Home warranties – are they worth it? Time and again, we hear this question from clients. Buyers want to know if home warranties are worth the additional cost and what they will cover. Sellers want to know if buying and offering a home warranty makes a property more saleable. Allow us to explain what exactly a home warranty is and when they make sense.
FIRST THINGS FIRST
What exactly is a home warranty? A home warranty is an agreement (typically for one year, sometimes longer), that covers the repair or replacement of many major system components and appliances that typically break down over time due to normal use. A home warranty is only part of re-sale property transactions, not new construction (though builders typically will offer a builders warranty on their work and will hand over any manufacturer warranties). These warranties can provide new homeowners a great deal of peace of mind when moving into their new home, especially if there are older systems or appliances. Often, buyers are facing many other expenses related to moving and furnishing a new home. The last thing they want to do is pay to repair or replace a major system or appliance.
WHAT DO THEY COST AND WHO PAYS FOR IT?
You will have to pay this deductible each time you make a claim. If the cost of the repair is less than the deductible, you’d pay that amount.
Buyers or sellers can purchase the warranty. Buyers can request that sellers provide a home warranty as part of the sales contract (often part of the negotiation process). Buyers are also free to purchase one on their own, outside of the sales contract.
DO I NEED ONE WHEN BUYING?
It depends. Generally speaking, home warranties are certainly nice to have for the peace of mind they provide. However, the warranty issue should never be a dealbreaker in contract negotiations. If your offer is very low, we don’t recommend compounding it by asking the seller to pay for your warranty.
WHEN DO WE RECOMMEND ASKING FOR A HOME WARRANTY?
When we know that some of a home’s major systems and appliances are near the end of their lifespan(s) and may not last for another year, we suggest requesting one.(as an aside, we request the ages of systems when we prepare to write an offer on a property). You can also opt to buy one for yourself.
We also often recommend home warranties for our first-time home buyers. In most cases, these buyers don’t have a lot of extra cash on hand for significant repairs or system replacements.
WHEN DO WE NOT RECOMMEND ASKING FOR A HOME WARRANTY?
If you’re in a competitive situation, we do not recommend requesting a home warranty from the seller. An offer without a home warranty request is certainly more appealing to maxed-out sellers than one that does include one. While a home warranty is not a huge expense, it may just be the term that tips the scales in your favor. If you are buying a new construction property, many builders will cover appliances and systems for up to 12 months and structural defects for several (often 10) years. In this scenario, you don’t need the additional coverage. Same goes if the seller has just updated all of the appliances or major systems – the warranty is just an unnecessary expense.
WHAT THE BUYER SHOULD KNOW
Keep in mind that home warranty claims are not automatically processed. Often the warranty company will deny a claim for things like incorrect installation or maintenance, excessive wear and tear, and items in violation of building code.
Bear in mind that any issues identified during the home inspection are not covered. Do not confuse home warranties with homeowners insurance, which is required by lenders. Lastly, don’t expect the home warranty company to come in and replace a system or appliance. They will always work to repair the item, rather than replace it.
WHAT THE SELLER SHOULD KNOW
Offering a home warranty when selling your home is a nice feature. It can set your home apart from the competition. It will provide much-needed peace of mind for new homeowners. That said, it won’t get a new buyer through the door and not offering one is certainly not going to make or break any deal.
The Bottom Line
So, home warranties – are they worth it? Home warranties are a “nice to have” feature when buying a new home. They provide excellent reassurance for nervous or first-time buyers (or those who are not very handy!) but they aren’t the answer to everything. You will need to pay the deductible for each claim and you should be prepared for the warranty company to attempt multiple repairs before replacing any big-ticket items. Remember, if the seller won’t agree to pay for the home warranty – or if your agent says it would weaken your offer – you can always try to negotiate one during the inspection period. Or just buy one for yourself!
Looking to buy or sell a home? We’d love to help! Contact us today to get started.
WASHINGTON – Dec. 1, 2017 – Some home sellers need a sale contract inked before the end of 2017 in order to avoid a big tax bill that would be imposed if the Congress' tax reform proposals become law: Both the House and Senate bills require sellers to have lived in their residence for a longer period of time before qualifying for the capital gains tax exclusion on the sale of a primary home.
As proposed, owners must live in their house at least five years out of the last eight; currently, the requirement is two years out of the last five.
The Senate version of tax reform includes an exception for transactions in which a contract is written before Jan. 1, 2018, even if the closing occurs later in the year. If that exception makes it into a final bill that both the House and the Senate pass – and the president signs – any seller with a contract in hand by midnight on Dec. 31 would be safe.
However, the bill passed by the House includes no such exception. As a result, homeowners who hope to sell but have lived in their current home less than five years only have a month left to complete a deal before the proposed tax changes would take effect should the House's take on capital gains taxes become part of the final package.
Should either version make it into the final bill, short-term homeowners who sell in 2018 would no longer qualify for the capital gains exclusion, which covers up to $250,000 for an individual and $500,000 for a married couple. As a result, the difference between these home sellers' tax bill pre- and post-tax reform could be huge.
It won't be known whether the House or Senate version of tax reform is adopted until the bill is finalized, which could happen in a few weeks. But sellers who haven't lived in their house for more than five of the last eight years will want to act quickly regardless of the version that is approved, according to the National Association of Realtors®.
Source: National Association of Realtors®
Buying your first home can be one of the most exhilarating — and stressful — moments of your life. But armed with the right information, you can shop for a house, apply for a mortgage, and close the deal with confidence. Our team of RE/MAX professionals are with you every step of the way.
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That’s right! Snow during the holidays in balmy Naples, Florida. It happens in late November during Third Street South’s Celebration of Lights in late November. Goes to show, despite the lack of frost in Naples during the winter holidays, the town really knows how to celebrate. All the major shopping areas deck the halls with lights and decorations and throw a series of special events from Thanksgiving through New Year’s.
Head to the Village Shops on Venetian Bay and Naples Bay for a truly Florida holiday tradition – annual lighted nighttime boat parades. On Fifth Avenue South, a tree lighting ceremony, tuba Christmas concert and holiday parade keep shoppers, diners and strollers merry throughout the season. Many of the area’s attractions decorate magically for the holidays, including the Naples Botanical Garden and historic Palm Cottage.
Local resorts get in the spirit, of course. This list includes one stand-out, The Ritz-Carlton, Naples, where a life-size Gingerbread House and Teddy Bear Teas with Santa Claus thrill the kids. So never worry that the lack of snowdrifts detracts from a Naples holiday season. Here, red cheeks come from near constant sunshine, poinsettias grow in gardens, and natural mistletoe decorates cypress trees in the wilds.
Explore local talent at Sugden Community Theater and world class productions at Artis Naples. Shop along 5th Avenue South and 3rd Street South, and dine on the beach at the Ritz-Carlton or LaPlaya Beach Resort. Naples has a little bit of something for everyone.
Article by 10 Best USA Today
Zillow’s property-value estimates, called Zestimates, are a popular consumer tool for seeing how much homes are worth. Whether you’re curious about how much your home’s value has changed, wondering if your home’s appraised value is high enough to let you refinance or curious about how much your coworker spent on his new house, Zestimates offer information for more than 100 million U.S. homes. But there are several reasons these numbers may not be as accurate as you’d like them to be.
1. Inaccurate Basic InformationThree times a week, Zillow’s unique algorithms update its collection of property values, which are based on both public data and user-submitted data. According to Zillow, “the vast majority of Zestimates are within 10 percent of the selling price of the home.” But Zestimates are only as accurate as the data behind them, so if the number of bedrooms or bathrooms in a home, its square footage or its lot size are inaccurate on Zillow, the Zestimate will be off.
Users can correct these mistakes. However, Zillow cautions that updating a property’s details won’t result in an immediate change in the home’s Zestimate, and sometimes it won’t result in any change at all. Perhaps having a fourth bathroom doesn’t do much for home values in your town, for example.
Along with accepting user-submitted data, Zillow deals with the inaccuracy problem by reporting estimated value ranges for individual properties. The smaller the range, the more reliable the Zestimate is because it means Zillow has more data available on that property. Looking at the high and low end of the range will give you a better sense of a home’s possible worth.
2. Mistakes or Omissions in Sales Prices or Property Tax RecordsZillow factors the date and price of the last sale into its estimate, and in some areas, these data make up a big part of the figure. If this information is inaccurate, it can throw off the Zestimate. And since comparable sales also affect a home’s Zestimate, a mistake in one home’s sales price record can affect the Zestimates of other homes in the area.
The Zestimate also takes into account actual property taxes paid, exceptions to tax assessments and other publicly available property tax data. Tax assessor’s property values can be inaccurate, though. The tax assessor’s database might have a mistake related to a property’s basic information, causing the assessed value to be too high or too low. Homeowners can report incorrect sales data or tax records to Zillow online.
3. Upgrades and Unique Features Unaccounted ForSometimes a homeowner makes improvements to a property, and Zillow has no way of knowing unless your local property tax assessor knows about them. If you make any upgrades that require permits from the city, that information may be passed along to the property tax authorities and entered into the public record, which is where Zillow could learn about it.
If you added a permitted fifth bedroom to your home, for example, and the property tax assessor deemed that the upgrade increases your home’s value, that information would probably eventually find its way into your home’s Zestimate. But if your home has a brand-new designer kitchen that didn’t require any major permits, yet your neighbor’s home has its original 1975 kitchen, Zillow will value both homes similarly even though your home may fetch a higher sale price.
Upgrades aren’t always as valuable as you think, though. It depends a lot on local housing market conditions and what projects you’ve done. So just because your home’s value on Zillow hasn’t changed since you added that bedroom or remodeled your kitchen, don’t assume you can tack on an extra $30,000 to the Zestimate. Conversely, if Zillow says your home is worth $300,000 but you know you haven’t updated it as much as similar homes in your neighborhood, it might sell for less or take longer to find an interested buyer.
4. Housing Turnover RateThe more home sales there are in your area, the more data Zillow has about how much buyers think those homes are worth. These data make Zestimates more accurate. So if you live in a hot market in the San Francisco Bay Area, your Zestimate might be more accurate than if you live in a rural town where people stay in their homes for decades and sales are rare.
5. Major Changes to the Zillow AlgorithmZillow updates its algorithm as it comes up with more ways to improve its accuracy. When this happens, Zestimates can change significantly even though nothing has changed about those homes or the real estate market. That said, in July 2016, Zillow upgraded its algorithm again. Zillow says its latest update makes the estimator's national median error rate 6%. That's down two points from the estimator's previous national median error rate of 8%.
The Bottom LineZillow isn’t trying to hide the imperfections of its Zestimates from consumers, and you can’t expect perfectly accurate estimates from competing sites, either. Merely use the prices from Zestimates as a broad guideline, and contrast these figures against other sources. A comparable market analysis from a local real estate agent and a professional appraisal of the home are the best ways to learn its likely value.
USDA loans provide great option for home buyers on the edge of suburbia. The program features 0% down and low guarantee fees
If you live in the right area, a USDA loan could be a perfect option. USDA loans (also referred to as Rural Development loans) are backed, directly guaranteed or insured by the Department of Agriculture to support affordable housing in less developed areas. In this article, we’ll review this loan’s benefits as well as its key qualification guidelines. Its key benefits include down payment flexibility and competitive rates on guarantee fees, the USDA equivalent of mortgage insurance.
Zero percent down
The first major feature of a USDA loan is the ability for homebuyers to get into a home without a down payment. Although not limited to first-time homebuyers, this could be particularly attractive for younger buyers who have a steady job, but not much in savings.
If buyers have an existing USDA loan, they can take advantage of a rate-term refinance to get lower rates without the need for existing equity. Cash-out refinances aren’t available.
Low guarantee fees
Guarantee fees are much lower than the similar fees on loans backed by the FHA. Let’s do a quick comparison:
USDA loan qualification requirements
As with any loan, USDA loan borrowers must meet certain requirements to qualify. In order to take advantage of this loan option, homebuyers need to be looking to buy a single-unit primary residence in a qualifying area. These can be rural areas or even the outskirts of suburbia. The USDA has an eligibility map on its website (areas not in orange are USDA loan eligible). Working farms do not qualify.
USDA loans also come with some financial requirements.
Homebuyer household income can’t exceed more than 115 percent of the area median income. If the household includes more than four members (adults and children), it may qualify with a slightly higher income. Homebuyers can deduct childcare expenses from this income tabulation, as well as income from a portion from any adult full-time student. The USDA doesn’t specify a minimum credit score for its loan, but lenders may have their own policies.
For the best chance at qualification, it’s a good idea for homebuyers to keep their debt-to-income (DTI) ratio – a comparison of minimum debt payments to overall income – at or below 45 percent. Lenders may have their own guidelines on this metric as well.
Senate-Passed Tax Legislation Bad News for Homeowners
Early Saturday morning, the U.S. Senate, by a vote of 51-49, passed legislation that would change the face of homeownership in this country for decades to come. The House passed its own version of tax reform Nov. 16.
A last-minute change to the Senate version would make up to $10,000 in property taxes deductible for the small number of homeowners who would still be itemizing. Previously, the Senate version had eliminated the property tax deduction entirely. The change aligns with the property tax cap set in the House bill. One difference between the two bills is that the Senate version retains the deductibility of mortgage interest payments on up to $1 million of indebtedness; the House version caps indebtedness at $500,000 (again, for the small minority still itemizing).
Now, members of the Senate and the House must meet to agree on a final bill. It's not too late to make your voice heard. Join us in telling your members of Congress that incentives for homeownership and the capital gains tax exclusion on the sale of a home MUST be protected. On Monday,
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