7 Things That Are Left Behind When You Sell

When it’s time for you to move out of your old home and into your new one, there’s a lot of packing and hauling to do. But while you’ll obviously want to take all your clothes and furniture with you, there are certain items that you should leave behind.

Certain things are just assumed to remain with the property when sellers move. And if buyers find that these things have been taken on move-in day, there could be trouble.

As a general rule of thumb, the following items should be left behind when you move out.

1. Light Fixtures

When buyers scope out a new house to buy, they usually assume that the light fixtures they see in the home will stay when they move in. Unless you specifically state in the contract that you want to take the light fixtures with you, they should stay with the home.

If you do take them, it’s customary to replace them with something else so the buyers aren’t left with dangling wires and gaping holes in the ceilings and walls.

2. Anything Secured to the Ground

If it’s stuck to the ground, odds are it should stay with the property when you move. This can include any of the following:

  • Mailboxes
  • Fences
  • Lights
  • Fountains
  • Water features
  • Fire Pits
  • Gazebos

Hot tubs should also stay even though they might not necessarily be affixed to the ground. There are still plumbing pipes and electrical wiring that are typically installed in hot tubs and run in-ground, so technically these structures should probably stay with the home too.

Items like these that are secured to the ground are technically classified as real estate as opposed to personal property, so they should remain on the premises when you vacate. If you have your heart set on taking a certain item with you, clearly detail its exclusion in the contract and make sure both you and the buyer initial it (if the buyer agrees).

3. Outdoor Plants

Along the same lines as the items listed above are outdoor plants, shrubs, flowers, and trees. Basically, any greenery that you have planted outside is considered to be part of the property and should remain there when the buyers move in. Buyers would be unpleasantly surprised to show up on moving day only to find large holes where plants once were.

Any greenery that has established deep roots would likely die after being ripped out of the ground and planted elsewhere anyway, so you would be better off leaving them where they are.

4. Anything Affixed to the House

Any items that are affixed to your home are also considered part of the property. This includes things such as:

  • Hot water heaters
  • Radiators
  • Bathtubs
  • Plugs
  • Built-in shelves
  • Cupboards

While it might sound silly to even try to rip any one of these items out and take them with you, it can and does happen. In these cases, buyers are left annoyed at the situation and sellers often wind up in legal trouble. As a general rule of thumb for sellers to follow, anything that is affixed to the home usually stays.

5. Fittings

Certain items might not necessarily be affixed to the property, but they should probably stay with the home anyway. This includes things such as the following:

  • Carpets
  • Curtains
  • Curtain rods
  • Free-standing appliances, such as refrigerators, ovens, and washing machines
  • Satellite dishes

6. Manuals

Certain items in the home usually come with manuals when you first buy them. These manuals contain details needed for proper set-up when you first buy or install them as well as troubleshooting tips in case there’s ever a problem.

Having these manuals handy is important not just for you, but for buyers who may be taking over your home. Things such as refrigerators, ovens, hot water heaters, dishwashers, or any other item that is remaining on the premises will likely have manuals. Make sure to leave these behind for the buyer, and keep them in plain sight so they don’t have to go searching for them when they need them.

7. Extra Paint

When buyers first move into a new home, they may want to do some touch-ups on the walls here and there if there are any scuff marks that need to be covered. They may even need to do that from time to time long after having moved in. When that happens, having the exact paint handy can really help.

It can be nearly impossible to match the exact paint color on your walls with paint purchased in-store without knowing the precise one that was used. While you could always leave the exact brand name and paint color model number behind for the buyers, it would be much easier for them if you just left any leftover paint cans that you might still have.

The Bottom Line

If there are any items that you really want to take with you that would otherwise be left behind, make sure you take care of these details during the actual negotiation process so there are no surprises. Make sure everything is in writing. But in general, anything that is bolted, mounted, nailed, or planted into the home or ground should probably stay.

How to Use Your Home Equity to Consolidate Debt

There are plenty of benefits to owning a home. For starters, you have full control over your property as an owner compared renting. Owning a home also provides you with a way to invest your money and take advantage of appreciation in value over time.

But as it turns out, owning a home might even provide you with a way to effectively deal with your mounting debt. If you’ve got a certain amount of equity built up in your home, you might be able to access it to consolidate your debt.

Why Consolidate Debt?

If you’ve got a lot of different loan payments to make every month, you know how much of a challenge it can be to manage them all and make sure they’re paid on time. It can be a real nuisance to constantly find a new bill in the mail every few days after you thought you tackled the last one for the month.

Not only that, but some of those bills can come with sky-high interest rates. The higher the rate, the more expensive your debt will be. Credit cards, in particular, are notorious for charging super high rates. If you only make minimum payments every month, that outstanding balance will just grow, making it increasingly difficult to pay that debt down.

If you’re finding yourself drowning in mounting debt, consolidating it might be a great option. By consolidating your debt, you can essentially combine it all into one larger, easier-to-manage debt. And with a lower interest rate, that debt can be more affordable, which will allow you to pay it down faster.

As a homeowner, you have the unique ability to borrow against the equity in your home to be used for all sorts of things, including consolidating your debt. So, how exactly is this done?

Home Equity Loans For Debt Consolidation

Through a home equity loan, you can use the equity you’ve built up on your home to be used to consolidate your high-interest debt. With timely mortgage payments, appreciation in value, or a combination of the two, you might have more equity in your home than you think.

A home equity loan is basically a loan that’s secured against the equity in your home. You’ll receive a lump-sum amount that you can use to consolidate your debts.

Home equity is defined as the difference between the value of your home and the amount that you still owe on your mortgage. So, let’s say your home is currently valued at $600,000. If you still owe $400,000 on your mortgage, that means you have $200,000 in equity. While this is a simplified calculation, it gives you an idea of what home equity is.

Lenders usually require that borrowers have at least 80% equity in their homes before approving a home equity loan. So, in the example above, you would have more than enough equity to qualify for this requirement. That said, there are other criteria that you’ll need to meet, including having a decent credit score (at least 680) and a sufficient income to support additional loan payments.

If you are approved, you can use the money from your home equity loan to pay off all your creditors and lenders. Then, you’ll be left with just your home equity loan payments.

If you can secure a home equity loan with an interest rate that is significantly lower than some of the rates you were being charged on your other debts that you paid off, you can save money and make it easier to pay down your debt sooner.

The Bottom Line

A home equity loan can be a great way to get your hands on the money needed to pay off all your current lenders and creditors and end up with only one, lower-interest debt payment. If you own a home and have some equity accumulated, this financial arrangement might be suitable for you.

Just make sure that you are financially comfortable with making these payments. If you default on your home equity loan payments, you risk losing your most valuable asset – your home – since this loan is collateralized by your house. As such, be sure to take the time to verify whether or not your current finances can support these monthly payments.

How to Prepare Your Home For an Appraisal

When you find a buyer for your home and strike a deal, there are plenty of events that will follow, and an appraisal is one of them. Lenders order appraisals in order to make sure that whatever price the buyer agreed to pay is in line with the current housing market.

But sellers can have their own appraisals ordered (at their own cost) before they even put their home on the market. Having a home appraised will help sellers determine how much their home is worth according to current market conditions and come up with a sound listing price.

Either way, an appraisal plays a crucial role in any real estate transaction. And for obvious reasons, you’ll want to make sure the appraised price comes back as high as possible. To help make that happen, there are a few things you can do to make sure the appraisal goes your way.

Make Any Necessary Repairs

While you might be aware of certain minor issues with your home that you just never got around to fixing (or never intended to fix), there might be a number of other little problems that you might not have been aware of. Now’s the time to walk around your home with a watchful eye and look for any issues that might need attention.

Make a list of anything that catches your eye. And before you list, take the time to make the needed repairs so your home is appraised at a high value. Chipped tiles, cracked windows, leaky faucets, ill-functioning appliances, or nail pops should all be rectified before the appraiser steps foot through the front door.

Not only will this help you fetch a higher price, but it can also impress buyers. Not only that but the home inspection that the buyer orders after offer acceptance will likely come back with far fewer issues if you’ve taken a proactive approach and tackled any known issues yourself.

Make Any Helpful Upgrades

Certain upgrades can bring in a high ROI. Ideally, you’ll recoup all the money spent on home improvement projects – and then some. That’s why it’s important to pick your projects wisely.

Appraisers will take note of any upgrades that they notice and will typically add to the value of your home accordingly. Whether such upgrades are just cosmetic in nature or are more structural, any upgrades will be included in the appraiser’s report and will impact the final appraised value.

Even just quick and simple cosmetic upgrades – like refacing kitchen cabinets, replacing countertops, or replacing old flooring material – can make a big difference not only in how your home looks but in its perceived value, too. Just make sure that you verify whether or not any building permits are required for any projects you undertake, as the appraiser will want to see them if they find out any work was done.

Keep a List of Upgrades Handy to Provide the Appraiser

Whether you just made a few upgrades recently in anticipation of the sale of your home or have already made some improvements in the past, you might want to provide the appraiser with a list of all these updates. While they will likely notice them, it might be helpful if you make the appraiser aware of the work done.

Appraisers will be looking for upgrades, but they’re not always going to notice every single one. They’re also not going to know exactly how much you spent on them. Make this easier for them by providing them with a list that highlights all the upgrades made and the expense of such improvements. Your list should also include the date that each improvement was made, any permits that were obtained to get the work done, and any home warranties that accompanied such work.

Clean and De-Clutter

While a messy home shouldn’t really affect property value, it can skew the appraiser’s opinion of your home. The final appraised value that your appraiser establishes for your home matters a great deal to the sale of your home, so anything you can do to make your home stand out in a positive way should be done. And that includes cleaning and de-cluttering.

Make sure that everything is put away in its proper spot. Things that you don’t use anymore should be tossed or donated. You might even want to start packing a few things in boxes in anticipation of your upcoming move to make de-cluttering easier. A couple of days before the appraisal, have the home deep cleaned and be sure to stay on top of dishes, laundry, kids’ toys, and so forth to make sure your home is spic and span. 

Paint

Giving your home a fresh coat of paint is a great way to perk up your interior and make your home seem newer (and cleaner). In fact, painting is typically considered to be the best upgrade to make because of the high ROI it tends to bring. The cost of a couple of cans of paint pales in comparison to how much more value you can add to your home, and your appraiser will take notice.

Boost Your Curb Appeal

Your appraiser will assess not just the inside of your home, but the outside, too. Ensuring that your home has great curb appeal is crucial and will play a key role in the appraised value of your home. Cut the grass, trim the hedges, water the flowers, rake the leaves, spruce up the front door, and tidy up your front porch in order to appeal not only to the appraiser but to potential buyers as well.

While you can always call a professional landscaper to tackle this for you, you can get the job done yourself in as little as a weekend to save some money while potentially adding some extra value to your home.

The Bottom Line

The appraisal report plays an important role in the sale of your home, so you want to make sure it goes well. Whatever the appraiser values your home at will have a direct impact on the deal. Before your appraiser visits, be sure to take the time and put in some effort to prep your home to ensure all goes well with the appraisal.

What Exactly Do Your Condo Fees Cover?

Condo living is pretty popular among buyers who are looking for something more affordable than traditional freehold homes. Plus, there are a bunch of other perks to living in a condo beside their more affordable purchase prices, including their amenities, low maintenance, and 24-hour security.

But your mortgage isn’t the only monthly payment you’ll have to make when you own a condo. Unlike a traditional freehold house, condos also come with monthly condo fees that every owner in a complex must pay.

The amount that each owner is responsible for paying is based on a specific rate multiplied by the square footage of their respective unit. You could pay as little as $200 to as much as $1,000+ in condo fees every month, depending on where your condo is located, the type of building it is (ie. luxury condos usually charge higher fees), and the type and number of amenities offered.

The question is, what exactly do monthly condo fees cover?

Security

Most condo buildings staff a 24-hour concierge who will serve as security, as well as a point of contact for things like visitors, mail, minor issues, and so forth. The concierge or security guard’s paycheck is typically covered by funds collected from monthly condo fees.

Maintenance of Common Areas

Every owner is responsible for maintaining their own individual units. But the maintenance, cleanliness, and repair of all other common areas of the building are paid for via condo fees. This includes the maintenance of things such as:

  • Landscaping
  • Parking garage and lot
  • Elevators
  • Hallways
  • Fences
  • Walls
  • Gates
  • Windows
  • Rain gutters
  • Heating and cooling systems
  • Gas pipes
  • Electrical systems

Maintenance of Amenities

In addition to the common areas and systems just mentioned, condo fees also cover the maintenance of the building’ amenities, which differ from one condo complex to another. That said, common amenities in condominiums may include:

  • Game rooms
  • Fitness rooms
  • Saunas
  • Swimming pools
  • Party rooms
  • Rooftop gardens
  • Guest suites

Insurance

Not every condo complex includes insurance as part of what their condo fees cover but must do. The insurance policies that condos take out cover building exteriors and shared common areas. Sometimes they might extend to cover things like damage done by floods, fires, and earthquakes. Given this, unit owners are only responsible for taking out an insurance policy to cover the interior of their own units and their personal belongings.

Reserve Fund

A reserve fund is an emergency fund, so to speak, that is saved up to cover the cost of occasional and unexpected repairs. For instance, a new roof or a newly paved parking lot are not things that must be done every year. Instead, they occur on occasion, and the money in a reserve fund can then be applied to cover these costs.

Ideally, there will be enough money in the reserve fund to adequately cover these costs. If not, each unit owner will be forced to fork over a lot of money in order to make up the difference between what’s in the reserve fund and how much needs to be spent.

A condo board that is well-run will charge each owner a small amount every month to be put towards keeping the reserve fund well-padded. That way, when the money is needed, there will be no need for owners to have to pay much more than they’re already responsible for paying every month.

Utilities

The majority of condo fees cover the cost of certain utilities of the building, including (cold) water, garbage collection, and sewers. Some may go so far as to cover heat, electricity, and hot water, and some may cover everything. Every building is different, so you’d need to check with your specific condo to find out exactly what your fees cover.

The Bottom Line

There are plenty of things that you have at your disposal when you live in a condo. But such things aren’t free; instead, you’re paying for them through monthly condo fees. If you’re in the market to buy a condo, make sure to find out exactly how much the condo fees are and what they cover before you sign on the dotted line.

10 Things to Look For When Shopping Around For a Condo

Thinking of buying a condo? It’s a great type of real estate to buy, whether you’re planning to live there yourself or are thinking of renting it out as an investment property.

But like any other type of real estate purchase, you’ll want to make sure that the investment you make is a sound one. Buying a condo is very similar to buying a traditional home, but there are some differences.

Here are a few important things to look for when shopping for a condo.

1. Location

No matter what type of real estate you’re buying, location is always the most important factor to consider. And buying a condo is no exception. Whether you’re planning to stay put for the long haul or might be open to selling in the near future, the location will play a key role in your enjoyment of the unit and your ability to sell when the time comes.

2. Condo Association

The health and integrity of the condo association is an absolutely crucial component to consider before buying a condo. Ideally, the HOA will be based on sound regulations, will appoint trustworthy and honest board members, and will keep the building and grounds well maintained.

These associations hold a ton of power, and as such, they can directly influence how you enjoy your home. Make sure to find out what their rules are and whether the HOA is dedicated to keeping owners happy and property values up.

3. Reserve Funds

A reserve fund is a financial account that is contributed to by owners. It’s meant to be used to cover the cost of emergency repairs and large expenditures that don’t usually need to be dealt with on a regular basis, such as a new roof or new electrical system.

Ideally, the reserve fund should have adequate funds in it to be able to cover expected costs at any time in the near future. But if there’s not enough in the pot, all the owners – including you – will have to cough up the money until there’s enough to pay for whatever surprise expense comes up.

4. Condo Fees (and What They Cover)

One of the biggest differences between buying a freehold house and a condo is the maintenance fees. If you buy in an HOA, there will be monthly fees to pay. These fees will vary from one complex to another and are usually based on the condo’s location as well as the type of amenities that are offered.

Find out what these fees are, and what they cover. If there are lots of amenities in the building that you don’t need and will never use, there’s no sense in paying for them. Instead, look for a building that has just what you need so you only pay for what you use.

5. FHA Approval

If you’re planning to take out an FHA loan to finance your purchase, the condo must have FHA approval. If not, you’ll need another type of mortgage to secure the place. This can also be a problem come resale time. You might be eliminating a good chunk of potential buyers if the condo is not FHA approved.

6. Rental Permission

If you’re planning to use the condo as an investment property and rent it out, find out if there are any restrictions on renting in the building. If the rules of the condo association don’t allow rentals in the building, then you might want to search elsewhere.

7. Percentage of Rentals

If the condo allows rentals, you’ll want to know what the share of renters in the building is, regardless of whether you’re buying to live in the unit or to rent it out.

If your plan is to make a home for yourself, knowing the percentage of renters in the building could determine your quality of life. Renters are not known to take care of their properties as well as owners, though there are certainly exceptions to this rule.

If the building has a particularly high share of renters, that could influence how the building is kept, which could also influence your enjoyment of your home as well as its resale value.

If you’re planning to rent it out, knowing what the percentage of renters is will give you a sense of what your competition is like. Plenty of rentals might mean more competition for you, while fewer spaces available for rent might give you an advantage.

You’ll also want to compare what the going rate is in the building, identify which units are rentals, and find out how much the respective tenants are being charged to give you an idea of what you can expect to charge, too.

8. Pet Policy

If you have a furry friend that you want to take with you when you move, you’ll obviously want to know if pets are allowed in the building. If they are, find out if there are any restrictions on breeds, size, and number of pets allowed.

9. Resale Value

While you might not be thinking of selling while you’re looking to buy, it’s still important to consider resale value. If or when the time comes to sell, you’ll want to make sure the condo is an easy sell. Given this fact, units with more than one bedroom are usually easier to sell than studios and 1-bedrooms.

If your budget permits, consider going with something a bit bigger. Of course, you’ll want to consult with your agent before making this decision in order to verify if past sales of larger units in that building or area are in fact easier to sell than smaller ones.

10. The View

This could technically be placed under the “Resale Value” category, but it deserves its own section. The view that the unit offers is an important factor to consider. You don’t want to be staring at a dirty industrial complex or a dumpster from your balcony. Instead, you’ll want a unit that has a decent view.

Not only is this important for you, but it’s also important for buyers if you ever sell in the future. You won’t have much of a selling point if the unit you’re trying to sell has a horrible view. In fact, views are often key selling points for condos, so you want to make sure that the view of the unit you’re looking at is pleasant.

The Bottom Line

Buying a condo is a big deal. It’s your home, and you want to make sure the one you buy is worthy of the money you spend on it. Make sure to consider all of these factors when condo shopping to help you make the best decision for you.

What Does it Mean to ‘Sublet’ Your Rental Unit?

Many homeowners rent out a part of their home in an effort to make a little side cash for space that they’re not using. Whether it’s a room in the home or a completely separate floor, homeowners can choose to open up part of their home to a tenant who then pays them a monthly rental fee in exchange for a roof over their heads.

But can renters do the same? If you currently rent and are out of town every so often, why should your unit be left vacant while you’re paying for it? Can’t you bring someone in

to rent out your place temporarily while you’re not there?

Or what if you want to bring in a roommate after you’ve already signed a lease, whether to help with the rent or simply to have some company?

That would be called ‘subletting’, and it’s an arrangement that you’ll need to work out with your landlord before you allow anyone into your home and charge them rent. If you don’t, you could find yourself in some trouble.

So, what exactly is subletting, and how do you go about it the legal way?

What is Subletting?

Basically, subletting involves a current renter leasing out their property to someone else. Not only can this arrangement be beneficial for people who are just looking for short-term rental units, but it can also help renters cover the cost of their long-term lease, especially when they’re not using the place 52 weeks out of the year.

Are You Allowed to Sublet?

When you rent out a unit, you typically have to sign a lease contract with your landlord. This lease will not only stipulate the term of your lease and how much your monthly rent will be, but it will also outline a number of details and terms about how you can and can’t use the property, as well as what your responsibilities and obligations are.

One of the terms that may be found in your lease if you ever intend to rent part or all of your unit out to another party at any time is a ‘sublet’ clause.

In California, you’re allowed to sublet, but only if you have written consent from your landlord before doing so. If your landlord doesn’t agree to it, then there’s no point in looking for someone to sublet from you. If you do, and you get caught, you could find yourself in breach of your lease.

This is especially true if there is no clause that specifically states that subletting is allowed or if there is a clause that actually says “no subletting.”

Landlords usually include this clause in leases in an effort to have control over who resides in their properties. Since there is no actual legal relationship between a landlord and a person who sublets, there’s little control for the landlord, compared to someone who actually has a signed lease. 

It should be noted that the rules across the state of California may differ when it comes to subletting. For instance, the rules on subletting tend to be a little laxer in San Francisco where subletting is more common and supported.

Be sure to check your lease to see if there is anything that discusses subletting. Whatever is stipulated in your lease speaks volumes. While in some states it is illegal for landlords to specifically include a clause that prohibits subletting, California is a little different with this issue.

In the Golden State, landlords have the freedom to add such a clause if they do not want anyone other than the original tenant on the lease to live in the unit and pay a separate rent fee.

How to Handle a Sublet Arrangement

If you have explicit consent from your landlord to sublet your rental unit, you’ll need to go about it the right way. Ideally, you should draft up a contract or written statement that both of you sign which will outline the terms of the arrangement. The documentation should clearly detail the following:

  • Term of the sublet
  • Name, permanent address, and signature of the subtenant

This letter should be mailed to the landlord through certified mail, requesting a return receipt. This will provide you with proof that the letter was delivered in case the situation is ever taken to court. The copy should then be saved for your own records.

You and the subtenant should both be familiar and up-to-date on the laws surrounding subleases and understand what your responsibilities are to uphold the terms of the lease agreement. 

The Bottom Line

Subletting can be a great way to supplement your rent, especially if you’re not there a few times out of the year. But at the end of the day, you’re ultimately responsible for the full rent amount as per your original lease. Even if your subtenant doesn’t pay up, you’re still required to pay. Just make sure that you choose your subtenant wisely and get written consent from your landlord before you take this route.

Bad Signs to Look For Before Buying a Home

Buying a home is a big commitment, so you obviously want to make sure that your purchase is a sound one. That’s the reason why you might go back a second time – or even a third – before putting in an offer, then maybe even return once or twice more before sealing the deal. You want to make sure the home and the surrounding neighborhood justify the money you’re spending on the property.

When you’re scoping out homes, you might have some items on your must-have list that you’ll be keeping an eye out for. But there are also some negative things that you should look out for that may be signs that the home or the neighborhood is not up to par, including the following.

Cracks in the Exterior

While fine cracks in the foundation wall might be OK, large ones that are at least a half-inch wide or are uneven might be cause for concern. Out of all issues with a home that can be the most cumbersome and expensive to fix, structural issues would be it.

If you notice any large cracks, that might be a red flag that the foundation is faulty. This could be a result of shifting or sinking soil underneath, grading issues, or other reasons. You may want to call in a structural engineer to check out the cracks to make sure there’s no serious underlying issue with the structure or foundation that will end up costing you a lot more than what you had intended to spend.

Paint Covering Up Water Damage

Some homeowners may try to conceal any water damage done to their ceilings or walls by painting over it. What homeowners might not know is not only are they not fully covering up the damage, they may also be allowing mold to fester, which can become a health hazard.

Pay close attention to any uneven patches of paint. If it seems as though certain areas were painted over, take a closer look. There just may be signs of water damage underneath.

Lots of Room Fresheners and Scented Candles

While it’s perfectly fine to freshen up the smell in a home when it’s on the market – and even recommended – overdoing it with the fresh smells might be a cover-up for something lurking. Find out if there is something that may be releasing a foul odor in the home, such as mold, pet urine, sewage, or a leaky pipe.

No Permits For Improvements Made

If it’s obvious that some work was done on the home – such as a room addition or a new deck, for instance – ask to see the permits for the work done. If the seller can’t produce them, the work may have been done without a permit. This could spell trouble for you if the building inspector in your area catches wind of the work done.

If that happens, you’ll need to not only pay for the permit yourself but even possibly go through the motions of having to apply for it and get it approved. The inspector could even go so far as to force you to take down whatever work was done.

Uneven Floors

Floors that are obviously uneven could be a sign of structural issues. As already mentioned, this can be a costly problem to fix. In addition to floors that are not level, look for doors and windows that stick when you try to open and close them or bubbling on the floors. 

Lots of For Sale Signs

So far, we’ve been talking about the home itself. But in reality, you’re buying into the neighborhood, too. As far as the area itself is concerned, there are a few things to look for, and one of them is an overabundance of For Sale signs. If you notice that there are plenty of homes for sale in the area or on your street, find out why.

While it may just be that the demographics are changing – such as empty nesters downsizing and making room for younger families – there could be more serious issues at the hub of all the for sale signs. Tanking property values or an increase in crime are issues you’ll definitely want to know about before you put an offer on a home.

Plenty of Empty Storefronts

Like the For Sale signs on residential properties, too many vacancies in commercial units could also be a sign that a particular neighborhood is not doing so well. Bustling businesses is a good sign in neighborhoods, but entities that are either going out of business or are bailing on the area for a better one is not a good sign of a healthy neighborhood.

All the Homes Look the Same

If you’re considering buying in an HOA community, take a look at how uniform all the houses are. While HOAs typically have restrictions about what homeowners can do to their exteriors, too much uniformity might be a sign that there is little wiggle room to deck out your home the way you’d like to.

Music is Playing in All Rooms

Having music played during showings or open houses might be fine, but it could also be used to mask any noise pollution in the area, such as a nearby train, planes flying overhead, or the neighbor’s dog barking.

Neighbors’ Homes Are Poorly Maintained

Speaking of the neighbors, look at how they maintain their properties. If they’re unkempt, that could affect the value of the property you intend to buy.

The Bottom Line

Buying a house is a big deal, so make sure you take your time scoping out different properties and the neighborhoods they’re located in before you make an offer. There’s a lot of money at stake, so you want to make sure that the house and the area you buy into are exactly what you’re hoping for without any unpleasant surprises down the line.

How to Help Your Adult Children Buy a House

With the price of homes as expensive as they are these days, it can be tough for anyone to get into the housing market. Young adults who are just venturing out of their parents’ homes in hopes of getting a place of their own typically face sky-high real estate prices. And those who are graduating college typically have a huge student debt loan to pay off on top of all other living expenses.

It can be a big challenge to save up enough money for a down payment on a home, let alone all the closing costs associated with buying a house, the furniture needed to outfit the place, and the ongoing operating fees.

Let’s face it: being financially capable of buying a home when moving out of a parent’s home can be a major financial feat.

In many cases, young adults need their parents’ help to secure a home and a mortgage. Doing so can give them a big head start in life. An increase in housing prices and mounting student loan debt can be major obstacles that parents can help overcome.

But how can parents help their grown children buy a home when they’re trying to juggle their own mortgage and daily expenses? Of course, helping adult children buy a house is no simple feat. You’ll definitely want to carefully plan your strategy to assist your kids when they’re ready to fly the coop.

Here are some suggestions to follow to help your kids get into the housing market.

Buy a Home and Let Your Child Rent it From You

Many young adults end up renting when they leave their parents’ homes simply because they do not have the financial resources or credit history to secure or afford a mortgage. But rather than them paying rent to a stranger, they can rent from you instead.

If your current finances permit, consider buying a home for your child in your name and renting it out to them. While this is certainly a huge financial undertaking for you, you may be eligible to deduct your mortgage interest, property taxes, repairs, and certain home improvements come tax time on your “rental” property. Plus, the rent that your child pays you can cover the mortgage.

Buy a Home Together

If your adult child is working and has some level of credit established, consider buying the home together. Two working parties should have an easier time securing a mortgage for a home than a single working individual. If you take this route, you’d each share a certain stake in the home, depending on how you divide the equity. 

If at some point, your child is ready to take over the house on their own, you’d sell them the share that you had in it. Just make sure that your child is financially capable of holding up their end of the bargain in terms of paying their share of the mortgage and all other operating expenses.

Co-Sign the Loan

Your adult child might have a steady job and the money to comfortably cover the mortgage as well as a hefty down payment, but that doesn’t necessarily guarantee mortgage approval. Lenders will want to check out their credit history, and if your child doesn’t have any credit built up yet – or has bad credit – it might be tough or even impossible to secure a mortgage.

If that’s the case, you may have the option to co-sign on the loan. In this situation, you would sign your name on the mortgage along with your child’s. As a co-signer, you would be responsible for making the mortgage payments in the event that your child defaults on the loan.

You’ll want to make sure that your child is responsible enough to make the payments on time and in full every month and that you have the finances available in case you ever have to step in to take over the home loan.

Cover Closing Costs

On average, buyers spend about 2% to 5% of the purchase price of their home in closing costs. This can amount to a hefty bill. If you can afford it, consider helping your child come up with the money needed to cover these costs, which typically includes appraisal fees, mortgage application fees, home inspections, homeowner’s insurance, and property taxes.

Give a Down Payment as a Gift

If you have access to cash – or have sources that will allow you to liquidate your money – consider gifting your child the down payment for a new home.

According to the National Association of Realtors, nearly one-quarter of millennials used a monetary gift from their family or friends as part of their down payment.

But giving your child money to cover their down payment is not as clear-cut as handing them a wad of cash. There are rules that need to be followed in order to provide a paper trail proving that the money being provided is indeed a gift to be used towards a down payment and not a loan. Such rules may vary from one lender or mortgage product to the next.

If the money being provided is classified as a loan, your child will have to pay taxes on it. On the other hand, taxes on gift money can be deferred up to $15,000 per child (or $30,000 for couples gifting their adult children). Be sure to speak with a tax specialist to determine whether or not any taxes apply in your situation.

Ideally, the gift should be made at least a couple of months in advance of the mortgage application. There might also be some paperwork to sign verifying that the money is a gift and does not need to be paid back.

The Bottom Line

If you can swing it financially, you’d be doing your adult children a huge favor by helping them out when it comes time to buy their first home. While renting is always an option, buying and owning property comes with its own unique benefits. Getting into the market sooner rather than later can help your children start building equity and can even help them establish strong credit with every mortgage payment they make.