Homeowners May Face Tax Hike Under New Federal Plan

Homeownership would no longer be a priority in the tax code if a reform plan released Wednesday by the Trump administration and congressional Republicans becomes law. The “Tax Reform Unified Framework,” known as the “Big 6” tax reform plan, is being touted as a way to cut taxes for the middle class.  But it could hurt residential real estate by eliminating most itemized deductions in return for an increase in the standard deduction.

Although on its face, the change would seem to help many taxpayers by nearly doubling the standard deduction to $12,000 for single taxpayers and $24,000 for married couples, most middle-income homeowners who currently itemize would likely pay higher taxes, according to National Association of REALTORS® estimates. That’s because the repeal of most itemized deductions, including the deduction for state and local taxes, would exceed what people would gain under the higher standard deduction – even if the deductions for mortgage interest and charitable contributions are left in place, which the outline calls for. In addition, the personal and dependency exemptions that taxpayers take today would be folded into the higher standard deduction, eradicating their benefit.

NAR President William E. Brown said in a statement that REALTORS® favor tax reform without hurting homeownership and the transfer of real property, which are the backbone of the economy.  “We have always said that tax reform—a worthy endeavor—should first do no harm to homeowners. The tax framework released by the Big 6 missed that goal. It recommends a backdoor elimination of the mortgage interest deduction for all but the top 5 percent, who would still itemize their deductions. When combined with the elimination of the state and local tax deduction, these efforts represent a tax increase on millions of middle-class homeowners.”

Among credits that are singled out for preserving—rather than repealing—is the low-income housing tax credit, which gives businesses an incentive to invest equity in housing developments that are affordable to low-income renters. The plan laid out no details on the fate of 1031 like-kind exchanges. However, the document specifies that many, if not most, business deductions will be curtailed or repealed.

The outline is the starting point for drafting legislation that lawmakers will eventually vote on.  Sen. Orrin Hatch (R-Utah), chair of the Senate Finance Committee, said at a hearing last week that he wants the process to be as bipartisan as possible.  At that hearing, Iona Harrison, a real estate practitioner in Upper Marlboro, Md., testified that real estate must be protected because it’s essential to communities and economic growth. “We want to be sure the economic engine of homeownership and the transfer of real property in this country remain unfettered,” she said at the hearing.

—Robert Freedman, REALTOR® Magazine



Three Ways Buyers Choose Homes

Buyers generally have three criteria for selecting the home they ultimately purchase.
These include  PRICE, CONDITION, and LOCATION.  Play these up to get your home sold quickly and for the best terms.

Make the price attractive:  Don’t price your home where you think it should be but instead, price it close to or slightly below market value. This strategy gives buyers the opportunity to compete for your home, and it could possibly sell above list price.

Make the condition move-in ready:  Keep in mind that many buyers are stretching their financial limits to afford your home. Buyer’s pet peeves are usually easy items to fix.  You don’t want your house to be disregarded because you failed to paint, mow, replace the carpet, fix leaky faucets, etc.  Your goal is to make buyers feel like they don’t have to do anything but move in.

Make the most of your location:  You can’t do much about your home’s location but you can make your home more attractive with lovely landscaping, fences to block out ugly views and sounds, and an outdoor entertaining area.  If your home is on a busy street, point out the easy access to amenities, like walking to the grocery store.

If these three criteria aren’t in alignment, you definitely don’t want to overprice.  Buyers expect to pay more for a great location near schools, transportation, shopping and restaurants but if you overprice, they will scrutinize the location and the condition more closely.


9 DIY Home Projects That Increase Sales Value

When purchasing a home, you’ll probably have a list of must-do projects in mind. It’s difficult to find a home that fits your style and taste perfectly. When making updates to your home, however it’s important to keep the home’s long term equity in mind. You don’t want to spend your life savings on projects that don’t have an impact on your home’s resale value, and place it at a price tag too high for the neighborhood. One of the easiest ways to keep the costs of projects down are by taking matters into your own hands.

1. Paint Walls
The first and most straightforward DIY home project is painting. There are a variety of tools available for DIY painting including edging tools, and one-coat paint that includes primer that make painting your own home easier than ever before. By putting in some sweat equity, you can completely transform your home at a low cost. To build equity, make sure the paint colors you choose are neutral to appeal to the largest number of homebuyers.

2. Install or Paint White Trim
The trim is another area of your home that can be completely transformed with a coat of paint. Although this can be a tedious DIY home project, it’s one that can modernize and brighten your home making it easier to sell. By painting the existing trim in your home white, you can complement the bright neutral paint colors you’ve painted throughout the spaces in your home. If your home doesn’t have trim, adding trim can also build equity. Adding trim and other decorative trim work, such as wainscoting, can make your home appear higher end on a budget.

3. Resurface Countertops
A complete kitchen remodel isn’t always in a homeowner’s budget. Even if it is an affordable option for you, it might not always make sense in terms of building equity. The worst thing you can do to your home is make it worth far more than the comparable homes in your surrounding neighborhood. One of the DIY home projects that can completely transform your kitchen however, aside from paint on the walls and cabinets, is resurfacing countertops. There are a ton of different ways that you can resurface your countertops by yourself. You could follow a plan for how to build butcher block countertops, or update your existing laminate countertops with new laminate, countertop paint or heavy duty contact paper coverings that are on the market today.

4. Modernize Fireplace
Your fireplace is the focal point of your living room and is a major selling point for home buyers. Old styles, like red toned brick and oak mantles are found in many homes but doesn’t necessarily appeal to today’s homebuyers.  Another one of the most rewarding DIY home projects you can complete is modernizing your fireplace. Start by using paint to whitewash or refinish brick. You can even completely change the style if it makes sense with your home decor by using stucco and other materials. Once resurfaced, modernize the mantle by creating an updated wood stained piece that can fit directly over the existing mantel or simply using paint. This DIY home project, along with the corresponding paint on the walls can completely transform the look of your living room without the large price tag.

5. Refinish or Replace Floors
Floors complete a home by making cohesive spaces. Updating floors can have a huge impact on building equity. Especially if you save money by making it one of the DIY home projects that you work on. One option for transforming your floors, especially if they’re wood, is to resurface them. You can rent a floor sander and take off the existing finish completely to prep them for a new stain throughout your home. If you have carpet or tile in your home, you can also make them look brand new using a carpet shampooer or grout cleaner. If your floors are beyond repair, replacing your floors is fairly easy with the products that currently exist. By opting for a laminate wood, for example, you can find products that physically snap together making it a doable DIY home project.

6. Build a Deck
Building equity isn’t only reserved for the inside of your home, sprucing up your outdoor space can make a huge impact as well. There are plenty of deck plans that you can find or purchase to build your own deck or porch. Although this obviously requires a set of power tools and knowledge about how they work. This is a DIY home project that will take some time, but will be well worth the return, especially by saving money on labor costs.

7. Upgrade your Exterior Doors
Exterior doors can not only tie together the look of your home, but also help immensely with your home’s efficiency. Updating the major exterior doors is a DIY home project that you can do on your own by taking proper measurements and purchasing a new door that fits in the same space. Opting for a modern door with a bright paint color can enhance your curb appeal making your home more desirable for homebuyers.

8. Update Light Fixtures
Another one of the simplest DIY home updates you can do is to update all of the light fixtures in your home. Opting for modern chandeliers for dining rooms, pendant lights in the kitchen and new updated hallway light fixtures can brighten and modernize your home in a cohesive way. Most light fixtures can easily be swapped out by following the instructions provided in the new light fixture and connecting the existing wires. New light fixtures are the focal point of each room, and can be the perfect finishing touch for a homebuyer.

9. Waterproof Basement
Finally, updating your basement is another DIY home project you can take on. One of the biggest fears of homebuyers is purchasing a home that has a wet basement. If you have an unfinished basement, you can make it more appealing by using waterproofing materials, like heavy duty waterproofing paint to finish off surfaces that may be susceptible to moisture. For example, covering concrete floors with waterproofing paint can make the space feel cleaner and can be a major selling feature for homebuyers.

Overall, these 9 DIY home projects take a range of time and sweat equity, but are well worth it in the end. They’ll ensure that your home looks great and is more efficient without breaking your budget. This will ultimately help you save money, giving you even more return on your investment. Sometimes, taking matters into your own hands through DIY projects can have a large return in the long term.

Lansing Area Real Estate Trends to Expect in 2018

2017 has been a hot seller’s market, and that trend will continue in 2018. With an influx Lansing area home buyers, homes aren’t staying on the market for long. If you’re considering buying or selling, it’s important to keep up on projected trends. Here are some real estate market trends to expect in 2018.

Demand will remain high & inventory will remain low

Inventory has been at a 15 year low in 2017 and that trend will continue into 2018. There has been a massive influx of people looking for new homes, but the inventory just hasn’t been there. This puts the state of the market in a seller’s market, giving seller’s an advantage to get top dollar for their homes by creating bidding wars with fewer contingencies. This year has been a great year to put your home up for sale as you’re almost guaranteed to get a high sales price. Expect this to remain as one of the top real estate market trends in 2018.

Home prices will continue to steadily rise 

In 2017, home prices were approaching the 2007 pre-recession mark. That upward trend will continue in 2018. Home prices are actually projected to be higher than 2007 levels for the first time since the recession. This means that the 2018 real estate market is in a more stabilized place than it has been in a decade. In the Greater Lansing area, we saw a 4.6% increase in home prices from 2016 to 2017. That trend is expected to continue with home prices rising about another 3.5% in 2018. Right now the average home price in our market area is around $156,251, so that amount will slightly rise.

Mortgage rates may slightly rise 

Rising mortgage rates may also contribute to a decrease in home affordability. This rise will not be drastic and will remain below 5%, however, rising mortgage rates will cause fewer buyers to be able to afford as much home. This will result in home budgets being slightly lower for home buyers in 2018. This national prediction is true for Michigan as well, as mortgage rates are expected to slightly rise to around 4.2%-4.6% in 2018.

Generational shift in buyers and sellers

Millennial homeowners have risen over the last few years, and 2017 wasn’t any different. However in 2018, the number of millennial homebuyers will be larger than ever before. As millennials become more stable in their careers, renting homes no longer makes sense, increasing the number of millennial home buyers.

Another generational real estate market trend we’ll see in 2018 is more Gen Xers taking advantage of the seller’s market and putting their home’s up for sale with the goal of upgrading to a larger home. This will be for a number of different reasons including growing family sizes, or simply a more luxurious space. Not only will this include new larger homes, this will also include second homes, especially in Michigan where second properties are common.

Finally, another one of the generational real estate market trends is the rate baby boomers are buying homes will drastically slow down. This is because baby boomers are at a point in their lives where they’re in a home where they’re comfortable staying put. This means that the real estate market is shifting away from baby boomers being home buyers and moving toward younger generations.

Investing in Residential Real Estate, Is It For You?

Some of the wealthiest people in the world have become so by investing in residential property. If not wealthy, then comfortable enough to fund a comfortable retirement. There are several approaches a person can take when investing in residential real estate.

Flip It

If you are willing to put in sweat equity and can find a house on the market at a bargain price or considerably below market price, flipping houses may be a good investment strategy for you. Even if you need to hire a contractor, a home purchased at a low price and sold at market value can make a substantial profit.

Flipping a home requires that either you or a contractor make all necessary repairs and upgrades to make the home sellable. You will want this done quickly because once the clock runs out on your short-term construction loan you will need to convert it to another type of loan or extend it, that is unless you paid cash for the property. Getting the job done quickly can give you a fast way to grow a residential real estate investment.

If you know your market and home values of property in the area, the knowledge to repair a home or see that it is done, and a desire to make a tidy profit on your investment, residential real estate may be for you.

Residential Rentals

For long-term, personal wealth, ownership of one, two or ten rental properties can create monthly cash flow that can affect your life today and long into the future. As a retirement strategy, rental properties can be acquired that will either fund your retirement or give you substantial assets that can be sold when you retire to buy and pay for your dream home.

Dealing with rental property is not for the faint of heart. Your personal budget can be affected by a missed rental payment if you have not planned for such eventualities. Managing the process of finding renters, maintaining the property, and planning the budget for the property, as if it were any other small business takes time and dedication.

Getting a call at midnight because a renter has no hot water may be more than you want to deal with and more conventional methods of investment may be more to your taste. That is unless; you are making enough cash flow to hire the services of a property manager. However, if you have the funds to invest in rental real estate and the will to deal with its requirements, then you can begin making a great contribution to your personal assets.

Know what you are buying

No matter what investment real estate you decide to purchase a home inspection will be worth every dollar spent. Costs of unseen issues, such as a leaking basement or roof; furnaces and AC units that are nearly worn out; structural, electrical or plumbing issues will be discovered through an inspection.

All can be costly to repair and may blow your budget out of the water and diminishing your investment. There are many short-term loans available to investors with excellent credit and the means to repay the loan. If you decide on this type of investment, proceed with caution because a bargain is not such a good deal, if it costs you more than it is worth.

Is real estate investment for you?

Knowing what you are getting into and making plans before ever finding a property can help you make a wise investment. If you do not know the area, a Realtor can familiarize you with the neighborhoods in your city and let you know when properties for sale are available.

After considering the pros and cons of residential real estate as an investment, you may find that playing it safe with your 401k is the best option for you. However, if you are willing to do the due diligence, and make a plan for financial freedom in the future, residential real estate investment can pave the way to that realization.


Tips for Fixer-upper Buyers

Rising home prices and low inventory is making it difficult for  buyers to find the perfect home.  What’s a great strategy?  Buy a fixer upper!

There are real advantages to buying a home that needs work. Unloved or outdated homes don’t attract as many buyers, allowing you to mine the gold under the dirt. You’re getting the home at a discount compared with the rest of the neighborhood. You’re not paying top dollar for someone else’s improvements and you can make the home your own. You’ll wow your friends and family with the result.

Shop for the best neighborhood you can afford.
Look for the worst home in the best neighborhood. Usually that home is older, smaller and not as well maintained as other homes. You’ll build instant equity when you improve the curb appeal, so the home looks like it belongs with its neighbors.

Ignore the cosmetics.
 Don’t stress over ugly paint, wallpaper, shag carpet or gingerbread trim.  Your Berkshire Hathaway Home Services network professional can help you distinguish features that matter and which are easy to change.

Consider the bones.
You need to know whether or not you can open a kitchen to the den or add on a bathroom or other square footage. These updates can be costly but they add value to the home. Talk to your lender about loans that pay for remodeling such as FHA’s 203(k) program or Fannie’s HomeStyle Renovation Mortgage.

Four signs your home’s list price may be too high

Housing inventory is low!  Mortgage money is available!  Interest rates are low!  The Lansing area is in “Seller’s” market!  So, why is your home not selling?

Overall, there are a variety of factors that can cause your home to not get any offers. However, by doing some investigation and keeping the following warning signs in mind you’ll be better equipped to know when it’s time to lower your home’s list price. 

 1. You’ve received multiple “low ball” offers
The first telltale sign that your list price is too high is if you receive multiple offers that you perceive as low ball offers. Receiving one or two low ball offers is expected in a buyer’s market where there is plenty of inventory. However, receiving low ball offers in a seller’s market could mean that your list price is too high. Don’t panic. Repeated low ball offers provides an opportunity to assess the offers that you’ve received to see what range they fall in, and adjust your list price accordingly to be more competitive. 

2. There’s been high traffic but no offers
Another sign that your list price is too high is if you’ve had a ton of traffic at open houses and through private showings, but still have yet to receive an offer. High traffic means that at first glance your home is appealing enough for buyers to check out. If there isn’t a major problem that is scaring buyers off, it could mean that the list price is simply too high. Lowering your list price could put you in a position of receiving multiple offers from interested buyers, driving up the price of the home through competitive bidding.

3. Comparable homes have much lower list prices
One thing you and your agent should always keep an eye on is if comparable homes come up in your neighborhood. As this begins to happen, you could notice that your home is priced much higher than comparable homes in your neighborhood. This is another sign that your list price could be too high and scaring off buyers. Adjusting your home’s list price as more comparable listings become available will make your list price more competitive.

4. Your home has been on the market for multiple months
A final sign that your list price is too high is if your home has been on the market for a long period of time. This is especially true during the current seller’s market with low inventory and a surplus of buyers. Lowering your list price could make your home more appealing to potential buyers and help get your home sold.


Home Values Continue to Rise. Mortgage Rates Remain Low.

The average sales price of Lansing area homes has increased $6,877 during the past twelve months.  This due to low inventory favoring sellers and affordable mortgage rates giving buyers a unique purchasing advantage.

After a brief hike, Mortgage rates fall below 4%
Following two weeks of mortgage rates slightly above 4%, rates have fallen back to pre-July 4th figures around 3.84%.  Did you ever notice that rates always go up during a holiday period?

Average Lansing Area home sales
The average sales price of homes in our market area has risen 4.6% from $149,374 in June 2016 to $156,251 in June 2017. Check out our Second Quarter Sales Statistics Link (below) for an update sales activity by community.

Second Quarter 2017 Sales Statistics

BHHS Tomie Raines sales exceed local average
While the average selling price of homes sold by all members of the Greater Lansing Association of Realtor is currently $156,251,  the BHHS Tomie Raines average is $196,579. This is $40,328 above the local average and $20,000 more than our next highest competitor.

Low inventory has led to quick sales
The number of sold home (residential and condominiums) has increased from 3,163 in 2016 to 3,329 (5.2%) in 2017. This means that properly priced homes are being sold almost immediately after being offered for sale and closing within two to three months.  As of July 22, the number of available homes in the five county Greater Lansing area was 2,022.

Buyers should expect to see higher price tags throughout 2017 and  2018.

What causes mortgage rates to fluctuate?

When purchasing a home, you’re more than likely going to need a mortgage to assist you with the purchase. A main factor that determines the long term financial commitment of your mortgage is the mortgage’s interest rate. Interest rates can fluctuate based on many different external factors. Some fluctuations happen quickly while other times mortgage rates remain more stable over time.

Economic Growth
One major factor in determining mortgage rates is economic growth. The economy will grow and fall based on many different factors including natural disasters, wars and other major events happening throughout the country. During times of economic growth the number of home buyers will typically increase creating a higher demand for mortgages. This will in turn increase mortgage rates. On the other hand if the economy is on the decline, mortgage rates will begin to fall due to reduced demand.

Another factor that comes with a growing economy and that can cause mortgage rates to fluctuate is inflation. Inflation happens when prices increase causing the purchasing value of a dollar to drop. This slows the economy. When this happens mortgage rates will rise because fewer people are able to afford to purchase homes.

Housing Market Conditions
A third factor that indirectly causes mortgage rates to fluctuate is the condition of the housing market. When the housing market is in a seller’s market there is a higher demand for mortgages. With fewer homes on the market either being built or re-sold this will cause mortgage rates to rise. On the other hand during a buyer’s market when there is plenty of inventory and less buyer demand, mortgage rates tend to decrease.

The Federal Reserve Board
The Federal Reserve Board is the central bank of the United States and collects economic information to make decisions about how money is allocated. With this economic information the Federal Reserve Board will determine how the money supply needs to fluctuate to stabilize the economy. Although the Federal Reserve Board can not directly change mortgage interest rates, their decisions have a trickle effect. For example if the money supply is increased there is downward pressure put on interest rates, and if the money supply is decreased there is upward pressure on interest rates. This is done in an effort to either stabilize the number of homebuyers by increasing mortgage rates, or spark economic growth by decreasing mortgage rates.