt notes.

Lenders set limits on seller concessions depending on the loan type, whether the home is a primary or secondary residence and the size of the down payment. For example, the Department of Housing and Urban Development caps seller concessions for FHA loans at 6% of the sale price.

Mortgage pay off
You’ll have to pay off the remainder of the loan on your home. To find out how much you owe, contact your lender or servicer and request your payoff amount. The payoff amount is the total you’ll have to pay to satisfy the terms of your mortgage, including any interest you owe until the day you plan to pay your loan in full.

Holding costs
Expect to cover holding costs, or carrying costs, in between the time you accept an offer and the sale closes (typically 30 to 45 days). The seller continues to pay the monthly mortgage payment, taxes, insurance, HOA dues, and utility bills during that time.

A camera used by a seller not working with a Realtor.
Source: (Imansyah Muhamad Putera / Unsplash)

FSBO fees: You’ll spend some of your 3% commission savings

Sure, as a FSBO seller, you save on the listing agent commission, but there are hidden fees in doing it yourself. Discounting the value of your time, expect to shell out for the following costs that are normally included in an agent’s commission:

Home appraisal
To help set a listing price, FSBO sellers often hire an appraiser to determine the home’s fair market value, based on comparative properties, or “comps.” Expect to pay between $200 and $600 for an appraisal. The national average is around $335, but the actual cost will depend on your home’s size, property type, and location.

MLS listing fee
If you want to get your listing in front of buyers, you need to get it on the MLS. 9 in 10 sellers listed their homes on the MLS; it’s the number one listing source and auto-syndicates your property details to the major online listing sites. You can pay a limited-service real estate agent to put the listing up for you or go through a flat-fee MLS listing service for $50 to $500.

Professional listing photos
Don’t expect buyers to take your listing seriously if all of the photos were shot on your smartphone. Pay for a professional real estate photographer to take photos and videos for around $350 to $650.

Digital and physical advertising
You can stick a sign in your yard and place a free ad on Craigslist, but to reach a broader audience of buyers, you’ll need to spend some money. At the very least, you’ll need signs, brochures, some classified ads, and perhaps some paid ads on social media. The low end for marketing runs from $50 to $200. There is no top end; the sky’s the limit.

Pre-listing home inspection
By presenting the buyer with a completed pre-listing inspection report form, you can allay some concerns and save time on the sale process. For an average cost of just over $300, an inspection is well worth the cost for FSBO sellers.

Property survey
For the same reasons mentioned above, a property survey can grease the wheels of a sale. The cost of a survey depends on the size of your property and its location, but Angie’s List calculates the national average at $550.

Open house expenses
The price of an open house varies widely, depending on where you live and how elaborate you want to go. Will you offer food and drinks? Will there be staging, decorations, or other attractions? According to the NAR, only 4% of buyers visit open houses, but it’s worth the effort to help promote your home.

Staging
Whether you hire a professional stager or add select pieces, staging can enhance the appeal of your home. Professional stagers are pricey, charging $1,000 to $8,600 for just a few rooms. You may have to commit to multiple months of furniture rental if your home doesn’t sell quickly.

Learn by example: The sum of closing costs without a Realtor®

To give you a better picture of FSBO closing costs, here’s an example, based on a house that sold for $300,000 (close to the median national price) in Illinois. HomeLight’s Net Proceeds Calculator gives a quick answer: $24,000 in closing costs. But let’s break it down:

Sale price: $300,000

Buyer’s agent commission at 3%: $9,000

Escrow (1%): $3,000

Title search: $300-$600

Title insurance: $1,000

Home inspection: $300-$500

Appraisal: $300-$400

Property survey: $500-$700

Transfer taxes: $3,000 (0.01%)

Recording fees: $50

That’s $17,450 to $18,250 for just the necessary paperwork. Add in repairs, seller concessions, attorney fees, and FSBO expenses normally covered in a listing agent’s commission, and the total closing costs reach well above $20,000.

A fsbo sign outside a home sold without a Realtor.
Source: (Sean Locke Photography / Shutterstock)

FSBO: Fizzle or sizzle?

For first-time and busy sellers, the time and responsibilities FSBO demands is not usually worth pocketing some of the 3% commission saved without a listing agent.

If your reason for considering a FSBO sale is monetary, consider that statistics from the NAR indicate that For Sale By Owner homes sell for 11% less than homes sold by real estate agents. Supporting that, HomeLight’s analysis of transaction data reveals that top real estate agents help sellers sell their homes for 10% more than average. 

Ultimately, the decision to FSBO or sell with a real estate agent is up to you. Perhaps you’re a diehard DIYer or a budding agent yourself. Just know what costs you’re on the hook for as a FSBO seller before you commit.

Header Image Source: (spacezerocom / Shutterstock)

For Sale By Owner sellers are on the hook for these closing costs without a Realtor.HomeLight Blog

Inherited a House and Want to Sell it? Follow These 10 StepsAlesandra DubinHomeLight Blog

The thought of inheriting a house always seemed like an exciting prospect — until this hypothetical became your reality. Maybe the house you inherited stirs unpleasant memories. Or perhaps you love the house, but you can’t afford to pay the outstanding mortgage. Whatever the reason, you want to sell that house you inherited ASAP.

The process of selling an inherited home is complex, including an array of financial, legal, and market ramifications. We spoke with probate attorneys and a top-performing real estate agent to bring you 10 essential steps for selling an inherited house.

A conference room used by a person selling an inherited house.
Source: (Slidebean / Unsplash)

1. Know where the mortgage stands

As the new owner of the house, you must fully understand the status of the mortgage. Run a title search to surface liens or judgments attached to the property, such as unpaid taxes, a home equity line of credit, or a reverse mortgage.

Lenders expect you to pay the monthly mortgage payments on time no matter what. “If the mortgage holder was behind on mortgage payments, it is imperative to make the account current as soon as possible,” explains Somita Basu, an estate planning and probate attorney based in the San Francisco Bay Area.

Reach out to the mortgage company and any owed creditors as soon as you have the appropriate documents that show you are in charge of the estate or trust. “Time is of the essence where mortgage issues are concerned,” Basu comments.

2. Anticipate your ownership timeline

Whether you’ve inherited the house via probate inheritance, transfer on death deed (also known as a beneficiary deed), or living trust impacts the ownership timeline.

You’ll take ownership the fastest if you’ve inherited the property through a living trust or life estate deed, according to Justin A. Meyer, an attorney whose decade-long practice includes probate, real estate, and title. “Because no court approval is required, you can sell the property immediately or at any time,” he comments.

Probate inheritance, on the other hand, is more complicated. “Probate inheritance will take as long as it takes,” Meyer says. “That’s an unsatisfying answer, but remember that it’s a judicial process in most states, and it can take anywhere from a week to six months.”

Basu agrees with this sentiment: “Beneficiary deeds pass title to the named beneficiary upon a filing of a preliminary change of ownership form within 150 days of the date of death of the original owner,” she explains. “Note that there are several limitations on these types of deeds, so it’s best to check with your attorney to make sure the beneficiary deed is valid and has been recorded.”

For a rough timeline, ask your probate attorney and estate administrator about when the probate process is likely to conclude.

3. Coordinate with all heirs to nominate a personal representative

Before you initiate selling the house you’ve inherited, you’ll need to identify all of the heirs and find out who is the named executor or personal representative. Only the executor or personal representative is legally authorized to make decisions about the home sale.

If the deceased’s will does not appoint an executor, then all heirs must agree to nominate someone as the personal representative. Typically this is the one person in the family most emotionally and practically prepared to handle the responsibility.

“A judge wants somebody who’s going to follow his or her role, then follow the letter of the law for the accounting and the paperwork and the rightful distribution of the funds from the estate,” explains Melissa Harmel, a top-selling agent and probate specialist based in Anchorage, AK.

In Harmel’s experience, the deceased homeowner only names a personal representative about 25% of the time; that means 75% of the time, her clients must nominate a personal representative before selling the inherited property.

4. Open an estate account to manage shared assets

The personal representative should open a bank account in the name of the deceased person’s estate to temporarily hold the person’s assets, including the proceeds from the home sale and any ongoing income. In agreement with the other heirs, the personal representative uses the estate account to cover the deceased’s financial obligations (e.g., mortgage payments, property taxes, car payments, etc.) and probate-related expenses.

Once you’ve paid all debt on the estate, the personal representative will distribute the remaining funds to heirs. You’ll need to file a final accounting of the estate that includes receipts or other documentation of all payments and disbursements with your probate court before closing the account.

A person holding cash received after selling an inherited house.
Source: (Karolina Grabowska / Pexels)

5. Consider selling the inherited house for cash

Selling an inherited home on the market requires significant time and labor (think staging, marketing, and negotiating). And until the property sells, heirs are on the hook for the monthly mortgage payments, property taxes, and utility bills until the property sells.

If your top priority is an ultra-fast sale, consider selling the inherited house immediately to a cash buyer instead. While you typically net less money selling for cash, the process is usually faster, easier, and less stressful than selling a house on the market — a big plus if you’re feeling overwhelmed by the home sale process.

See what a cash buyer would offer for your home with HomeLight’s Simple Sale. We’ll connect you with offers from our network of pre-approved cash buyers. To give you a clear view of your options, we’ll also show you a side-by-side comparison of an estimate of how much you could sell the home for on the market with a top agent.

6. Partner with an agent who does probate

If you prefer to sell the house for the highest price possible, hire a top real estate agent with probate home sale experience to list your home on the market.

“My goal as a probate specialist real estate agent is to net the family as much equity as possible,” Hamel says.

To find experienced agents near you, plug property details into HomeLight’s Agent Finder. We’ll match you with the three best agents for your home sale based on local transaction data and client reviews. Interview at least three agents over the phone to compare their probate experience, marketing strategies, and communication style.

You want an agent with an appropriate bedside manner at a time that can be quite emotional. “I want the family to feel like I have respectfully treated the property,” Hamel says.

“I actually love those properties — they’re my favorite. They have stories, and it’s all about presenting them to the world in the best light possible. I like doing that.”

7. Enlist the help of a mediator if needed

In a multiple heir situation, there’s plenty of opportunity for drama. If your family is struggling to reach an agreement over the home sale, hire a mediator to help you work through the obstacles together.

“If there are beneficiaries who do not agree on the sale of the house or other issues regarding the house — renovations, which Realtor, removing tenants — then a mediator can help resolve these issues outside of a formal court process,” Basu says. “This can decrease the time spent on resolution, as well as the cost.”

Meyer adds that most common for hiring a mediator is when one heir doesn’t want to sell — usually for sentimental reasons — or wants to hold out for more money. “A big issue is when one heir has unreasonable beliefs as to the value of the home,” he says. “Usually, you’ll need one if there is a dispute about what to do with the house. But luckily, I’ve never needed one yet.”

You can search online to find mediators in your area. Mediators may charge an hourly rate, a flat fee, or a percentage of the value of the estate assets.

Clothes in a closet of an inherited house.
Source: (Annie Spratt / Unsplash)

8. Take an aggressive approach to decluttering before you sell

“Ninety percent of the time when I arrive at an inherited house, the family has already taken items that were personal to them, and now they don’t know what to do with the rest of it,” Hamel shares.

Create a decluttering plan with other heirs and family members to tackle the job over a couple of weekends. You can hire a professional estate sale company to manage and promote an estate sale or attempt to sell items individually with a garage sale and use of online platforms, such as Facebook Marketplace, Craigslist, and OfferUp.

Though decluttering a deceased loved one’s home is a difficult task, it’s essential for securing a swift and successful sale. Our research indicates that decluttering costs on average $486 yet adds $2,584 to the home’s value at resale — that’s 432% of costs recouped.

9. Spruce up the property, but don’t renovate

Let’s say you’ve inherited a home dressed in 1970s shag carpet and popcorn ceilings. You’ll want to focus on light, cosmetic upgrades rather than full-blown room renovations. Ask your real estate agent what upgrades they recommend to help increase the property’s value and marketability.

“When you walk into a house and nobody’s taken anything out of it, and it’s just full of stuff, people just walk out the door,” Hamel says. “With a mere $2,000, we can turn the property around, get it cleaned up, steam cleaning, painting, taking the time to appreciate the asset and making sure that the family benefits from the sale as much possible.”

Here are some examples of easy, high-impact projects that can help you sell your inherited house faster:

A tax form used by someone who inherited a house.
Source: (Oleg Magni / Pexels)

10. See if any home sale tax exclusions apply

Remember, you’ll need to report proceeds from the sale of your inherited home as taxable income. Since the tax implications of selling an inherited property vary from state to state, you likely want to enlist the help of an attorney. Report the sale on Schedule D (Form 1040 or 1040-SR) and Form 8949.

Typically, you will not qualify for the home sale tax exclusion if you plan a quick sale because you will need to have lived in it for at least two of the past five years to be eligible. However, you may be eligible to take advantage of the stepped-up tax basis. In short, this means you won’t be responsible for an enormous capital gains tax if the inherited home appreciated substantially over the course of the previous ownership.

Header Image Source: (rSnapshotPhotos / Shutterstock)

If you inherited a house and want to sell it quickly, you’ll need to navigate a complicated web of financial and legal ramifications. Follow these 10 expert-guided steps to pull off a successful sale.HomeLight Blog

Planning a Remodel? Know Your Home Renovation Loan OptionsAlesandra DubinHomeLight Blog

In 2020, the average American household spent $8,305 on home improvements — that’s almost the exact amount the average household has in their savings account, according to Bankrate’s recent analysis of data from the Federal Reserve.

But rather than draining their savings, most homeowners opt to finance their home home improvement with credit or a home renovation loan. A recent survey by Discover Home Equity Loans reveals that 23% of homeowners plan to pay for their renovation with a credit card, 18% with a home equity line of credit (HELOC), 13% with a home equity loan, and 7% with cash-out refinance.

If you’re considering taking out a home renovation loan to spruce up a powder room or gut the kitchen, we’ve got you covered. Our expert-backed primer unpacks the array of renovation loan options available today and how they impact your future home sale. We’ll also share tips on how to focus on remodeling projects that add value to your home to help you recoup your investment.

A homeowner holding cash for a renovation.
Source: (Lukas / Pexels)

An overview of home renovation loan options

If you’re interested in taking out a home renovation loan, you’ve got options. Here’s an overview of the most common home renovation loans available:

Cash-out refinance

With this option, the borrower refinances their existing mortgage, and the lender advances an additional amount in cash for the renovation project. Typically, lenders will allow homeowners to refinance 80% to 90% of the property’s value.

You might consider this option if you have at least 20% equity in the property and a strong credit score, plus can secure an interest rate lower than your current one. A major upside with a cash-out refinance is that it’s a standard first mortgage loan, not a secondary lien or line of credit.

Construction loan

Homeowners can use a construction loan to cover land, building labor and materials, permitting, and other relevant expenses for residential properties. These are short-term loans (usually about a year) with higher interest rates. To qualify for a construction loan, you’ll need to provide the lender the detailed project plans, background on the licensed contractor managing the project, at least 20% equity in your home, and proof of your ability to repay the loan (proof of income and good credit history).

Owner-builder construction loan

If you plan to build your own home, an owner-builder loan is the loan for you. Lenders see these borrowers as higher risk (their projects can take longer and encounter more problems), so these loans may be harder to qualify for. You’ll need to demonstrate a detailed construction plan with costs to show you’re competent to complete the job.

While these loans come with a higher interest rate, you can recoup the cost if your completed project adds value to your home; plus, you’ll likely make up for the higher interest with your savings from forgoing a contractor.

Home equity loan and HELOC

Home equity financing enables homeowners with equity to access cash from their homes for renovations (or other needs). Typically, these types of loans that allow you to tap into your equity require a second lien (or “second mortgage”) in addition to your existing mortgage. Since these loans are secured against your equity in the house, lenders might offer lower rates than they would for a personal loan.

A regular home equity loan works very similarly to your standard mortgage. The money borrowed against the equity in your home comes as a one-time, lump sum and typically with a fixed interest rate. You’ll typically need at least 10% equity in your primary home or 20% for an investment property to qualify.

A HELOC — short for “home equity line of credit” — is a revolving line of credit that you can draw from as needed, sort of like a credit card. With a HELOC, you’ll be approved for a line of credit equal to your maximum draw amount, but it’s not paid as a lump sum. Instead you will be able to withdraw money from the account as you need it, much like a credit card, but this debt is secured by our home. The upside to HELOCs is their flexibility in using the funds how and when you want, and the fact that you only need to pay interest on the money you’ve drawn from the account. Plus, HELOCs may have a few unique tax advantages for the savvy homeowner.

Government loans

Why would the government want to help fund your remodeling project? Well, because when property values rise, the community and local economy benefit, as well. So the government offers low-interest loans with tax relief benefits and other incentives to encourage homeowners to improve their homes.

But don’t expect Uncle Sam to back your dream of building a super custom Star Trek basement. To qualify, you must prove that you will use the loan on a project proven to appreciate your home’s value. Here’s an overview of the two most common government home renovation loans:

  • FHA 203(k) Rehabilitation Loans allow homeowners to take out a single loan for both their home renovation and home purchase or refinance. Since these loans are insured by the government, lenders can offer them with relatively low-interest rates.
  • Home improvement programs (HIPs) help homeowners save on their remodeling loans with subsidized interest (either partly subsidized or entirely subsidized, depending on the application).

Personal loan

You can qualify for a personal loan even if you don’t need to have equity in your home. Your loan’s term and interest rate will largely depend on your creditworthiness. However, since personal loans are higher risk for lenders, these loans often have higher interest rates than other home renovation loan options.

A for sale sign outside of a renovated home.
Source: (Andy Dean Photography / Shutterstock)

Review your finances and future plans before you borrow

Regardless of the loan type, renovation loans are debt that you’ll need to pay back over time. Carefully review your finances and discuss your options with your lender to ensure that taking out a home renovation loan is the right move for you.

Evaluate your equity before you borrow

In the early stages of planning your home renovation, check your home equity. If your equity is low or in the negative range, you’re probably better off saving money to pay for the renovation in cash than taking on more debt, even if the upgrade will add value to your home.

Consider your future home sale plans

When evaluating if you should take out a loan to renovate, you should also consider how soon you plan to sell. If your remodeling project won’t significantly increase your home’s value or marketability, it might not be worth the effort. Ask your real estate agent and lender if they recommend going through with the renovation before you develop your project plans.

“It comes down to getting the right team. If you have the right team around, you’re really getting the best advice from the right people at the right time,” shares top real estate agent Mark Pages-Oliver, who closes 8% more sales than the average agent in Concord, CA.

When the demolition dust clears, you’ll owe the backing lender

Remember that you’ll need to pay back the principal and accrued interest for the duration of established loan term. To keep your total investment down, you’ll most likely want to choose the loan with the lowest interest rate. Let’s take a look at how interest differs between unsecured and secured loans.

Unsecured loans tend to have higher interest rates

Government loans, personal loans, construction loans, and construction-builder loans are unsecured debt, meaning that the debt is not backed by collateral (your home). Since the lender has no claim to your home to recover their investment if you default on payments, these loans typically have a higher interest rate than secured loans.

If you default on your payments, your lender will report the late payment to the credit bureaus. Once reported, these late payments lower your credit score and appear on your credit report for a length of time — ultimately making it difficult for you to qualify for new credit.

Secured loans are liens on your property

If you finance your home renovation with cash-out refinance or a home equity line of credit (HELOC), the loan will serve as a lien on your property that you must resolve to clear title. In other words, the lender has a claim to your home if you default on payments. Since the lender has collateral, these loans typically have lower interest rates than unsecured loans such as a personal loan or credit card.

However, you’ll need to pay off the loan when you sell your home to clear title for the new homeowners. If you’re selling right away, the escrow company will help you understand and manage these responsibilities.

“When we go to sell the property, we appoint an escrow company, and part of their responsibility is to understand all of the liens on the property, who needs to be paid off, and in what order,” Pages-Oliver explains. “So then when it comes to closing, the sellers will get an itemized list of all of the expenses, which will include the lien holders and the totals that they need to be paid out.”

The escrow company will calculate the exact amount “down to the penny” that the seller owes to all of these lien holders, including any and all pay-off fees that might be associated. The escrow company will present the total to the seller prior to the close of escrow so that they understand what they’ll net from their home sale after paying off all their loans, pro-rata property taxes, insurance, and closing costs.

Refinancing is an option to consolidate your debt

If you’re selling down the road, you may consider refinancing your home to consolidate debt on the property and, in some cases, to secure a lower interest rate. These decisions will be highly individual and specific to the seller’s situation.

“We often see that people will get access to borrowed funds in one particular mechanism, and once they’ve completed that, the situation changes,” Pages-Oliver says.

“Part of the overall lending strategy would be to look at whether consolidation is worthwhile. If that’s the best solution for our client, then that’s something that they really should know about and understand.”

What it comes down to is the bigger goal, or “the master objective,” as Pages-Oliver calls it:

“What is going to serve the client best moving forward? Sometimes that might be keeping two separate liens on the property; sometimes, it might be consolidating. But every situation is always slightly different, and that’s what we need to get expert advice.”

A roof installed with a home renovation loan.
Source: (JØNΛS. / Unsplash)

Focus on value-adding and value-retaining home improvements

If you decide to take out a home renovation loan, you should focus on projects that either add value to your home or help your home retain value.

“The things that retain value are important to the property but aren’t necessarily show stoppers,” he says. “They’re not going to show up in the photos necessarily. They’re not going to draw crowds of people through the property, but they’re really important to have in some marketplaces.”

Examples of these value-retaining home improvements include sewer pipe upgrades and roof replacement. On the other end of the spectrum, some cosmetic improvements are unlikely to recoup much or any of their costs — especially those with highly custom or unusual finishes.

According to Remodeling Magazine’s 2020 Cost vs. Value Report, the following projects are your safest bet for hitting a remodeling home run:

  • A minor, mid-range kitchen remodel recoups around 78% of the project cost on average.
  • With a roof replacement, sellers recoup about two-thirds of the project cost on average.
  • A primary bathroom remodel also recoups about two-thirds of a seller’s project investment.
  • Other notable remodeling projects topping the list include garage door replacements and stone veneer replacements, for which sellers tend to recapture nearly the entire cost when they go to sell.

When in doubt, Pages-Oliver advises sellers to “follow the staging formula”:

“If we follow that formula, kitchens and bathrooms are really at the top of the agenda for buyers, and that’s where we should be concentrating money.”

The best renovation loans for you depends on your unique situation

When evaluating home renovation loans, remember to consult your real estate agent and lender for guidance.

“Everyone is different, everyone’s circumstances are different, and everyone’s goals are different — there really is no one-size-fits-all approach,” Pages-Oliver notes. “When it comes to lending for renovations, it really does need to be a bespoke solution that takes into account a lot of factors about the circumstances.”

Header Image Source: (Zakhar Mar / Shutterstock)

These home renovation loans can help you afford a value-boosting remodel. But if you’re selling soon, you’ll need to know how the outstanding debt will impact your sale.HomeLight Blog

Selling Your Home? Here’s 5 Questions Your Real Estate Agent Can’t AnswerMatthew StalcupHomeLight Blog

Throughout your home sale, your real estate agent wears many hats: salesperson, stager, marketer, negotiator, and all-around industry expert. They’re a wealth of information, ready to answer your many questions about the selling process. Still, there are some questions real estate agents can’t answer.

For instance, while real estate agents are experts on local housing markets, they do not have a license to answer questions about legal and financial issues that affect sellers. We consulted an expert attorney and top real estate agent and put together a list of important questions that are better to ask other industry professionals. Here are five types of questions real estate agents can’t answer:

A neighborhood with houses sold by real estate agents.
Source: (park dasol / Unsplash)

1. Questions that breach real estate associations’ codes of ethics

Nearly three-quarters of licensed real estate agents in the U.S. are members of the National Association of Realtors (NAR) either directly or through their local chapter. These real estate associations require their members to abide by a code of ethics that promotes honesty and excellent client service.

For instance, NAR’s Code of Ethics and Standards of Practice stipulates that agents must be “honest and truthful in their real estate communications” and never conceal the fact that they are real estate professionals.

While these rules are in place for the benefit of both sellers and buyers, some of them explicitly limit your agent’s capacities. The document states that “Realtors® shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence unless they engage the assistance of one who is competent on such types of property or service, or unless the facts are fully disclosed to the client.”

Here are a few of the things that NAR prevents their member agents from doing:

  • Representing both seller and buyer without informed consent from both parties
  • Delaying the submission of a counteroffer
  • Exaggerating, misrepresenting, or concealing pertinent information about the property to buyers
  • Misrepresenting their availability to show or inspect a listed property
  • Acquiring an interest in buying or presenting offers from themselves or their family members without revealing their status as a Realtor to all involved parties (in essence, if the Realtor® has a financial interest in the property, it’s considered a conflict of interest)

“There’s certain things that I don’t know or can’t say too much about because they are a conflict of interest,” shares Ruth Wordelman, a top Colorado real estate agent and licensed attorney under the Colorado Bar Association.

2. Questions asking for legal advice or practice

While your real estate probably knows a fair amount about the legal aspects of selling a home, they cannot provide you with legal advice as this would constitute an “unauthorized practice of law” which is prohibited by state law.

Every U.S. state has its own statutes regarding the unauthorized practice of law, and the severity of the charges for doing so can range from a misdemeanor to a felony. However, the definition of what constitutes unauthorized practice of law only varies slightly between jurisdictions. Per the Santa Clara law review, the generally accepted definition of the practice of law is “legal advice and counsel and the preparation of legal instruments and contracts by which legal rights are secured.”

Since your real estate agent is not working for you as a licensed attorney, they legally cannot advise you on specific legal matters and cannot prepare legal documents required to sell your home.

“It’s a very slippery slope,” warns Wordelman.

“A Realtor® can say what’s typical, and can answer general questions about home-selling contracts, but agents should definitely refer clients to legal experts for more in-depth questions about their specific situation.”

Here are a few examples of legal questions a real estate agent can’t answer:

  • Does this count as a breach of contract according to the purchase agreement?
  • Could you draft a covenant that will restrict how the new owner can develop on the land I am selling them?
  • Are there legal consequences to selling my home while I’m going through a divorce?

Instead, direct these questions to a real estate attorney. Depending on your state, you may even be required to have an attorney present at closing. You can find a real estate lawyer near you with an online directory such as Avvo. The site includes ratings and reviews of lawyers, so you can know for certain that you’re hiring the best person to answer your legal questions.

A real estate agent answering a question.
Source: (LinkedIn Sales Navigator / Unsplash)

3. Questions soliciting answers that would violate the Fair Housing Act

Your real estate agent can’t answer requests that would violate the Fair Housing Act, a federal law that prohibits discrimination in the sale or rental of housing.

The Fair Housing Act states that it’s “unlawful to refuse to sell or rent after the making of a bona fide offer or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin.”

On top of the federal fair housing laws, states also set additional regulations. Depending on your state, these laws may also prohibit discrimination on the basis of:

  • Age
  • Gender expression or identity
  • Genetic information
  • Marital status
  • Medical condition
  • Sexual orientation
  • Military or veteran status
  • Primary language
  • Source of income

To remain compliant with the Fair Housing Laws, your real estate agent will always default to the most conservative answer when you ask them questions about deciding who you sell your home to. For this reason, the following questions are better left to real estate attorneys:

  • Can I market my home as “family-friendly?”
  • Is it possible to make sure that I sell my home to a family in my community?
  • My neighborhood has excellent crime statistics. Can I use this to market my home?
  • Can I specifically choose a family that shares my religion when accepting an offer for my property?

All of these questions directly or indirectly prompt your agent to give you advice about something that could potentially limit the availability of your home to a protected group. Ultimately, it’s your decision to accept an offer or not, but you don’t expect an agent to screen buyers based on any of the above criteria on your behalf.

4. Requests to conceal known property issues with buyers

In most states, sellers are required to disclose any known material defects of their home to buyers. If you fail to disclose important details about your home, buyers may take legal action to hold you financially liable.

Wordelman shares that real estate agents are trained to advise sellers to “disclose, disclose, disclose.” For this reason, agents are usually required to err on the side of caution. Basically, this means that your agent is always going to advise disclosure when asked questions like:

  • Can we hide the water stains on the ceiling with paint?
  • Our basement leaks, do we need to mention it if we’ve fixed it ourselves?
  • Is it possible to avoid mentioning a recent death in the house?
  • Do we need to tell buyers about our noisy neighbor?

Review your state’s specific disclosure requirements for more information on seller disclosures. If you require legal advice on a complicated disclosure issue, consult a licensed attorney.

A calculator used by a financial expert.
Source: (recha oktaviani / Unsplash)

5. Questions asking for financial advice

Similar to legal advice, real estate agents are also unqualified to give you specific advice about the financial aspects of selling your property. While an agent can tell you your home’s market value and whether or not it’s a good time to sell, they can’t tell you whether or not selling is the right financial decision for you or your family.

Direct questions like these to a financial advisor:

  • How much will I owe in capital gains tax?
  • Are there any tax exemptions or benefits I can make use of?
  • How long should I wait before claiming exemptions on the sale of my primary residence?
  • What should I do with my home sale proceeds?
  • Will I be able to pay off my mortgage by selling my home?

You can find a financial adviser through The National Association of Personal Financial Advisor or a customer review website like Yelp or Thumbtack. 

Now, for some questions your real estate agent can answer

Outside of these categories, real estate agents are ready to answer your biggest (and smallest) questions about your home sale.

Here are some questions that are great to ask your real estate agent:

  • What do local buyers want to see in a home?
  • What remodeling projects have the highest return on investment?
  • How should I stage my home to attract buyers?
  • Where are the best places to advertise my listing?
  • Should I consider selling to an investor?
  • When is the best time to put my home on the market?
  • What can I do to speed up my sale?
  • How can I fetch the highest price for my property?

A top real estate agent will have a thorough knowledge of the local housing market as well as plenty of experience navigating the complex process of selling a home. They can also refer you to experienced professionals, such as attorneys, financial advisors, and home improvement specialists to tackle questions outside of their wheelhouse.

Header Image Source: (Christina Morillo / Pexels)

Need financial or legal advice when selling your home? There are some questions real estate agents can’t answer.HomeLight Blog

3 Effective Options for Selling Your House Without a RealtorKristine HansenHomeLight Blog

Thinking about selling your home without a Realtor®? You’re taking the path less traveled, my friend. According to the National Association of Realtors, in 2020, only 8% of sellers sold their home For Sale By Owner, and less than 2% of sellers sold their home to a home buying company or iBuyer.

Still, if you’re gung-ho about selling your home without a Realtor® — you’ve got options. We consulted two real estate attorneys and a top agent for insight on how sellers pull off an agent-free home sale. While this is a huge feat, it’s not impossible.

To help you navigate your options, we’ll break down the pros and cons of three routes you can take:

  • Sell to a cash buyer
  • Hire a real estate attorney to facilitate a sale to a known buyer
  • Fly solo via For Sale By Owner (FSBO)
Cash received after selling a house without a Realtor.
Source: (Karolina Grabowska / Pexels)

Option #1: Sell your house to a cash buyer

If you’re looking for a fast sale, consider selling your house for cash. Cash buyers — including iBuyers and house buying companies — are individuals or entities that purchase your home outright, without the need for lender financing. Cash buyers offer sellers convenience and certainty, often at the cost of a higher transaction fee.

Pros:

You can sometimes avoid home inspection delays

Inspection issues account for 16% of closing delays, according to the National Association of Realtors. If you sell your home as-is to a cash buyer, they may not require you to complete repairs the home inspection deems necessary. Some cash buyers may not require a home inspection at all.

You don’t need to deal with the stress of an open house and home showings

Put away the cleaning supplies because nobody is coming for a showing at a moment’s notice. Imagine how much time you’ll save on your already busy weeknights and weekends without wrangling your kids and pets to disappear for an hour!

You can skip the home makeover

Again, because this is an as-is situation, you won’t need to climb up on the roof or repaint the rooms or hire contractors to visit and price out a job. You can also skip cosmetic upgrades normally needed to increase your home’s marketability and attract buyers either. So, you can skip decluttering, staging, painting, and updating hardware and fixtures.

Cons:

The sale price is often lower than you want

As we hinted at earlier, convenience comes with a cost. The cash buyer’s strategy is to use a seller’s desire for convenience to leverage a lower price. For example, a study by Collateral Analytics reveals that iBuyer fees cost sellers about 13% to 15% of a home’s sale price; these fees are significantly higher than real estate agent commission which ranges between 3% and 6%. So, if your home sells for $300,000, you’ll leave $30,000 on the table.

Because many cash buyers are flippers or investors, they don’t want to pay more than necessary to close the deal. They’ll need to spend money on your home after they purchase it so they can flip it and earn the best profit possible. Plus, they know that some sellers are willing to sacrifice money in exchange for speed and convenience.

If you want the highest sale price possible, you’re better off selling to a family who plans to live in and love your home, not view it with dollar-signs.

There’s no chance of sparking a bidding war

In a hot seller’s market, buyers often compete to purchase a home in what’s known in real estate as a bidding war. When this occurs, a seller can win a sale price well above the initial listing price. If you’re selling your home to a cash buyer, on the other hand, you miss out on the opportunity to spark a bidding war.

Since cash buyers purchase homes by the dozens, they’re only interested in buying your home if it’s a deal. If a competing buyer offers you more, they’ll typically let your home go than raise their price and consequently lower their future profit.

If you want to sell your house for cash, ensure you’re selling your home for the most money possible with HomeLight’s Simple Sale platform. Fill out basic information about your home and location, and introduce you to the highest bidder from our network of pre-approved buyers.

Simple Sale will provide you with a side-by-side comparison of what you’d make selling your house on the open market with the help of a top agent so you can make an informed decision.

Option #2:  Sell your house to someone you know with the help of a real estate attorney

If you’re lucky enough to have a buyer waiting in the wings, you might consider selling your house without a Realtor®. Instead, hire a real estate attorney to help you close the sale.

“Money and blood don’t mix. The relationship gets killed because they didn’t have something in writing,” says Rajeh A Saadeh, a real estate attorney in New Jersey. So, as much as you may love your BFF or believe your brother-in-law is a good guy, it’s best to involve an attorney to help you navigate the deal.

Attorneys specialized in real estate transactions can help you draft and interpret the endless stack of closing paperwork, including contracts and legal documents. Depending on your state, you may even be required to have a real estate attorney present at closing, regardless of if you’re selling your home with a real estate agent or not.

Pros:

A real estate attorney can craft an air-tight contract

Your attorney will draw up contracts that include deadlines for inspections and appraisals, any conditions, caveats and contingencies, and the details of the sale price and closing dates.

You have a legal advisor to resolve disputes

“Having an attorney help you with the process can be valuable, especially if problems develop because they can step in to help resolve disputes or prevent them from even occurring,” shares Safa Ashrafi, a licensed attorney with Gross McGinley in Allentown, PA.

Common disputes include failure to disclose property defects and the inability to agree on a moving date.

You still save money compared to working with a real estate agent

It’s not cheap to hire an attorney, but it’s less than what you’d pay in commission working with a real estate agent (typically 5.8% of the sale price). Average hourly fees for real estate attorneys range between $150 and $350 per hour. For example, if you’re selling a $250,000 home, $15,000 (or 6%) will go to the agent.

Cons:

An attorney won’t get you the best deal possible on your home sale

An attorney will help you close your home sale without running into legal issues, but they won’t help you sell your home for the best price possible. For that, you need a top real estate agent.

“Attorneys, unlike agents, will not showcase or advertise a seller’s house, which draws a large pool of potential buyers,” comments Ashrafi. “Agents also may know the market and help sellers with determining a sales price.”

Agents are also experts in crafting effective pricing strategies and helping you negotiate to secure the best price possible for your home. If you go without an agent, you could undersell your home — especially if it’s to someone you know, where personal feelings are in the mix.

You might lose a friend

There are definite dos and don’ts when selling a house to a friend. You’re not just planning happy-hour cocktails or throwing a bridal shower — there are thousands to hundreds of thousands of dollars on the line. You’ll need to remain professional through the process and stay level headed during price negotiations to close a sale that satisfies both parties and keeps the relationship intact.

A sign used when selling a house without a Realtor.
Source: (tab62 / Shutterstock)

3. Sell your home on the open market without a real estate agent (FSBO)

Sellers are often drawn to FSBO because they want to save on agent commission and control the entire process. However, with added control comes responsibility. You’ll need to advertise and market the listing, price it accordingly, and host walk-throughs and open houses.

Few homeowners are willing to take on these tasks and risk selling their homes for less. In 2018, the National Association of Realtors shared that FSBO sales accounted for only 8% of home sales, the lowest percentage ever since data collection began in 1981. But if you’re savvy at marketing, home design, networking, and negotiating, you may just pull it off.

Pros:

You save on real estate agent commission fees

You can pocket the 3% commission fee that normally goes to the listing agent’s commission. However, note that you may still need to cover your buyer’s agent commission fees, typically 3% of the home sale.

You can still list your home on the MLS

You can advertise your home listing on a website (which costs around $200 and then $50 per month thereafter) or on your personal Facebook page. But to reach the widest audience possible, you’ll want to list your home on the MLS, where 9 in 10 sellers listed their homes. Go through a flat-fee MLS listing service to access the MLS $50 to $500.

Cons:

Statistically, you’re likely to sell your house for less money than if you hired a Realtor®

Real estate agents sell homes for 6% more than FSBO sellers do, according to Collateral Analytics. And according to the National Association of Realtors, the typical FSBO home sold for $217,900 compared to the $295,000 that agent-assisted homes sold for in 2018.

There are many reasons why FSBO homes usually sell for less:

  • Buyer’s agents out-negotiate FSBO sellers.
  • FSBO sellers often miss the mark in setting a competitive listing price. When they price their homes too low, they lose money. When they price their homes too high, their home sits on the market, leading to lower offers over time.
  • A home inspection report could reveal issues that the seller struggles to address efficiently. They may concede to too many repairs and lose money in their home sale. Or they may push back too hard and influence the buyer to leave the deal.

FSBO is time-consuming: You’re in charge of marketing and communications

If you’re planning to act as your own agent, get ready for it to feel like a part-time job. The seller must market their home with social media, flyers, and open houses. Top agent Joanne Owens of Sarasota, FL, advises sellers to use a service like Vistaprint, where 500 4” x 6” postcards cost $40 to help advertise their home. Ordering is the easiest part. You’ll be designing it yourself. Don’t forget to tack on a $.35 stamp to mail each postcard.

As a seller without an agent, you also must be available days, nights, and weekends to promptly respond to inquiries. If they fail to return an email or phone call quickly, they might lose the buyer who finds another home in the meantime.

Photos and staging are your responsibility

You can easily hire a professional photographer to take shots of your home’s interior and exterior for an average cost between $110 and $300. But professional photos won’t compensate for a home that’s cluttered or poorly staged.

“You’re looking at [your home] through your filter,” says Owens. “I had one seller with a plush-toy collection that was cute but wasn’t in the best intentions of the buyer.”

Your personal safety may be at risk

Owens recently met with an older woman convinced by a family member to FSBO and felt concerned for her safety when hearing about some recent home showings. “Are they just casing the joint or do they plan to purchase it?” she wondered. An agent will not only host walk-throughs but also vet potential buyers to keep you and your home safe.

Owens also warns FSBO sellers to watch out for wire fraud and online-phishing scams. “A lot of people that are older have been fooled,” she comments.

Understand the trade-offs before selling your house without a Realtor®

If you plan on selling your home without a Realtor®, you need to have a solid understanding of what your responsibilities will include and what you might sacrifice in the process. Remember, every home sale route has its trade-offs. Choose the best route for you based on your skill set, time, and personal selling goals.

Header Image Source: (David Suarez / Unsplash)

Thinking about selling your house without a Realtor®? We’ll break down the pros and cons behind your home sale options.HomeLight Blog

Ready, Set, Remodel: 8 Tips for Planning Your Perfect Home RenovationBeth Ann MayerHomeLight Blog

Maybe you want a spanking new kitchen, complete with an island and a walk-in pantry. Or perhaps you’re dreaming of retreating to a spa-like bathroom every night.

If you’re planning your perfect home renovation, you’re not alone. According to a LightStream survey, 77% of homeowners plan to renovate their homes in 2020. And their budgets are at a record high: On average, homeowners spent $11,473 on renovations, up 27% from 2019.

With top contractors and materials in high demand, you’ll need to plan your home renovation well in advance to finish your project on time and within budget. We’ll help you stay organized with these nine key steps for planning the perfect remodel.

For added expertise, our list includes expert tips from top real estate agent Martin Bouma, who sells properties 69% faster than the average agent in Ann Arbor, MI. Bouma shares advice from his 36 years of helping sellers prepare their homes for the market. He filled us in on how to plan your renovation, so it adds value and marketability to your home at resale. Ready, set, renovate!

A clock used to represent the timing of a perfect home renovation.
Source: (Jeanne Rouillard / Unsplash)

1. Time your renovation wisely to save money

Timing your renovation is everything — at least when it comes to getting the best deal. In HomeLight’s recent Top Agent Insights Report, 91% of top real estate agents agree that contractors’ peak seasons are the spring and summer. With this in mind, two-thirds of agents say that materials and labor for home renovation projects are the least expensive from October through March. If you can hold off planning your renovation for these months, you could save hundreds to thousands of dollars.

2. Research average project costs and create a budget

Before you get carried away planning fixtures and finishes, you need to know the going rate for your renovation project so you can budget accordingly. Hint: It’s almost always more than you think.

“A lot of people think carpeting is only going to be $1,000 or $2,000, but it ends up being $7,000 to $9,000, depending on the size of the house,” Bouma comments.

Research average project costs on websites like HomeAdvisor, Angie’s List, and Thumbtack. Once you have a rough idea of how far your budget will stretch, reach out to local contractors for a more realistic estimate. Take note of the project area’s dimensions before calling to get the most accurate estimate possible.

Here’s the average cost of common home renovations:

3. Assemble a top-rated home renovation team

Now that you know what’s possible for your budget, it’s time to book contractors. Assemble a dream team of reliable professionals who can help you plan the perfect home renovation following these tips:

Browse portfolios online

Discover local contractors, designers, and architects on websites like Houzz and Thumbtack. Filter by project type and location to narrow your results. Bookmark professionals who have completed projects similar to yours in terms of scale, budget, and style.

Carefully read customer reviews

Once you’ve narrowed down your candidates, read all of the reviews you can find on websites like Yelp, Google Business, and Angie’s List. Bouma advises sellers to spend time reading the reviews rather than taking the average ratings for face value.

“Pay attention to whether the contractor was on time, whether he did the project in the allotted time frame at the right price, and whether he followed up,” he adds.

When friends and family may also suggest professionals, Bouma cautions sellers to read online reviews anyway. Often, people recommend friends and acquaintances without a clue of their referral’s work ethic.

Interview candidates over the phone

Before you commit to a contract, screen your candidates over the phone with these questions:

  • How long have you been in business?
  • Could you share examples of projects you’ve completed similar to mine?
  • How long will this renovation project take? (Pro tip: If time is of the essence, add it to the contract as an incentive. “If your contract says that every day they’re late, you’ll reduce the bill by such and such amount, they’ll give your job priority,” Bouma says.)
  • What materials are needed? Can I save money by purchasing them myself?
  • Can I see your license and proof of insurance?

4. Get the appropriate permits

Cosmetic upgrades, such as replacing flooring or adding a fresh coat of paint on the walls, don’t require permits. Renovations altering your home’s structure, on the other hand, likely will. Since every city and county has different regulations, contact your local permitting office to determine what permits your project requires.

“In our market, you need permits if you are doing any structural, plumbing, or electrical work,” Bouma comments.

For most projects, your contractor will manage the permit applications and tack the costs onto your bill.

Source: (DocuSign / Unsplash)

5. Stay organized: Store all of your quotes, invoices, and receipts together

When you’re in the middle of planning your renovation, you’ll want to keep track of invoices, total spend, contracts, and warranties. These documents will also come in handy when it’s time to sell. You can share the warranties with your buyer to give them some peace of mind, and your agent can use the renovation documents to support their case for the home’s value during the appraisal.

Keep all of your documents in one place with one of these organization systems:

  • Google Drive: Between emailed quotes and receipts from online shopping, you’re likely to collect more digital than physical documents. With Google Drive, you can easily save documents from your email and phone into the cloud without printing them out. As a best practice, name the files with the company, project, and date, so they’re easy to search for down the line (e.g., ABC Landscaping_Invoice_June_2021).
  • Physical Folder: If you’re the type that still likes a hard copy, an old-fashioned manila folder will do the trick. Try alphabetizing your papers or opting for a folder with dividers to keep documents organized.
  • Thumbtack: There are more than 2.2 million home improvement apps in the Apple App Store, but Thumbtack consistently ranks as one of the best for planning the perfect home renovation. You can search for contractors, estimate project costs, and save renovation documents in the app — for free!

6. Create a Pinterest board to save your inspo photos

Tried and true, Pinterest is the ultimate social media for home design inspiration. Search for ideas and save your favorite pins on organized boards. You can share your boards with family and friends to give them a preview of your renovation and ask for ideas.

Here are some elements and trends you’ll want to pin down (pun intended) when planning your perfect remodel:

Choose a paint color

There are thousands of paints to choose from when planning a remodel. When in doubt, Bouma advises homeowners to stick with neutral colors. You’re less likely to burn out on a neutral shade than a more dramatic choice, and you won’t need to repaint when it’s time to sell.

In HomeLight’s recent Top Agent Insights Report, surveyed agents ranked Agreeable Gray by Sherwin-Williams as the paint color with the widest appeal. Bouma says white is also a favorite option. Research shows white is one of the least distracting hues — perfect for keeping buyers’ attention on your home’s best features.

If you’re looking to make a statement, experiment with a dark paint shade like black and dark green. The hashtag #darkinteriors has 186K tags, with more and more designers embracing the dark side. Wrought Iron and Jet Black are two of Benjamin Moore’s best-selling black paints.

Find your perfect hardware finish (or finishes)

Sometimes, the perfect home design is all in the finishing touches. The types of knobs and handles on your doors and cabinets can make or break a look.

“Right now, pewter is really popular,” Bouma notes. Pewter finishes, like these drawer pulls from Home Depot pair perfectly with whitewashed furniture.

Mixed metal finishes are also trending, but be careful: There’s a fine line between eclectic and tacky. Choose two or three finishes max. We recommend incorporating matte black since, like a little black dress, black matte hardware goes with everything and never goes out of style.

And by the way, don’t worry if the fixtures don’t match the appliances. It’s OK to have a stainless steel fridge and copper and gold cabinet pulls.

Pro tip: If you only update the hardware in one place, choose the front door. First impressions are everything when selling a home. In a survey by the Real Estate Staging Association, 79% of pro home stagers agree that the look of your front door could increase your home’s perceived value. Satin nickel and satin brass look best with blue doors, while matte black pairs perfectly with red doors.

7. Incorporate green materials where possible

We’re not talking about color here — we’re talking about sustainable building materials. Choose sustainable flooring materials like Millennial-loved bamboo, cork, or carpet made with natural fibers like wool.

You’ll enjoy your home renovation even more knowing it’s as easy on the environment as it is on the eyes. Plus, green home features can help attract buyers when it’s time to sell. A Nielsen study showed that two-thirds of Millennials are willing to pay more for eco-friendly goods, and one study found that green homes can sell for 7% more.

8. Take home material samples for comparison

For the perfect home renovation, test drive materials in your home before you place an order. Ask your retailer or contractor for samples of flooring, countertop, and backsplash materials so you can see how the elements look together. You can better envision your renovation if you see the materials in the project space. Plus, you’ll see how the materials look in realistic lighting instead of under showroom spotlights.

A bathroom that has been renovated perfectly.
Source: (Daniela Gisin-Krumsick / Unsplash)

9. Research projects proven to recoup costs at resale

If you’re plotting a move, focus on projects that will boost your home’s value when planning your renovation. Here’s an overview of common remodeling projects’ average return on investment:

While online ROI data is a useful tool, Bouma recommends reaching out to your real estate agent for the most accurate insight. They’ll know what renovations add value and marketability to homes in your price range in your particular neighborhood. Top agents can also help you choose finishes and materials that attract buyers when it’s time to sell.

Header Image Source: (Joe Ciciarelli / Unsplash)

Start planning your perfect home renovation with these 8 tips to help you stay organized and add value to your home.HomeLight Blog

What to Do Before Buying a House: 30 Tasks to Add to Your ListEvette ZalvinoHomeLight Blog

Do you know what to do before buying a house? If you’re a first-time homebuyer, be warned: There’s a lot to remember, and we know how challenging it can be trying to make sure you have all of your ducks in a row.

Don’t worry! We got you covered. We’ve created a checklist (of sorts) to help you remember what to do before buying a house. (Heck, you may even want to print this article for future reference.)

Source: (Zane Lee / Unsplash)

What to do before buying a house

1. Determine if this is the right time to buy

You have to be objective and evaluate your situation because you don’t want to get in over your head when there’s no need for that future stress!

Jeremy Smith, a top-selling real estate agent in Austin, Texas, with 17 years of experience, says that when mortgage rates are low, loans are inexpensive, and it can be a good time to buy — but there are always other factors to consider, too:

“You would have to look at various factors in your life, like job security and advancing in your career.”

2. Create a list of what you want in a house

It’s fun to imagine all of the features you want in your new house, but as the Rolling Stones said, “You can’t always get what you want.”

Let’s say a finished walk-out basement and brand-new appliances are among the top things on your list, which is fine and well.

However, you need to consider that these things typically increase the value of the home and could price a property outside of your budget range. Creating a list of features you want (and features you really can’t live without) will help your agent find houses that best fit the criteria and help you determine what you can improve after moving in.

3. Research the market

After deciding that this is the right time to buy a house and you’ve created your wants list, you must do a little research into the real estate market in the desired area.

This is why an experienced real estate agent will become your new best friend. The agent will be able to explain how the market is doing in terms of home inventory and prices. They’ll be able to walk you through various contingencies, how to handle a situation where there are multiple offers on the house, and they’d also be able to tell you if it’s a seller’s market or a buyer’s market.

When you’re speaking to an agent about the market, some questions you might want to ask include:

  1. What kind of amenities, attractions, or resources are available in the area?
  2. Is the neighborhood safe?
  3. How competitive is the market?
  4. What is the local economy and job market like?

4. Spend some time in your desired neighborhoods

A neighborhood may look good when you drive through it, but to determine if it’s the right one for you, then you need to spend some time in the neighborhood.

Hang out at local coffee shops, the library, the parks, and other places. Chat with the residents and ask their thoughts on what it’s like to live in the neighborhood.

If possible, rent a room or an apartment for a week or two in your neighborhood of choice, so you can experience it night and day, weekday and weekend, before you decide to live there.

5. Check your credit score

Your credit is incredibly important when you’re applying for a loan because it indicates your creditworthiness to lenders and plays a big role in how much interest you’ll pay.

We recommend that you check your credit report and monitor your score regularly prior to applying for a loan.

6. Consider seeking help to repair credit, if necessary

If your credit score needs some work, speak with a financial advisor to see how you can boost your score.

Heck, the easiest way you can start is to make sure you’re making all of your minimum payments on time!

Cash used to buy a house.
Source: (Pixabay / Pexels)

7. Estimate how much money you need for closing costs

As a buyer, you’ll be responsible for closing costs that will need to be paid on closing day, so you’ve got to make sure you have enough money saved to do that.

We have a useful closing cost calculator that will give you a ballpark idea of how much you need to save.

8. Get estimates associated with moving into a new house

Not only is buying a house expensive, so is moving into one!

Along with closing costs, you’ll want to have money saved for things like turning on the utilities, hiring a moving company (or to rent a moving van if you’re moving on your own), buying new furniture, renting a storage unit if needed, and other expenses.

9. Figure out your shopping budget

After you’ve weighed up all the possible expenses, it’s time to take a close look at your finances and figure out what you can comfortably afford to spend on a house before you start shopping for one.

You can use our house affordability calculator to get an idea of how much house you can afford.

10. Weigh your options regarding loan type

There are several different types of loans you could apply for. Do a little bit of research to find out which ones you may qualify for because each loan has different eligibility requirements, and some have additional program fees or expenses.

Loans typically fall into two categories — conventional, and government-backed loans, such as FHA, VA, and USDA.

Conventional

Conventional loans are offered by private lending institutions and banks. These loans are not backed or guaranteed by any government agencies. The lowest interest rates are typically offered to buyers who have a 20% down payment and excellent credit (740 and above).

Government-backed loans

Government-backed loans include FHA loans, USDA loans, and VA loans. Although each of these loans have slightly different terms and requirements, they are designed to help make mortgages accessible to more buyers. .

11. Compare lenders to find the best fit

You don’t go with the first lender you pick out of the phone book! Take some time and do some research on a few lenders, as some lenders may offer better interest rates, or quicker closing times.

12. Get preapproved for a mortgage

Once you’ve found a lender, now you need to get your preapproval letter.

This document will outline how much home you can afford — sometimes it’s more than your estimated budget, and sometimes it’s less. That said, it’s usually not a good idea to shop at the very top of your budget.

A buyer researching what to do before buying a house.
Source: (Buro Millennial / Pexels)

13. Find a real estate agent

Your real estate agent is going to be your go-to person for everything during this process. You need to find an agent who has a good reputation, lots of experience, and who makes you feel confident that they’ll work with your best interest at heart.

14. Start the house hunt

Now the fun can really begin! Your agent will show you houses that meet your budget and your needs, but you can also ask to see any houses you’ve found on your own that you’re interested in seeing.

15. Tour houses in different types of weather

People always want to see houses when it’s nice and sunny, but you should be willing to look at houses in different types of weather if at all possible.

For example, if you see a house when it’s rainy, you can look for leaks. If you see a house when it’s cold or snowing, you can check for drafts around the windows, doors, where plumbing enters the house, and air ducts.

16. Make sure listing details are correct

It’s important that when you’re going to see a house that the listing details match what you see. Examples of incorrect listings could say there are three bedrooms, but one of the rooms is a glorified closet — or the listing says stainless steel appliances are included, but all you find when you open the utility closet are outdated appliances that have seen better days.

17. Be open to reconsidering your wants and needs

After you’ve seen a few houses and have gotten a sense for how much your money can buy, it could be time to reconsider what features you are looking for in a house.

Maybe instead of a finished basement, you can settle for a basement that you could finish in the future?

18. Research homeowner’s insurance options

You don’t have to go with whatever insurance company is recommended to you. Shop around and look for homeowner’s insurance companies that offer the best coverage at the best rates.

A floodmap studied before buying a house.
Source: (Andrew Neel / Unsplash)

19. Study the FEMA floodplain maps for your neighborhood

While you’re looking at homeowner’s insurance options, you will also want to study the FEMA floodplain maps. Why? Well, you’ll need to see if you’ll be in a flood zone so you can get the appropriate insurance, as well as make sure your house is properly zoned.

20. Request permits for any large home renovations

If you’re thinking about doing a large renovation no matter what, you may want to start the process of requesting permits for the type of renovations you’re hoping to do early on.

This isn’t a must-do, but remember: If you drag your feet on permitting until you have the keys in your hand, you could be waiting for weeks to get going!

21. Review HOA rules and regulations, if applicable

If you’re moving to an area where there’s an HOA (homeowner’s association), you’ll need to familiarize yourself with the rules and regulations prior to moving in. You don’t want any violation notices because you overlooked one rule or another.

22. Get a home inspection

Don’t skip the home inspection! The home inspector will go through the property to look for repairs that need to be made, structural or foundation issues, and more.

Trust us: You don’t want to waive your rights to a home inspection only to discover the roof needs to be replaced or the plumbing in the kitchen floor under the sink is rotting.

23. Determine whether you need specialized home inspections

There are some instances where you may want to look into getting other types of home inspections.

We have an extensive breakdown of what specialized home inspections are available and the circumstances when you’d want to do them.

24. Get a home appraisal

Your lender will also require a home appraisal so they aren’t lending more money than the house is worth. Ultimately, the home appraisal is for your benefit because it’ll protect you from paying more for a house than it’s actually worth.

25. Buy title insurance

Title insurance protects you and the lender from any possible future ownership claims to the property. This could include filing errors, undisclosed heirs, and forgeries. It’s not required, but it’s a really, really good idea.

26. Negotiate repair requests or credits

After the home inspection is complete, you now have the ability to negotiate with the seller depending on what the inspector found.

You can ask them to lower the price, ask them to repair or fix any problems, or request that they give you the money to have the repairs done yourself (also known as a credit).

A question mark representing questions about buying a house.
Source: (Emily Morter / Unsplash)

27. Ask any questions you may have

If you have any questions, don’t hesitate to ask them! Your real estate agent will answer your questions to the best of their ability.

That advice applies from the time when you’re going on a home tour all the way up until closing day — don’t be afraid to ask! This is a huge purchase, and you want to be 100% certain you know what you’re getting into.

28. Don’t ding your credit

From the time you get your preapproval letter until the keys are in your hands, you do not want to make any big purchases that will affect your credit!

If your credit takes a hit and drops significantly, the lender may see that and change your interest rate, or they could deny your loan entirely. Not good.

29. Get the clear to close

Clear to close means you are one step closer to being an official homeowner. A clear to close means you meet all the conditions and requirements necessary to get to the closing table; all closing documents have been signed, and you’ve secured your mortgage. The only thing left is to close!

30. Schedule a final walkthrough

The final walkthrough is your final chance to make sure everything is in order. You’ll get to make sure all of the agreed-upon appliances and fixtures are still in the house. You can double-check the basic functions of the house (lights work, plumbing is good, the HVAC runs properly), and to make sure repairs (if any) have been made.

You can read our full list of things to look for during a final walkthrough here.

A door of a house you can buy.
Source: (Ilinca Roman / Unsplash)

Don’t forget what to do before buying a house!

Buying a house is an exciting time, to be sure. In all that excitement, some things may fall through the cracks, and you may not remember what to do before you get down to the business of actually buying the house.

If you’re worried that you will forget something, refer back to our guide along the way. You’d be surprised by how much having a comprehensive list can help ease the stress that can come with the house buying process!

Header Image Source: (Daniel Bosse / Unsplash)

It’s easy to forget what to do before buying a house, but we’ve created a huge list of commonly forgotten tasks in an effort to help you to be well prepared!HomeLight Blog

A Buyer’s Guide: What Is a Manufactured Home, and Should I Buy One?Gayle TowellHomeLight Blog

When you picture your dream home, odds are probably good that you aren’t imagining a manufactured home. This home type is much maligned in the United States, conjuring images of sloping floors, drafty doorways, and lower-quality construction materials. But manufactured homes have come a long way since the school trailers of your childhood. Modern manufactured homes now offer great quality and are often indistinguishable from site-built homes.

If you’re in the market for a new home but are on a tight budget, you might consider looking into a manufactured home. These homes are often cheaper to get into, making them great options for first-time buyers.

In this article, you will learn exactly what is a manufactured home as we cover the ins and outs, including what they are, what options exist, and what you should be aware of if buying one.

A manufactured home being towed to a new location.
Source: (Sue Smith / Shutterstock)

What is a manufactured home?

According to the U.S. Department of Housing and Urban Development (HUD), a

manufactured home is built to HUD’s Manufactured Home Construction and Safety Standards. They are at least 320 square feet in area and contain a permanent chassis (usually steel) for transportation ease and safety.

Manufactured homes are built in a controlled environment and then transported in one or more sections to their final destination, where they can be placed on a permanent foundation, on a lot, or in a home “park.” Each section of a manufactured home will have a red HUD certification label with a unique identification number that states that it was built to the proper standards.

Manufactured homes are not the same thing as modular homes. While much of the home is built in a factory and assembled on-site in both cases, manufactured homes tend to come in only one, two, or three pieces, and they are required to have a permanent chassis. Theoretically, you could move a manufactured home more than once.

Modular homes are built in “modules” that can be assembled on-site to create a wider variety of floor plans. Modular homes are more versatile in design, often come in several pieces, and do not require a permanent chassis. Once they are set on their final foundation, they aren’t moving again.

In the U.S., manufactured homes are also colloquially called mobile homes or trailers, but for homes built after 1976 that comply with the HUD Code, the correct term is “manufactured home.”

The phrases “mobile home” and “trailer” often have negative connotations associated with low quality and a run-down appearance. So the term “manufactured home” is perhaps more appropriate then because these newer homes distinguish themselves by their more modern appearance and significantly higher quality.

What kinds of manufactured homes can you buy?

Though manufactured homes aren’t quite as versatile as modular homes, they’ve still come a long way from the “single-wides” of the past.

The overall construction is pretty standard —  these homes come in rectangular form only. However, the exact size and square footage can vary.

  • A single-wide ranges between 750 and 1,050 square feet
  • Double-wides range between 1,060 and 2,300 square feet
  • Triple-wides can go up to 4,320 square feet, but often a triple-wide is used to configure a different floor plan instead of simply adding that much square footage
  • For all three types of manufactured home, ceiling height typically caps out at nine feet

This means the upper range of a double-wide comes in just under the median new home size, meaning that manufactured homes can offer just as much space as many site-built homes. Plus, many manufactured homes come with add-ons that can make them indistinguishable from site-built homes, including:

  • Customizable floor plans
  • Garages
  • Decks
  • Porches
  • Upgrades to kitchens and bathrooms
An air conditioning unit outside of a manufactured home.
Source: (Keagan Henman / Unsplash)

What should buyers think about vis-a-vis manufactured homes?

Regardless of how well modern manufactured homes may blend in with site-built homes, there are some distinct differences that prospective buyers should be aware of. Here we outline all of the things to look for or consider when shopping for a manufactured home.

Buying new or used

When it comes to site-built homes, whether the home is brand new or previously owned rarely matters except when it comes to repairs and inspections. With manufactured homes, however, this is not always the case.

If you plan to purchase a brand-new manufactured home, you will likely have no problem securing financing and bundling the home loan with a lot loan. But if you are looking at used manufactured homes, it’s crucial to determine whether the house has been moved from its original site.

Despite the permanent chassis that makes the moves possible, manufactured homes don’t hold up well through multiple moves. A home that has been moved more than once is more prone to problems and damage. Because of this, it might be difficult or impossible to secure a loan, depending on the home’s condition and the state and local regulations.

If you are considering a used manufactured home, check its identification tags and paperwork with local records to determine if it was ever moved, and if it was, to see if the move was handled professionally, and to obtain a valid engineer’s certification for the foundation.

Insulation, ventilation, and energy efficiency

While older manufactured homes sometimes had insulation and ventilation issues, modern manufactured homes are often designed to be energy-efficient. If you are looking at older homes, make sure you determine the current state of the home’s ventilation and insulation and see what sort of upgrades it might need.

Energy.gov suggests that the following retrofit measures can help an older manufactured home become more energy-efficient:

  • Install new energy-efficient windows and doors (Windows may cost an average of $650 apiece while doors average $997)
  • Add insulation to the belly (Insulating an entire home costs around $1,489 on average)
  • Make general repairs of cracks and ducts with caulking
  • Add insulation to the walls
  • Install insulated skirting (Insulated vinyl skirting for a single wide costs between $1,440 to $4,000)
  • Install a belly wrap (Costs vary, but expect to spend a few hundred dollars)
  • Add insulation to the roof or install a roof cap

Cost of home

Manufactured homes are typically more affordable than a stick-built house. Experienced Florida real estate agent Chuck Shaver says, “They tend not to have homeowner’s associations, and they tend to have lower taxes. A budget of $100,000 gets a lot of home with a much better main suite, bigger walk-in closets, and huge bath that are all superior to that of a conventional home.”

The lower price tag makes these home types attractive to first-time buyers and retirees looking to downsize.

Land, and whether it is included or not

Because manufactured homes are built in a warehouse, you might need to purchase your home and your land plot separately. Some people even buy a manufactured home and then rent the lot that the house rests on. More often than not, though, it’s not too difficult to wrap your purchase of home and lot all into one transaction.

Greg Clark from Waco, Texas, who sells homes 55% faster than the average agent in his area, says that if a mobile home is used, the home and land almost always come together, but, “When it comes to new-built manufactured homes, often the manufacturer will source those lots and roll it into the loan.”

Some people find the land they like first and then make plans to place a manufactured home. However, you should be wary of purchasing the land before the home, as it may turn out that regulations prohibit placing a home on the land.

Buyers “need to be aware of the neighborhood restrictions or the area restrictions,” says Clark.

“It’s the buyer’s responsibility to figure that out before they purchase the land. You’ve also got to make sure you can get water, electricity, and sewer.”

Getting a loan for a manufactured home

While getting approved for a loan on a manufactured home can sometimes prove more challenging than getting a loan on a conventional home — especially if the home has been moved — it is still very possible to secure financing.

You can often get government-backed mortgages for newer manufactured homes, including FHA and VA loans. Otherwise, if it’s a conventional home loan you’re after, “You may be better off going to the local banks because sometimes their threshold for risk is a little bit different,” says Clark.

Clients who have a relationship with a local bank may benefit from asking if they have a loan available for manufactured homes. This may be a particularly handy tip if you’re looking to secure a loan on a manufactured home that has been moved, as it can be harder to secure a traditional mortgage on these properties.

Shaver notes that in some places, the home manufacturer could offer financing. “I have sold homes to people that were looking for land. So, I helped them find the land they wanted, and they went to the home manufacturer. They financed the lot and the land together, and it was like a one-stop-shop.”

Shaver also suggests that it is more challenging to get loans on a manufactured home that has been moved, though it isn’t impossible. “I just had a property where the home was moved, and it was financed, though it required a manual underwrite.” A manual underwrite involves more paperwork and can take more time than typical automated underwriting, while the end result (hopefully an approved loan!) may be the same.

Your home’s value over time

Often people who buy a home consider it an investment. Home values tend to increase over time so that when you sell your home, you make a profit. This may not always be the case with manufactured homes, however. According to Clark, “Year over year, they’re going to depreciate quicker than a regular home around here.”

The value of the land your home sits on may help balance out declines in home value. However, according to Shaver, declining value of manufactured homes may not be the rule everywhere.

“Allegedly, values decline over time. That’s what everybody tells me, but I have been selling mobile homes, and the price just keeps going up and up and up. I’ve never really bought into the belief that they do not increase in value over time.”

An agent that can help you buy a manufactured home.
Source: (mentatdgt / Pexels)

Find an agent who can help you find a manufactured home

Though manufactured homes may have had a bad reputation in the past, many modern homes are built to high-quality standards and are virtually indistinguishable from other homes.

“Don’t look down your nose at them,” says Shaver. “There are plenty of lenders; someone will finance them. And work with an agent that has dealt with manufactured homes.”

Header Image Source: (Sue Smith / Shutterstock)

What is a manufactured home? Manufactured homes are built in a controlled environment and then transported in one or more sections to their final destination.HomeLight Blog

Mortgage demand falls, but average homebuyer size hits recordMovement StaffMovement Mortgage Blog

Mortgage demand falls, but average homebuyer size hits record

Total mortgage application volume fell 4.1% from the previous week, but were 16% higher than a year ago. The average loan amount for homebuyers hit another record high — $395,200, according to the Mortgage Bankers Association’s seasonally adjusted index reported by CNBC. 

Homebuyers are seeing prices rise at the fastest rate in over six years, as highly emotional, pandemic-induced demand for housing butts up against a record low supply of homes for sale, resulting in bidding wars.

Continue reading Mortgage demand falls, but average homebuyer size hits record at Movement Mortgage Blog.

Total mortgage application volume fell 4.1% from the previous week, but were 16% higher than a year ago. The average loan amount for homebuyers hit another record high — $395,200, according to the Mortgage Bankers Association’s seasonally adjusted index reported by CNBC. 
Homebuyers are seeing prices rise at the fastest rate in over six years, as highly emotional, pandemic-induced demand for housing butts up against a record low supply of homes for sale, resulting in bidding wars.
Continue reading Mortgage demand falls, but average homebuyer size hits record at Movement Mortgage Blog.Movement Mortgage Blog

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