Helpful Hinz

Articles in this month’s Helpful Hinz:

  1.  Why is it so hard to find a house to buy?  (RE/MAX Alliance Blog)

  2.  3 Things to consider before listing your home on a short-term rental site. (RE/MAX Blog)

  3. 4 Common Consumer Mortgage Frauds ( MortgageLoan.com article)

 

Why Is It So Hard To Find A House To Buy?

Blog Article:  Coloradomoves.com

WHY ARE THERE SO FEW HOMES AVAILABLE?

The Colorado real estate market, like much of the rest of the country, is suffering from “fixed-in-place” syndrome.  Translated, that means a serious lack of homes for sale.  Specifically, the lower end of the marketplace, typically known as starter homes, is playing a dirge to many potential home buyers.  While the secondary market or “move up” homes isn’t a funeral march, it also isn’t sounding anything like a Mardi Gras parade.

Fewer homes available for sale leads to rising prices and fierce competition among those seeking to purchase.  So what do you need to do to make sure your dream home doesn’t stay a dream?

Understanding why inventory in the marketplace is so tight can help alleviate a lot of the frustration many are feeling about the atmosphere in this current market.  It also helps in understanding what motivates the sellers that are putting homes up for sale.  That information is invaluable in formulating your plan of attack to not just seek, but buy, the home you want.

WHY ISN’T ANYONE MOVING?

Recent surveys give us some insight into the real reasons many homeowners have decided to stay put and it’s probably not what you’d expect.  While statistically people move about every 5-7 years, the statistics didn’t account for the generation known as Baby Boomers.  How is this people group affecting the real estate market?

A close look at the demographics of the responders to the survey reveals what may be the biggest factor. Younger homeowners, those under 55 in particular, admit they have plans to sell in the near future.  However, the greater majority of home owners are those identified as Baby Boomers.

The survey reports that 85% of these Boomers, homeowners in the 55 – 74 year age range, said they had no plans to sell in the next year. This isn’t that odd a percentage on its own, since this is typical for this age range.  No, the problem presents itself in that the overall population of that age range is one of the largest of the home owning age groups.

That means, there are quite a few more homeowners who aren’t that likely to put their homes up for sale.  Does this mean your home buying plans need to be put on hold?

NOW THE GOOD NEWS!

All that said, the low mortgage interest rates are making home ownership far more affordable than just a few years ago.  With 60% of millennial home owners indicating were hoping to sell within the next year and home builders working hard to provide new inventory to choose from, this coming year should be a very good market for interested first-time buyers.

Preparing to buy your first home doesn’t have to be a difficult chore, especially when you get the best tips and ideas from your local RE/MAX Alliance Associate to assist you in getting ready!

 

 

3 Things To Consider Before Listing Your Home On A Short-Term Rental Site

Blog Article:  Remax.com

Once upon a time, the idea of renting out your home to a stranger while you left for vacation was considered quite odd.

Enter changing consumer attitudes, the “sharing economy” and online services such as Airbnb, FlipKey (owned by TripAdvisor) and VRBO (owned by HomeAway, which is now owned by Expedia).

Today, renting a room in your house (or the entire house) to unknown travelers isn’t an outlandish concept. Short-term rentals provide an income opportunity for owners and a unique way for visitors to experience a city. What better way to get the local experience than staying with – or renting from – locals?

If you think you’re up to being a host of a short-term rental, here are three things to keep in mind.

1. Legality

The rise in popularity of Airbnb and other sites hasn’t been without its controversy. There are concerns that short-term rentals threaten the jobs of hotel workers, and that a short-term rental doesn’t have to pass the same certifications and inspections of regular hotels. Finally, many investors are buying properties with the intent of renting them out, which takes housing off the market in areas with already limited inventory (check out this article from The Los Angeles Times to learn more).

Some cities have enacted restrictions against short-term rentals. You may need to register and get a permit or a license – or you may not be able to host at all. Check with your local government to make sure you understand the laws.

2. Taxes

You don’t need to report the money earned from the short-term rental of your home if you meet both of these requirements:

1. You rent it out for fewer than 15 days a year AND

2. You live in it for more than 14 days or more than 10 percent of the total days you rent it out during the year (this determines if the property is seen as a residence or a rental property by the IRS).

Still unclear about the taxes on your short-term rental? Forbes and TurboTax provide some more information, or you may want to consult with a tax professional.

3. Additional Costs

Renting out your home could mean an extra insurance bill. Check with your insurance agent to learn what your current policy covers regarding short-term renters. They may recommend increasing coverage. Airbnb does provide free primary liability coverage for up to $1,000,000 per occurrence, and many of the other sites have partnerships that make it easy to take out additional coverage, if needed.

In addition to insurance, you’ll have to pay a percentage of the rental income to the website: Airbnb and FlipKey both charge a 3% host service fee, VRBO has an option to pay-per-booking or an annual subscription fee.

Looking for a permanent home in your favorite vacation spot? Search for properties on www.remax.com.

Once upon a time, the idea of renting out your home to a stranger while you left for vacation was considered quite odd.

Enter changing consumer attitudes, the “sharing economy” and online services such as Airbnb, FlipKey (owned by TripAdvisor) and VRBO (owned by HomeAway, which is now owned by Expedia).

Today, renting a room in your house (or the entire house) to unknown travelers isn’t an outlandish concept. Short-term rentals provide an income opportunity for owners and a unique way for visitors to experience a city. What better way to get the local experience than staying with – or renting from – locals?

If you think you’re up to being a host of a short-term rental, here are three things to keep in mind.

1. Legality

The rise in popularity of Airbnb and other sites hasn’t been without its controversy. There are concerns that short-term rentals threaten the jobs of hotel workers, and that a short-term rental doesn’t have to pass the same certifications and inspections of regular hotels. Finally, many investors are buying properties with the intent of renting them out, which takes housing off the market in areas with already limited inventory (check out this article from The Los Angeles Times to learn more).

Some cities have enacted restrictions against short-term rentals. You may need to register and get a permit or a license – or you may not be able to host at all. Check with your local government to make sure you understand the laws.

2. Taxes

You don’t need to report the money earned from the short-term rental of your home if you meet both of these requirements:

1. You rent it out for fewer than 15 days a year AND

2. You live in it for more than 14 days or more than 10 percent of the total days you rent it out during the year (this determines if the property is seen as a residence or a rental property by the IRS).

Still unclear about the taxes on your short-term rental? Forbes and TurboTax provide some more information, or you may want to consult with a tax professional.

3. Additional Costs

Renting out your home could mean an extra insurance bill. Check with your insurance agent to learn what your current policy covers regarding short-term renters. They may recommend increasing coverage. Airbnb does provide free primary liability coverage for up to $1,000,000 per occurrence, and many of the other sites have partnerships that make it easy to take out additional coverage, if needed.

In addition to insurance, you’ll have to pay a percentage of the rental income to the website: Airbnb and FlipKey both charge a 3% host service fee, VRBO has an option to pay-per-booking or an annual subscription fee.

Looking for a permanent home in your favorite vacation spot? Search for properties on www.remax.com.

4 Common Consumer Mortgage Frauds

Article: MortgageLoan.com

The second major category of mortgage frauds targets consumers. Foremost among these are foreclosure rescue and mortgage debt relief scams. These scams seek to take advantage of homeowners who are falling behind on their mortgages or property taxes and are afraid of losing their homes. These scams are of particular concern in a depressed economy when unemployment is rising.

Still other scams attempt to take advantage of consumers through fake investments and other schemes that use real estate and mortgages in an effort to separate them from their money and/or property. These are not necessarily aimed at consumers in financial difficulty, but those who fall for them do tend to end up poorer.

Here are some examples of scams related to mortgage modification and foreclosure rescue, followed by examples of other consumer mortgage frauds.

Foreclosure Rescue and Mortgage Debt Relief Scams

Foreclosure “rescue” and refinance frauds

The scam artist offers to help a homeowner in financial difficulty refinance their loan or obtain a mortgage modification to avoid foreclosure. The scammer charges hefty up-front fees for this service, but doesn’t deliver in the end, leaving the homeowner in even worse financial shape than before. In a worst-case scenario, the scammer will claim to operate as the homeowner’s agent, and direct the homeowner to send payments directly to him or her to be forwarded to the lender – but the scammer pockets the money instead. In some cases, the homeowner may not realize they’ve been scammed until the foreclosure notice is posted on their door.

Fake government programs

Some scammers will claim to be working in government-sponsored homeowner programs or even represent government agencies in an effort to fleece homeowners. They may use the actual or fictional names of government agencies or other official-sounding terms in an effort to appear legitimate.

The easiest way to recognize these scammers is when they ask for hefty up-front fees in return for their services. While there are a large number of nonprofit agencies that do offer homeowner assistance programs under government sponsorship (usually through HUD), they charge little or no fee for their services.

Leaseback/rent-to-buy scams

In this scenario, the scammer proposes a deal in which the owner deeds their property to the scammer in return for signing a rent-to-own agreement that will allow them to stay in the home and eventually reclaim the property. Once the deal is signed, however, the homeowner may find that the rent-to-own agreement is loaded with hidden fees and penalties that make it easy for the scammer to void the deal and evict the homeowners. In many cases, this is part of an equity skimming fraud (see previous chapter).

Debt-elimination schemes

Scammers sometimes claim to be able to eliminate a homeowner’s debt through “secret laws” or other financial and legal wizardry. They claim they can free a homeowner from the obligation to make mortgage payments while retaining ownership of the home. Of course, they charge for this “advice” and the homeowner who heeds it and stops making their mortgage payments only ends up in deeper financial trouble than before.

One variation of this is to sell the homeowner an official-looking certificate, which resembles a cashier’s check or other legitimate financial instrument, and which can supposedly be presented to the bank in satisfaction of the mortgage. But the piece of paper is worthless.

Other Consumer Mortgage and Real Estate Scams

Reverse mortgage scams

Reverse mortgage scams commonly target senior citizens. While a legitimate and well-planned reverse mortgage can provide revenue for persons on a limited income, there are also examples of fraudulent reverse mortgages that can cost seniors money or even end up causing them to lose their homes. Such scams often start with telemarketing efforts aimed at seniors. Warning signs include high-pressure sales tactics, being asked to sign incomplete documents, salespeople claiming to represent government or nonprofit agencies and charging fees for basic information.

Mortgage escrow schemes

A dishonest mortgage lender agrees to maintain an escrow account for the borrower to cover costs associated with the mortgage or home ownership itself. But rather than using the funds for their’ intended purpose, the criminals skim them off a portion for themselves. This activity is often hidden within the details of financial statements that the homeowner finds too complex or time-consuming to check.

Equity stripping

An unscrupulous lender may lend an amount that is more than a borrower can afford, with the knowledge that default is likely. The lender can then foreclose and sell the house, stripping the borrower of any equity earned over the years.

Chunking

Chunking is a variation on property flipping that often starts as a seminar or program where the scam artist pitches real estate investments to an investor or group of investors. The scammer persuades the investor to purchase one or more properties, with the scammer as an intermediary, then uses the investor’s personal information to obtain additional mortgages to purchase additional properties the investor is unaware of. In reality, the properties are being purchased from the scammer or accomplices at inflated values with the help of a corrupt appraiser. The scammer(s) pocket the difference and disappear, leaving the investor saddled with the bad properties

Insurance packing

Packing is the practice of adding unwanted extras to a loan without the full knowledge of a borrower. The most common product added to loans is credit life or disability insurance. Credit insurance is almost always overpriced and a poor value for consumers, but in mortgage loans, the cost can be enormous.

 

The Hinz Group
Danna Hinz ABR, CDPE, GRI, IRES
The Hinz Group at RE/MAX Alliance
225 S. Boulder Rd. Suite #100
Louisville, Co. 80027
303-926-4021
303-901-3860
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Bob Sampson
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Louisville, Co. 80027
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