From our family to you and yours: wishing you a Happy Labor Day!
Labor Day was created as a way to acknowledge and pay tribute to the American workforce for all they have done to make our country prosperous and strong. Take some time this Labor Day weekend to enjoy safe, fun and relaxing moments with your loved ones.
Recreational land is different than other land types. Its success isn’t measured in crops, but on the quality of the time spent on the land. Whether you buy recreational land as a hideaway for generations to enjoy or to create a lucrative hunting spot, recreational land does have some unique barriers to achieving success. Since this land type isn’t talked about as much as residential land or farmland, we wanted to dedicate a blog post to commonly asked questions about recreational land.
As the name suggests, recreational land is land that is used for recreation. The types of recreation can vary – hunting, fishing, camping, ATV-ing, and more. In the industry, hunting is one of the most popular and well-recognized uses for recreational land.
Knowing what zoning regulations and restrictions impact a property is one of the most important things to look for. These regulations can impact everything from build-ability to what you are allowed to hunt. Work with a land expert in your area who can help you find a property zoned right for your intended use.
If you want to use the land for hunting, keep an eye out for animals and things animals like. Food plots, a good source of water, and cover for animals to feel safe in is key for attracting game to your land.
Good neighbors can also make or break a recreational property. If the property is part of a managed neighborhood, that’s a great sign that they are dedicated to helping everyone in that community and their land to thrive. Bad neighbors (for example, poachers, people who make noises that scare animals or disturb the natural peace, or people that dump waste into the river) can ruin an otherwise perfect property.
How you benefit from the land is up to you. You could let other people enjoy the property and its amenities for a fee. You could improve the land and sell it for a profit down the road.
You can also use it for your friends and family as a retreat from the rest of the world. If kept in good shape, recreational land can be something passed down for generations that will only increase in value.
There are dozens of ways to add value to your recreational land. In his guest post for RLI, Bob Stalberger, ALC, suggests adding trail cameras as a cheap and effective way to add value.
“Buyers are always asking me to see trail camera photos from the property for sale,” said Stalberger. “When we check the analytics of our listings, it is proven that a listing with good trail camera photos vastly outperforms a listing without them. In addition, I personally advise my new buyers to go buy a thumb drive and save trail camera photos from day one, even if they have no plans of ever selling. It is great to be able to show a buyer 2-10 years of trail camera photos and allow them to see the quality and quantities of deer using the property.”
Tommy Stroud, Jr, ALC, recommends creating habitats for animals to thrive in. He says, in his guest post for the RLI Blog, about a recent property he helped to add value to “This [property] required thinning the trees back to 35-50 trees per acre. A skid steer with a grinder ate up a lot of the long-abandoned under story before Garlon (Triclopyr) was sprayed to prevent hardwood growth. These fields were burned using prescriptive fire in late February. Continuing to burn every one or two years will keep this stand clean and provide a great habitat for all wildlife.”
Recreational land is so much more than just another land type. It can be a family heirloom passed down from generation to generation, a profitable business, or just a place to get away from the rest of the world. Interested in owning a piece of your recreational land? Make sure to Find A Land Consultant that has the expertise required to conduct these types of transactions. Interested in learning more about recreational land as an agent? Check out the Recreational Land Real Estate LANDU course.
About the Author: Laura Barker
is a freelance writer based out of California for the REALTORS® Land Institute. She has been with RLI since October 2017.
16 Types of Mortgages Explained
Did you know there are many different types of mortgages? We list 16 of the most common mortgage options, along with the pros and cons of each.
Fixed rate mortgages are the most popular option. A set interest rates mean predictable monthly payments. These payments are spread over the length of a term, which ranges from 15 to 30 years, typically. Currently, shorter loan terms are becoming more popular. Back in 2011, USA Today noted that 34 percent of refinancers shortened from a 30-year to a 20-year or 15-year loan.
Generally, the shorter your loan’s term, the lower the interest rate. Lenders take on less risk with a shorter loan term. This means you’ll pay much less interest over the life of a 15-year mortgage versus a 30-year mortgage.
As you might guess, the interest rate on an adjustable rate mortgage fluctuates. Exactly how the interest rate changes depends largely on the type of loan you get.
In many areas of the world, including Britain and Australia, adjustable rate mortgages are the norm, though they’re much less common in the U.S. If interest rates are going down, ARMs let homeowners take advantage of that without refinancing. If interest rates rise, however, ARMs can result in surprisingly sky-high payments.
Balloon mortgages typically have a short term, often around 10 years. For most of the mortgage term, a balloon mortgage has a very low payment, sometimes interest only. But at the end of the term, the full balance is due immediately. This can be a risky proposition for most borrowers.
Interest-only mortgages give borrowers an option to pay a much lower monthly payment for a certain time, after which they’ll need to begin paying principal. Balloon mortgages are technically a type of interest-only mortgage. But most interest-only options don’t require a lump sum payment of principal.
Instead, these payments will allow the borrower to pay only interest for a set amount of time. After that, the borrower will need to make up for lost time by paying more principal than they would have had they begun with a traditional fixed rate mortgage. In the long term, interest-only mortgages are more expensive. But they can be a decent option for first-time home buyers or individuals who are starting businesses or careers with only a little money at first.
This type of mortgage is for seniors only. A reverse mortgage gives homeowners access to their home’s equity in a loan that can be withdrawn in a lump sum, with set monthly payments, or as a revolving line of credit. Homeowners don’t have to make payments, but the lender will have a lien on the home for the amount owed upon the death of the borrower(s).
With a reverse mortgage, you’re find until you have to move out of the house. If you move out, even if it’s before your death, you’ll need to repay the mortgage out of the proceeds of the loan. This can drain the equity many seniors depend on to fund long-term care expenses. In some situations, a reverse mortgage can be a reasonable choice. Just be sure you know what you’re getting into.
Combination mortgages are helpful for avoiding Private Mortgage Insurance (PMI) if you can’t put 20 percent down on a home. Usually, you take out one loan for 80 percent of the home’s value and another for 20 percent of the home’s value. This is an 80/20 combination loan. Usually the first loan has a lower, fixed interest rate. The second loan has a higher rate and/or a variable rate.
This can sometimes be more expensive interest-wise. But do the math. PMI can be expensive, as well. If you can pay off the higher-rate 20 percent equity loan quickly, you may come out better off with a combination mortgage.
In an effort to encourage home-ownership, the federal government offers some loans that are backed by government entities. This means that if a borrower defaults on the loan, the government will cover the lender’s losses. Because of this guarantee, government-backed loans are often an ideal solution for first-time and low-income home buyers.
If you have a home and have some equity built up in it, you can take out a home equity loan, also known as a second mortgage. This is just another loan secured by the equity in your home. Another option is a home equity line of credit. This is a revolving loan based on the equity in your home.
These loans will typically have a higher interest rate than your first mortgage. But they can be a good option for funding home renovations or other necessary expenses, especially in such a low interest rate environment.
The type of mortgage is an important consideration. The good news is you have far more options than many realize. In all cases, focus on the interest rate and fees while you compare rates.
How to Prepare For a Real Estate Appraisal
If you are planning on selling your home or trying to refinance your mortgage, you will need to get your property appraised as part of the process.
Over the past thirty-two years of selling real estate, lots of sellers have asked me what they need to do to prepare for their real estate appraisal.
They will specifically ask what the appraiser will be looking at. In other words, what is the appraiser appraising?
Getting an appraisal can be stressful, which is totally understandable. The value your home is appraised for will be a primary factor in how much money you can get for it.
A low appraisal tends to mean a lower selling price—not ideal when you want to make as much money as possible from your sale. Fortunately, there are things you can do to prepare for an appraisal.
Read on for valuable tips on prepping for the appraisal so you can maximize the value of your home.
The information you will get from the appraisal is going to play a significant role in the planning process for the completion of your sale. If the appraiser finds a defect with your home, for instance, you can address the problem right away, so you are not scrambling at the last minute.
Of course, if you wait until the last minute to get the appraisal done, it is going to be much more difficult to fix problems before you try to close on the property. Do yourself a favor and get the appraisal done now so you can make informed decisions moving forward.
Ask your real estate agent to keep the mortgage approval date as tight as possible and to get the appraisal ordered.
A clean home is not going to prevent an appraiser from identifying major problems with your property. That being said, there is still something to the idea of dressing to impress.
When your home is clean and organized, it gives off the impression that you take care of the property. The appraiser may be a little less prone to nit-picky observations and maybe a little more motivated to see the best in your home.
An appraiser is human just like the rest of us. The psychology of selling comes into play with a spotless, well cared for home. One of the ratings on an appraisal report is condition – keep this in mind.
Another advantage of cleaning your home thoroughly is that you will be able to see some potential problems that the appraiser would notice. If you find a damp area in the basement that has a bit of mold in it, you can get the problem fixed and the mold remediated before the appraiser has a chance to see it and write about the issue in his or her report.
The same idea about cleaning your home applies to your yard and landscaping. You do not need a luxurious lawn and heavily landscaped areas to make the house look nice. But you do need to cut the grass, rake the leaves and tidy things up if you want to put your best foot forward.
Cleaning up the exterior of your home will also give you an opportunity to see problems that you could fix quickly and cheaply before the appraiser shows up. Look around with a keen eye for any apparent defects.
Make sure you take care of any obvious problems like rotting trim boards, leaves hanging out of your gutters, an unmaintained deck and other such issues.
Try to have an open mind and see things like you would be if you’re the one purchasing the home.
Another great tip to prepare for an appraisal is to make it easy on the appraiser! Appraisers are people, and most people respond well to being treated with respect and courtesy.
They tend to have full schedules, so making it easy as possible for them to appraise your home is an easy way to get on their good side.
Keep in mind, being on the right side of a professional is not going to make him or her neglect job duties—if there are severe issues with the home being nice is not going to keep them off the report.
Making it easy to appraise your home means cleaning up, removing clutter, ensuring all areas are accessible like attics and basements, being on-time for the appraisal, etc.
The $500 example is the idea that appraisers tend to measure the value of a home in increments of $500. If you have some minor repairs that need to be done and you leave them for the appraiser to find, he or she is likely to knock some value off of your home.
Things like broken doors, non-functional locks, faulty light switches, leaky faucets, and other minor issues are cheap enough to repair and will help you avoid lost value and increased scrutiny on the part of the appraiser.
Just think about how quickly each issue can add up when multiplied by $500, and you will find it easy to appreciate the value of making minor repairs now instead of later.
Again, this falls under the category of condition which an appraiser will be grading while visiting the property. Blatantly obvious repairs can affect the value of your home.
The best real estate agents will attend the appraisal to help the appraiser. When I’m selling a home in the Metrowest Massachusetts area, I always try to attend the appraisal.
It is important for the agent to bring comparable sales data to support the sales price. The agent can also point out other important things if the appraiser is not aware such as recent improvements, the quality of the neighborhood, and schools, etc.
An excellent real estate agents does more than sell your house – they REPRESENT you at every phase of the sale, including the appraisal. The appraiser will appreciate being helped as well. This is a vital step in getting ready for the appraisal.
A simple list that highlights all the improvements you have made to your home and the expense of those improvements makes it easier for the appraiser to calculate the value of your property.
While appraisers may be on the lookout for upgrades, they are not always going to notice every one you have made, and they are certainly not going to be sure of how much you spent on the upgrades.
The list you make should include the date of your upgrades, all the building permits you acquired, and any warranties that go along with the work. The more recent the improvement, the better.
For example, if you have remodeled your kitchen in the last couple of years, this is certainly something the appraiser needs to be made aware of. Not every improvement you make to your house increases the value. In fact, some can actually hurt your value.
Here are some of the best home improvements to increase value.
Appraisers do their best to research each area they appraise in, but they are not always going to be thoroughly familiar with the area where your home is located.
You may have noticed a new shopping center, an upgraded school, increased access to the highway or other improvements that add to the quality of life in your neighborhood.
Since the appraiser could miss these improvements, it is up to you to make sure that all of them are understood before the appraiser finalizes his or her report. As crazy as it sounds having a Starbucks, Trader Joe’s or Whole Foods nearby could increase the value of your home.
While you should be careful about how you spend money on improvements before selling—because not all improvements yield positive financial returns—some improvements are a more sure bet than others.
Landscaping improvements can often be done for a reasonable price, especially if you do a lot of the work yourself. And those improvements may add noticeable value to your home.
There is a lot that you can do in a weekend, like planting flowers, shrubs, and small trees, replacing dying areas of grass with more low-maintenance plants and adding a layer of mulch to your flower beds to bring everything together. Even an afternoon of planting and cleaning up can make your home much more appealing to anyone who drives by or walks up to the door.
If you are selling your house as a for sale by owner, you might want to get some tips from a Realtor. The problem with trying to do everything yourself is that you can miss important things—factors that can make a significant difference in the final value of your home.
Your local agent will be able to provide guidance specific to your home and your area that you cannot find anywhere else.
A quick tour of your home with the agent will get you valuable feedback on what aspects may need to be addressed before the appraiser walks through the door.
The agent can also help you understand what improvements are likely to yield good returns, and which ones should be avoided. The better information you have, the better you can expect to do with the appraisal.
Preparing for a real estate appraisal is easy when you know what the appraiser will be looking for. Here is a recap of what the appraiser will be appraising:
These are all things that will impact the value of your home. There are also extraneous features of an area that can have a negative impact on your property value.
The downside of not being prepared for an appraisers visit is that he or she could look at your property unfavorably. Why is this a problem? The appraiser is the judge, jury, and executioner when it comes to providing the lender with a home value.
You may not like what the appraiser tells the bank about the value of your home. In other words, the house might not appraise for the value you expected – the agreed upon sale price. This is the point in time where your stress levels will rise significantly.
You will now be either reducing the sale price of your home to what the appraiser says it’s worth or trying to fight it.
Let me be blunt – getting an appraiser to change the value of a home is not easy. Unless the appraiser made a factual mistake, you’re probably going to be out of luck.
It sounds like you should take this whole appraisal process seriously right? Hopefully, knowing how to be ready for the appraiser has been helpful.
The Ultimate Smart Home: 5 Devices That Save Money
Smart-home technology offers entertainment, convenience, and peace of mind, but did you know that it can help lower energy bills and save homeowners money? The average owner spends about $2,000 on energy costs every year, according to Energy Star. By adding just a handful of cost-effective devices, homeowners can save between 20% and 30% on their energy bills. Here are a few key smart home products you can pass on to your clients.
Nearly half of a typical utility bill goes towards heating and cooling. Installing a smart thermostat can save about 10% a year, according to the U.S. Department of Energy. This is achieved by adjusting the HVAC system while away from home. They can be set to a schedule, controlled remotely, and react to information via sensors and the weather forecast. Advanced smart thermostats such as Ecobee 4 have additional occupancy and temperature sensors that can be installed through out the home and geofencing capability to know when you’re away. Advanced users can pair their thermostat with connected shades and fans to save even more money. According to American Council for an Energy-Efficient Economy, 11 percent of households have already installed a smart thermostat, making them the most popular smart energy-saving device. Many utility companies even offer rebates of $50 to $100 for installing one.
Leaving lights on when not in use can be a major drain on your energy bill; about 25% of utility costs are spent on lighting. Devices such as smart switches, room sensors, and smart bulbs can help ensure lights aren’t being left on. These have the potential to save 7% to 27% of a home’s overall lighting energy use, according to study by American Council for an Energy-Efficient Economy. However, the amount of energy savings for Wi-Fi connected devices is sometimes offset by the power used to control them. Look for devices that use low-power communication such as Z-Wave, ZigBee, or a proprietary network like Lutron. Smart switches cost around $50 and bulbs range from $15 to $40 each—they’re often sold in a kit, which includes the required hub.
By Installing an energy monitoring system such as Sense, homeowners can identify appliances that are quietly adding to the monthly utility bills. The Sense monitor is installed in electrical panel, connected to Wi-Fi, and viewable in real time via a smartphone app. The device automatically detects items in the home in order to identify vampire loads and see how much they’re costing. I use this device, and within a week of installing it, I determined the my computer, TV, and DVR were costing me a lot of money when not in use. I’m now more mindful to turn my computer off when it’s not in use and I’ve have installed a smart power strip to reduce the idle power consumption of our home entertainment systems. Advanced users can take advantage of integrations with Alexa, Google, IFTTT, TP-Link, and Phillips Hue to setup additional energy-saving automation. Sense will help homeowners form better habits, identify problem appliances, and reduce always-on device consumption hat may account for up to 20% of energy use.
Instead of powering down completely, many modern household electronics enter standby mode and continue to draw power even when not in use. This allows them to continue to communicate with other devices, get updates, and load faster. However, this is a complete waste if you’re not around to use them. Watch out for new smart TVs, gaming systems, DVRs, and computers—often the biggest culprits. Smart plugs, outlets, and power strips enable you to cut the power completely when they’re not in use, and some even allow you to monitor energy usage, such as the Fibaro Wall Plug with Z-Wave Plus
Have you ever been out walking the dog or driving around town in the rain and noticed sprinkler systems running and thought, “What a waste!”? Rachio can help homeowners save money on water bills by creating custom schedules that automatically adjust for local weather and can be monitored via smartphone. Available integrations allow owners to control water by voice, set up automations, and avoid turning sprinklers on when someone is outside. The optional wireless flow meter helps detect leaks, alerts the user, and can even remove that specific zone while continuing to water the rest of the yard.
Smart-home technology is becoming more widely accepted, but still struggles to overcome up-front costs, perceived complexity, and reliance on internet connectivity. Mitchell Klein, executive director of the Z-Wave Alliance, points out that this technology has had a difficult time overcoming mainstream consumer hurdles. “I think there is a lot of value in helping buyers understand how a smart home can work in everyday situations and benefit their life,” Klein says. “It’s imperative that home buyers understand that a smart home can be easy, and it can also be secure.”
As a real estate professional, you have the opportunity to explain the benefits and associated costs of these systems and offer homeowners help navigating the different options available for their home.
Questions to Ask When Considering Selling
These questions will help you decide whether you’re ready for a home that’s larger or in a more desirable location. If you answer yes to most of the questions, you may be ready to move.
Check your annual mortgage statement or call your lender to find out how much you’ve paid down. Usually you don’t build up much equity in the first few years of your mortgage, as monthly payments are mostly interest. But if you’ve owned your home for five or more years, you may have significant, unrealized gains.
If you’re making more money, you may be able to afford higher mortgage payments and cover the costs of moving. If your income has decreased, you may want to consider downsizing.
The neighborhood you pick for your first home might not be the same one in which you want to settle down for good. You may have realized that you’d like to be closer to your job or live in a better school district.
Sometimes you can create a bigger home by adding a new room or building up. But if your property isn’t large enough, your municipality doesn’t allow it, or you’re simply not interested in remodeling, then moving to a bigger home may be your best option.
If your market is hot, your home may sell quickly and for top dollar, but the home you buy will also be more expensive. If your market is slow, finding a buyer may take longer, but you’ll have more selection and better pricing as you seek your new home. Ask your real estate professional what they see happening locally.
Low rates help you buy “more” home, and also make it easier to find a buyer for your current place.
A REALTOR ® can help you decide whether a smaller house, condo, or rental would be appropriate.
