What about taxes, inflation and interest rates?
Virginia real estate can be one of the best investments you ever make, or one of the worst if you don't understand a few basics about taxes, inflation and interest. A few years ago it seemed everyone wanted to invest in real estate - today, the media is full of stories about homes in foreclosure. What happened? Is real estate a good investment or a high risk activity?
The truth is Virginia real estate has been a very strong investment for many years but as with all investments, prudence and financial know-how are important. Today, Virginia homes for sale are priced right. Historically low interest rates make it a potentially great time to take a second look at houses for sale in Virginia.
There are three things to always keep in mind when evaluating the financial impact of purchasing Virginia real estate:
1. Taxes. Don't make the mistake of forgetting taxes when evaluating any potential real estate purchase. In addition to property taxes, you may also be subject to Capital gains taxes when selling a property. Failure to adequately address tax issues can turn a potential profit into a loss.
2. Inflation. One of the reasons Virginia real estate has increased in value over the long run is due to inflation. Even low rates of inflation eventually result in a loss of purchasing power. Tangible assets like real estate tend to perform better in comparison to inflation especially over the long run.
3. Interest. Albert Einstein is reputed to have called compound interest one of the most powerful forces in the world and with good reason; the amount of interest is often more important than the actual purchase price of a home and may account for double or even triple the original cost of the home.
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What energy saving ideas should I use when listing my home?
When listing your Virginia property for sale it may be a good idea to implement these energy saving ideas that sell to assist the Realtor in showing your home. Today more than ever, buyers are searching for ways to reduce the cost of utility and fuel bills without cutting back on convenience.
Quick Commute. Houses for sale in Virginia with minimal commute times continue to demand strong interest so make the most of it. Measure the time and distance to major employers, shopping and other popular destinations to use as a feature when listing your property for sale.
Energy Saver Appliances. Energy Star appliances are a popular enhancement to any new Virginia home or existing property but don't stop with the kitchen! Washer, dryer, hot water and central heat/AC can make a very real different in utility bills each month. Add up the monthly savings compared to older models and then be sure to bring it to the attention of potential buyers. The money saved each month may well off-set a slightly higher asking price on a home!
Low Maintenance. From tile floors to low maintenance siding, many modern building materials help reduce time, money and bills. Make a list of low maintenance, energy saving features used to build or remodel the home. Popular examples include insulated windows, tile floors and metal roofing.
Xeriscaping. The days of costly and poisonous lawns are quickly giving way to low maintenance, energy saving xeriscaping. Make the most of the natural beauty and native Virginia vegetation by implementing it into the landscape. Native plants use less water and reduce the amount of time spent maintaining the lawn.
Fans. From ceiling fans to whole house attic fans the fan is making a dramatic come-back in many homes due to their energy savings and beautiful new styles.
LED Lighting. Give your home an up-to-date energy efficient look by replacing old lighting with new LED solutions. They are popular among new home buyers for their great looks and low cost!
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How can I eliminate smoking damage from a house when buying or selling?
One of the most common problems home buyers encounter when searching for a house in Virginia or throughout the country is a home that has been smoked in. The smell of cigarette smoke can linger far after the original occupants have left while also discoloring cabinets, walls and other areas of the home. Potential home buyers with Asthma or allergies may find the problem serious enough to simply keep looking.
If you are buying a house in Virginia or listing your Virginia home for sale and need to eliminate the odor and discoloration of cigarettes, use these quick tips.
Professional Cleaning. Pay to have the carpets, drapes and any other fabrics professionally cleaned using special enzyme products designed for this purpose. Many do-it-yourself products mask the odor for a short period of time and will eventually seep through. It is worth the additional time and effort to actually neutralize the problem by using the services of a professional.
Vinegar or Bleach. Vinegar or bleach used as directed can be effective in removing odors and mild stains from cabinets and other superficial surface areas.
Paint. One of the largest and most absorbent surface areas in any home are the walls and ceilings. Over a period of time the smell of tobacco can deeply absorb into drywall, paneling and other surfaces making it difficult to eliminate. Scrub with vinegar or bleach followed by a sealant paint such as Kiltz then regular paint.
Air Vents. Take time to change the air filters and professionally clean the air vents in the home for a dramatic and near immediate improvement.
Resurface. Cabinet doors and other surface areas may have become permanently discolored due to smoke. It is often possible to resurface or just replace the doors of the cabinets to eliminate the appearance of unsightly stains at a reasonable cost.
Taking time to attend to these issues before placing your Virginia real estate on the market will help your home look its very best. If you are purchasing Virginia real estate don't dismiss a property with smoking related damage before evaluating how much you might be able to save. Depending upon the amount of damage, you might be able to save a bundle by implementing these tips.
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How do I research Virginia real estate?
Buying Virginia real estate remains a solid investment if you take the time to do your homework. Here to help is the "Research 101 Guide" to evaluating Virginia real estate.
1. Review Comp Sales: Comp Sales refer to the selling price of homes sold in the same general location that are similar in size, structure and other amenities. Notice - this is the actual selling price not the asking price. You can obtain a comp sales report from a knowledgeable Virginia real estate agent or contacting the Clerk of Court in the county where the property is located.
2. Economic Growth: Virginia real estate is somewhat unique due to the ongoing economic growth combined with rural areas. Take time to contact the local Chamber of Commerce and Better Business Bureau to obtain copies of current and projected business patterns for the area in consideration. Since most people hold a property an average of five to seven years, obtain a ten year forecast when possible.
3. Expansion: Contact the local government, property appraiser and road departments to request information on expansion projects in addition to the economic projections mentioned above. Pay special attention to projected road expansion, schools and other indications of future growth. Traditionally the largest returns are those in areas of the highest projected growth within the following ten years.
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What should I know when buying a new home?
Many people mistakenly believe they have less to be concerned about when buying Virginia new homes; after all, everything is brand new so there should be fewer repairs and a more straight-forward transaction - right? No always. It pays to remain vigilant and knowledgeable even when purchasing a new Virginia home.
Here is what you need to know when buying Virginia new homes.
Model Mayhem. Model homes are a great way to view potential new homes but be careful when buying a model home. Model homes are meant to impress so may contain upgrades that aren't reflected on the lower prices. Be sure to carefully read the fine print of what is...and isn't...included when purchasing a new home. Common upgrades may include ceiling fans in every room, upgraded appliances, flooring and even premium paint.
Developer Delays. Working with a reputable real estate agent is an asset even if you are purchasing a new home especially if you are relocating or on a tight time-line. Developer delays can impact every part of the transaction including your ability to lock-in an interest rate and obtain favorable financing. Use the HomesandLand.com agent search tool to locate a qualified buyer’s agent to represent your concerns while buying raw land and building your new Virginia home.
Worthless Warranty. Many new home builders offer to sell an additional warranty on everything from appliances to roofing. Before shelling out the big bucks, take time to request and read the warranty information on the appliances, building materials and other features that come with the price of the home. For example, many appliances come with a standard one year parts and labor warranty that is included with the price of the appliances. Windows, roofing materials and flooring often have five to thirty year coverage. Don't pay for coverage you already own!
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Will rising interest rates impact my ability to purchase real estate?
Over the past several years interest rates grew low and credit was easy to obtain. Combined with lax lending standards and creative financing techniques, monthly mortgage payments were at least temporarily affordable. However, all of that is about to change due in part to a tightening of credit lending standards.
When banks and others tighten the credit requirements it often results in paying a higher interest rate; in the late seventies and early eighties mortgage interest rates reached double digits as high as 15 percent making the monthly mortgage payments rise much higher even while the actual cost of a house stays the same or decreases.
For example, let's assume you paid $220,000 for a piece of Fairfax county real estate with a fixed, 30 year interest rate of 6 percent. Monthly payments would be $1,319 and you would pay total interest of $254,844 over the life of the loan.
Now let's assume that the same property is still sold for $220,000 and financed for the same 30 years with a 12 percent interest rate instead. The monthly payments for the property would be $2,263 each month and total interest would reach $594,661 over the life of the loan.
Notice, the property sold for the exact same amount and was financed for the same length of time except with a higher interest rate. New banking guidelines, inflation and other economic pressures are beginning to create a situation where interest rates could eventually increase. However, they currently remain lower than historical averages. Combined with recent decreases in the cost of Virginia real estate, now might be a great time to begin searching the HomesandLand.com property listings!
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What do these agent relationship terms mean?
Making sense of the different terminology can be confusing if you aren't familiar with real estate lingo so here is what you need to know to differentiate the relationships.
Buyer’s Agent. A buyer’s agent represents the needs and interests of the buyer. Not only can a buyer’s agent save time and money but they often work with fewer clients and provide more direct service by getting to know the needs of each buyer individually.
Open Listing. An open listing is exactly what it sounds like..."open". You hire the broker but retain the ability to work with others at will.
Exclusive Agency. In this situation you hire a broker who will represent the property but you retain the rights to sell the property. Strictly enforced time limits and other contractual obligations are established for the protection of both parties so be sure to understand what you are signing and ask questions in advance.
Exclusive Right to Sell. In this situation only the listed broker has the right to sell the property and receives a commission independent of circumstances.
Whenever considering buying or selling Virginia real estate it is a good idea to do your homework and compare at least three different real estate agents and brokers before making a final decision. In addition to Virginia property listings, the Homes and Land website has a free agent search tool to assist in locating some of the most qualified real estate professionals in Virginia.
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