Should I Sell or Rent Out My Home?

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You’re considering selling your home and moving into a new one that better suits your needs and situation. But is selling the only option on the table? Have you considered renting instead?

Selling is clearly a popular option and is usually necessary in order to take the proceeds of the sale to be put towards a new home purchase. But in some cases, renting might also be a viable option and may even make more sense.

If it’s financially possible, keeping your home can be a great way to accumulate wealth and even save for retirement. When the mortgage is fully paid off at some point in the future, you can either continue to rent out the property or sell it and pull out the equity into a lump sum.

So, should you sell your home? Or should you hang onto it while collecting rent?

There are lots definitely a lot of things to consider before you ultimately make your choice, including the following.

The Current Market

If you’re in the middle of a seller’s market, selling might be a great way to make a decent profit on the sale of your home. Depending on when you purchased and how much equity you’ve put in the home, you could stand to make a good chunk of money compared to how much you initially paid for it.

Of course, you still have to buy something, so consider what your position will be as a buyer in a seller’s market. That said, you may be moving to a completely new area with a different market temperature that is more favorable for buyers. Or, you may be downsizing into a condo or townhome. In either case, you could really make the sale work in your favor.

However, if the market is a particularly stubborn one for sellers, holding onto the property and renting it out instead can provide you with the opportunity to wait until the market will allow you to sell for a higher price within a short period of time. When the market swings back in your favor, you can then decide if you want to sell. In the meantime, you can collect rent to help cover the mortgage and other carrying costs.

Even if your rent isn’t enough to completely cover all carrying costs, you can still make up for it when you sell if prices are anticipated to rise in the near future.

Your Finances

Obviously, carrying two mortgages on two homes is not exactly financially feasible for everyone. You will have to take a hard look at your finances before deciding whether to sell or rent. You may not be approved for another mortgage without first selling your current home. This is a no-brainer and is something that should absolutely be considered before making a final decision.

Whether or Not Your Move is Permanent

Are you moving because of a job transfer with the chance to come back? If your move isn’t necessarily permanent, perhaps renting might be a good idea. In fact, it could be the cheaper of the two options if the market isn’t the greatest for selling and your rent potential is pretty hefty. Selling is an expensive endeavor, so if you can hang onto your home and rent it, this could potentially be a more financially-sound idea.

Whether or Not Rent Will Cover All Carrying Costs

If you are considering renting your home instead of selling, it’s imperative that you check what the going rent rate is like in the area for a property like yours. You may have an idea of what you’d like to rent the place out for, but if that number is not in line with what similar properties are being rented out for, you’ll have a tough time commanding the dollar figure that you’d like.

This is important because you will need to know if the rent collected will be able to adequately cover all expenses, including the mortgage, utilities, property taxes, homeowner’s insurance, and so forth. If you can make a little money every month, that would be ideal. Even breaking even would be helpful. But if you’re going to be in the red every month, you will need to determine whether or not you’ll be able to financially carry added debt and whether or not it’s worth it when all is said and done.

Taxes

The IRS can charge capital gains taxes on real estate, but certain exceptions apply. In order to avoid paying capital gains taxes when you sell, you’ll need to meet specific criteria, including the following:

  • You owned the property for a minimum of two years in the five years before selling it;
  • The property was your primary residence for two years in the five years before selling;
  • You have not been involved in any other capital gains tax exclusion for another property that you sold at least two years before selling the current property.

If you’ve only lived in your home for less than two years, it might be more difficult for you to seek exemption status to avoid paying capital gains taxes. The longer you stay in the home, the easier it will be for you to qualify for an exemption.

Keep in mind that if you do decide to rent out the home, if you choose to sell it at some point in the future, you won’t be able to claim exemption because the house will no longer be your primary residence. In this case, you’d be selling it as an investment property, which comes with different criteria if you wish to avoid paying capital gains.

That said, you would be able to depreciate the property for tax purposes if it’s a rental. The annual depreciation amount can be arrived at by dividing the amount you paid when you first bought the home – plus any expenses related to major home improvements – by 27.5, without including the value of the land the home sits on.

Being a Landlord

Even if you’ve determined that renting makes financial sense after crunching all the numbers, you may decide that being a landlord is simply not for you. The job of a landlord can be quite challenging, especially when it comes to dealing with nightmare tenants who either don’t take care of the property, are a nuisance to neighbors, or don’t pay on time.

Then, of course, there’s the responsibility of maintaining the property and collecting rent checks, both of which take a lot of time and effort. Make sure you’re up for the task and have considered everything involved with being a landlord before you choose to rent instead of sell.

The Bottom Line

The choice between selling versus renting can be a tough one to make. While renting might make sense for some homeowners who are looking to move, selling is often the best choice for many others. Be sure to carefully review your finances in great detail, assess your current and future situation, and determine whether you can handle being a landlord or if you’d much rather cut ties with your home. To help you make the right decision, be sure to discuss your choices with a trusted real estate agent who can guide you in the right direction.

What Do Builder’s Warranties Cover When Buying a New Home?

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Just because you’re buying a new home doesn’t mean something can’t happen shortly after moving in. That’s why it’s customary for builders to include a home warranty with every new construction purchase, which gives buyers some assurance that they won’t be left high and dry in case something goes awry not long after they sign on the dotted line. Warranties also assure homeowners that the builder they’re buying from is reputable, reliable, and willing to stand behind their product.

But just because you get a warranty on your home purchase doesn’t mean everything under the sun will be covered. As a buyer of new home construction, you’d be well advised to do a little bit of homework on exactly what the builder’s warranty covers, and what it doesn’t.

Generally speaking, the majority of builder warranties cover material and work done by construction workers and contractors on a new house for anywhere between one to 10 years.

More specifically, here is what you can expect to be covered in your builder’s warranty as required under California law:

One Year Warranty:

  • Cabinets, countertops, trim, paint, floors, mirrors, and interior and exterior walls
  • Products that are entirely manufactured offsite, such as appliances, fixtures, and HVAC units
  • Drainage, landscaping, and irrigation systems

Two Year Warranty:

  • Dryer ducts
  • Decay from untreated wood posts

Four Year Warranty:

  • Plumbing systems
  • Electrical systems
  • Sewer systems
  • Driveways, pathways, walkways, sidewalks, and patios
  • Corrosion of untreated steel fences

Ten Year Warranty:

  • Major structural elements, such as the foundation, support beams, and retaining walls

What if the Builder Goes Under?

New home warranties may sound great, and they can be, but they can be completely useless if the builder you buy from eventually experiences serious financial troubles or goes belly up altogether. If that happens, the warranty you were given could wind up being completely useless.

That said, if the warranty is issued by a third-party insurance company, then buyers have little to worry about. In fact, it might even be better for buyers if the builder’s home warranty is issued and dealt with by a third party. In addition to the fact that you’ll be covered in case the builder goes under, third-party warranties are cheaper. That’s because the risk can be spread across hundreds or even thousands of homes. There’s also no need for third-party issuers to underwrite, issue, and maintain records of warranties and pay staff to handle such documents, saving even more money.

Your Duties as a Responsible Buyer

During the process of purchasing a new home from a builder, you may want to ask a number of questions when it comes to the warranty and what you can expect from it. Here are just a handful of inquiries you might want to make with your builder:

  • What exactly does the warranty cover?
  • What is not covered?
  • What do I need to do in order to make a claim?
  • What is your liability?

You might even want to check with the contractor licensing board in California to ensure that the builder you are buying from is providing you with all warranties that are required by law in the state.

The Bottom Line

Every builder should provide buyers with a comprehensive warranty that covers various components of the structure. Even though the home is new, that doesn’t mean there won’t be any unforeseen issues that could creep up shortly after you take possession. This is a big investment, and as such, it makes sense to take a little bit of time to find out what type of warranty your builder offers and whether or not it is being provided by a third-party provider.

How to Improve the Energy Efficiency of Your Doors and Windows

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How does saving a few hundred bucks every year in energy bills sound to you? Well, this doesn’t have to be a far-fetched idea if you make some simple changes to your doors and windows so they’re more energy efficient.

There are plenty of components in a home that can be real energy suckers that not only waste precious energy but can burn a hole in your pocket. Windows and doors are one of the biggies in this department, but there are ways that you can make them more energy efficient so you can save both energy and money.

Find Drafts

One of the biggest ways that windows and doors can waste energy is from gaps allowing air to escape. If you’re cooling your indoor air with the help of an air conditioner, you’re paying good money for such a service. But if a good chunk of that cooled air is escaping to the hot outdoors, you’re just wasting energy used to keep your interior comfortable – and money.

One of the first things you should do is scope out all your windows and doors and check for any drafts. Some may be obvious, but others might not be very noticeable to the naked eye. In the case of the latter, you might be able to detect any drafts by placing a wet hand all around the perimeter of the window and door openings to see if you can feel any drafts.

If not, you can use a lit candle and hold it near the edges of the windows and doors. Pay attention to any changes in the flame; if it waivers or even blows out, that’s a clear sign of a draft from a gap in the frame.

Seal Gaps

Once you’ve found any gaps, seal them. It’s pretty easy to do and can end up helping you save a ton of energy and money when all is said and done. Just take some caulking or weatherstripping and apply it around the window or door frame to seal all the gaps that are causing drafts. This will help make your windows and doors much more energy efficient.

Change Your Window and Door Frames

Upgrading your frames to energy efficient ones can help improve the efficiency of your windows and doors. Just make sure that the frames you buy are energy efficient and are rated according to such efficiency. The higher the rating, the better.

Upgrade Your Current Window Treatments

Another easy way to improve the energy efficiency of your windows is by changing the window coverings. Although the windows themselves aren’t being changed or upgraded, you can still make a significant difference in how much energy you can save in your home. The appropriate window treatments can help to keep the indoor air cool without having to overwork your air conditioner.

Cellular window shades are great choices and are probably one of the most energy-efficient window treatments available. They’re designed with a unique series of cell pockets that trap air around the windows to keep the interior cool, especially throughout the hot summer months. They’re often referred to as “honeycomb shades” because of the design shape of the cells. You may also consider hanging thermal curtains to help insulate your home, as long as they cover the windows entirely.

Add a Double Glaze

Installing a double glaze on your windows might be more involved and a little more expensive, but it can really do wonders for making your windows more energy efficient. Double-glazed windows feature two glass layers separated in the middle by a layer of air to help keep cool air in. They’re also very good at minimizing condensation and can even reduce the noise coming from outside.

To add a double glaze to your windows, you’ll need to call a professional window installer to have this done for you, as it’s not a very simple task that the average homeowner can take on as a weekend DIY project. These experts will ensure that the glaze will fit like a glove and do what it’s designed to do.

Replace Exterior Door Thresholds

Any doors leading to the exterior could be allowing cool air to escape through the threshold at the bottom of the door. These thresholds are meant to keep dirt from the outside getting into your home, but they can eventually allow air to escape over time as they start to wear down. If yours is looking a little worn, consider fixing or replacing it.

The Bottom Line

You’d be amazed at how much energy is lost because of your home’s windows and doors. By making a few adjustments and improvements, you can effectively make your windows and doors much more energy efficient, saving both energy and money spent keeping your indoor air comfortable.

Tips to Keeping Your Landscaping Healthy This Summer

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California isn’t exactly known for its heaping mounds of rainfall, which can make it a bit of a challenge to keep your greenery healthy, especially in the summer. And the fact that temperatures can soar throughout the summer months can make things even more difficult for homeowners tending to their landscaping.

To help keep your greenery healthy throughout the sizzling months of the summer, keep the following tips in mind.

Add Mulch

Mulching your garden can help trap moisture and keep your plants cool and moist for longer periods of time, long after they’ve been watered. Mulch also helps to keep weeds at bay, which is important because weeds compete with plants for water. Besides, mulch looks great and can help clean up the look of your garden.

Water During the Cooler Parts of the Day

If you water your garden at peak temperature, most of the water will evaporate before it’s able to reach deep into the soil. The best time of day to water your garden is first thing in the morning long before the temperatures soar, which will help to keep your garden well hydrated throughout the day.

Keep a Consistent Watering Schedule

Certain greenery requires consistent watering in order for it to do well, including vegetable gardens and flower patches. Failure to water on a consistent basis can cause damage to your flowers, such as rotting of the blossoms and even a decline in flowering altogether. To make sure your plants are watered consistently, create a schedule to help you stay on track. If you’ve got an irrigation system, set it on a timer to run at the same time.

Keep an Eye Out For Signs of Plant Stress

Hopefully, your plants and shrubs will remain healthy throughout the year, but there may be times when they need a little more attention. To prevent any damage to your plants, be on the lookout for any signs of stress. This can include:

  • Brown leaves
  • Drooping and wilting
  • Rotting roots
  • Yellow falling leaves
  • Rolled leaves
  • Petal loss
  • Flowers that easily fall

If you notice any one of these signs, be sure to water your plants thoroughly right away. If you catch these issues early, your plants should be able to recover.

Consider Drip Irrigation

Rather than watering your garden with a sprinkler, consider installing a drip irrigation system. These types of systems can help keep your garden moist and healthy in a more efficient manner if managed properly. In California where water is a valuable commodity, conserving as much water as possible is important, and drip irrigation systems may be able to help.

These systems have been shown to be more effective at delivering water to plants as well, even more than sprinklers. Further, there tends to be less nutrient loss thanks to minimized leaching.

Choose Native Plants and Those That Don’t Require Much Watering

A simple way to keep your landscaping looking hearty throughout the summer is to simply plant species that are native to your location. Native plants require very little maintenance and water in order to maintain their health. This can help reduce the amount of time and money you spend watering.

Add Compost Regularly

Regularly adding compost to your garden’s soil can benefit it in a number of ways:

  • Add rich microorganisms
  • Help retain water more effectively
  • Add nutrients for optimal plant growth
  • Promote aeration and drainage
  • Avoid leaching by releases nutrients slowly
  • Improve soil structure

You can make your own rich compost by adding things such as vegetable peels, coffee grinds, eggshells, tea bags, grass cuttings, and plant prunings. These items break down quickly and provide both moisture and nitrogen to the soil.

Prune Your Shrubs and Trees

Regularly pruning your trees and shrubbery is important, especially during particularly dry periods, which can help effectively reduce stress on the greenery. 

Choose Slow-Release Lawn Fertilizers

Organic fertilizers that slowly release nutrients into the soil can provide added nutrients to the grass, improve soil structure, and encourage soil microbes, making your lawn less needy for water.

Mow the Grass to Proper Heights

You may be tempted to cut your grass too short in an effort to minimize the number of times you have to mow the law. But cutting too short can discourage root growth and reduce water retention. Instead, cutting to proper heights and leaving the grass blades a bit longer can keep the lawn cool and increase water retention.

The Bottom Line

Landscaping is definitely not a set-it-and-forget-it type of deal. Instead, it requires regular maintenance and attention in order to ensure its vitality, especially during particularly hot and dry periods. Keep these tips in mind to make sure that your landscaping stays in pristine condition throughout the sizzling summer months!

JUST LISTED: 224 Portola Dr

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224 Portola Dr, Danville, CA 94506

$699,999 | Beds 3 | Baths 2.5 | 1,598 SqFt

Lovely townhome that has the feel of a real home! Freshly painted, vaulted ceilings, good size living room with a cozy fireplace, spacious dining area convenient to the kitchen, overlooking the patio and open space. The kitchen includes a breakfast nook, dual sink, plentiful counter area and storage space – all at your fingertips! Good size bedrooms upstairs provide privacy plus lots of natural light. Great and convenient location, near the end of the street. Close to playground, community pool, shopping, medical offices, cinema, museums, services and more!

FULL LISTING

JUST LISTED: 7526 May Way

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7526 May Way, San Ramon, CA 94583

$875,000 | Beds 4 | Baths 2 | 1,935 SqFt

Endless potential and possibilities! An opportunity to transform this classic Walnut Hills home into a dream home! Good, spacious floor plan with a good size living room and a formal dining room (currently being used as another room). The kitchen flows into the casual dining area and large family room. All of the bedrooms and baths are strategically located at the opposite wing of the home. Lots of storage space and nice size front and back yards with beautiful roses, citrus and shrubs to use in a landscape plan renovation. Welcoming neighborhood, close to schools, parks, shopping, dining, entertainment, services, Bishop Ranch Business Park and freeway access.

FULL LISTING

JUST SOLD – $100K OVER ASKING PRICE IN 2 DAYS!

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12965 Hawkins Dr, San Ramon, CA 94583

$1,075,000 | Beds 4 | Baths 2 | 1,940 SqFt

Wonderful single story home with class tucked away in a great location! Nicely maintained and improved, including new, attractive flooring and paint. Good, functional, spacious and airy floor plan in a neutral decor. Beautiful, good size back yard with patio and pleasant, restful views. Near schools, shopping, dining, entertainment, services, Bishop Ranch Business Park and commute access. Great home at a great price!

FULL LISTING

How Long Should it Take to Sell a House?

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As a seller, you’ve got clear goals: sell your home for a pretty penny, and find a buyer within a reasonable amount of time. After all, nobody wants to sit around waiting for a willing buyer any longer than they have to. The longer a home sits on the market, the more expensive the process gets, not to mention more frustrating.

But exactly how long should it take for you to sell your home? Knowing the answer to this question can make things a lot easier and more streamlined for you, especially if you’re buying another home and want the closing dates to jive.

The thing is, there are several factors that influence how long a house will take to sell, including the following.

Current Market Conditions

Different market conditions will make it easier or harder to sell, depending on the current climate. You’ve most likely heard of “buyer’s markets” and seller’s markets,” and the one that you happen to be in right now will have a strong influence on how long you can expect your home to sit on the market.

In a buyer’s market, there are usually many homes available and few buyers, making the competition fierce among sellers but favorable for buyers. In this case, it could take a bit longer to sell. On the other hand, a seller’s market means the demand for homes is high thanks to the heavy pool of buyers out there and the limited inventory for them to choose from. This scenario makes selling much easier and usually results in a faster sale.

Listing Price

One of the most important factors that goes into selling a home is the listing price. If priced right, your home should have no problem selling within a reasonable amount of time, as long as it’s in decent condition. But if you overprice your home compared to similar listings in the area, you can expect your home to linger on the market longer than it should.

Buyers go into the real estate game armed with all the information they need, including what homes in the area are worth. They’ll be less likely to spend more than they have to on a home if they know it’s not worth as much as what the current market dictates. If you want to sell quickly, make sure your home is priced appropriately.

Neighborhood

The more desirable the area, the easier it should be to sell a home. Even homes that are in rough shape can sell rather quickly if they’re located in neighborhoods that buyers are eager to get into. But areas that are not so hot can make it tougher for sellers to sell quickly.

Many factors influence the desirability of a location, including proximity to the downtown, public transit, schools, crime rates, walkability, nearby amenities, parks, and so forth.

Condition of the Home

There’s a reason why real estate agents recommend that their seller clients have their homes staged. Presentation matters, and it can have a strong influence on the impression buyers have. Buyers typically want a turn-key home so they have little to do when they move in. The better the home looks, the better the odds of finding a willing buyer more quickly.

Average Days on the Market

Every area has its associated “average days on the market,” which changes frequently. If the average number of days it takes to sell a home in your area is 30 days, for instance, then you can expect it to take that long for you too. That said, you could experience a longer or shorter sale, depending on how all other factors line up for you, such as the condition of your home and the listing price.

Luxury Home Versus Average Home

Generally speaking, luxury homes over the $1 million mark tend to take a lot longer to sell than the average home. That’s because buyers in this market tend to be much pickier with their purchase, given the high price tag. If buyers are going to spend the big bucks, everything has to be just right.

The Bottom Line

Several factors play a role in the amount of time it takes to sell a home. It’s important to weigh them all before gauging how long it will take you to seal a deal. As always, consult with your real estate agent to help you get the exact information you’re looking for.

INFOGRAPHIC: NAR’s Existing Home Sales Report For May 2018

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Home-Buying Shows on TV Don’t Paint the Full Picture

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Real estate reality shows on television are quite popular these days. There’s something very interesting about watching homebuyers navigate the process of searching for a home to making an offer. Many shows even take viewers beyond closing and show them how many new homeowners renovate and upgrade the homes just purchased.

But as entertaining as these shows can be, how realistic are they? It turns out, they really don’t paint the full picture of what the true homebuying process is like.

A lot of details are left out of these shows. Of course, producers want to make sure that these programs are as interesting to the viewer as possible, and as such, they tend to only include parts that would hold a person’s attention. There are several components of buying real estate that may be too “boring” for television, and so they’re left out.

But it’s important for buyers to understand this fact in order to avoid going into a real estate transaction without being fully prepped for the process.

Many of these shows depict house hunters quickly looking through a handful of homes, usually a maximum of three (that are shown on the program). Then, they’re put in a position to make an offer based on only those few homes that they see, even if they don’t seem entirely keen on any one of them. An offer is submitted quickly, and the deal is done in a matter of minutes, or so it seems.

In some cases, these shows may actually fast-forward the process and only start the show after the buyers have already chosen a home and may have even submitted an offer that’s been accepted by the seller. Any other homes shown are only thrown into the mix to help viewers make their own decisions about which property should be picked. It makes the program more interesting and almost like a game show.

When it comes to “reality” TV, it should come as no surprise that much of what is shown is probably staged to some degree. After all, the show must be entertaining or it’ll lose viewers. As such, producers will try their best to tweak things in order to make these programs more intriguing.

While there’s certainly nothing wrong with that, buyers – especially first-timers – should be made aware of this fact, as it could skew their perceptions of what the buying process is really like and what they can actually expect from the process.

Why Homebuying Shows Can Be Deceiving

Television is meant to entertain, but it can also be used to educate as well. The problem with some reality house-hunting shows is that they can be a bit inaccurate in many ways.

For starters, many of these shows only include a handful of properties. Are buyers to believe that the people hunting for a home on the show only see these specific properties before making a decision about which one to purchase? In reality, it’s most likely possible that the buyers in the show have already seen dozens of homes before choosing the one they eventually purchase. But since these shows are only half an hour to an hour long, it would be impossible to cram them all into one episode. Real-world buyers should be aware of this potential fact.

In the real world, buyers are encouraged to see a lot more than that before settling on one. Considering how expensive this massive purchase is, it makes sense to see as many as possible for comparison purposes before making a final decision.

These shows also don’t go into detail about the negotiation process. They may tell viewers what the initial offer is and what the final accepted price is, but there is no back-and-forth bantering shown on TV that displays how the final sale price as arrived at. Negotiating is a critical piece of the puzzle and is something that buyers should be made aware of.

There is often no mention made about the market conditions in the area that the buyers are looking in. What is the price of an average home in the area? How much have similar homes in the neighborhood recently sold for? What is the community like? Is the location ideal for commuting to and from work? Was a home inspection done? If so, what was the outcome? There are so many little details involved in buying real estate that is usually not covered in these shows.

And then there’s the issue of financing. Have the buyers been pre-approved for a mortgage? What is the process that they go through to secure financing? Sure, these are not exciting details involved in the homebuying process, which is likely why they don’t make the editing cut. But the topic of financing is a crucial one that all buyers need to seriously consider.

Real estate agents on the show also don’t seem to do much, either. They basically unlock the door and let the buyers take a gander at the homes. Then, they just seem to let the buyers make their own decision about the properties they see. But this is unlike what agents in the real world will actually do. There’s a ton of behind-the-scenes work that goes on in buying real estate, and what agents actually do is not reflected in house hunting television shows.

The Bottom Line

Reality homebuying shows are definitely fun to watch. And in many cases, you may even be able to learn a thing or two about buying a house. But for the most part, these shows can be misleading and leave out a ton of critical information that is essential for making the right homebuying decision.

At the end of the day, actual buyers should only take these shows with a grain of salt and hire a professional real estate agent to walk them through the real-life process of buying a home. Getting educated on the real estate procedure and the market is important to understand what can really be expected of the homebuying process.