McNulty Real Estate Services Indianapolis, IN, Office/Cell: 317-507-0688

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Dear Friends

We hope all is well. Patrick, Brian, and I truly enjoy our daily activities in the real estate business...particularly helping people, such as yourself, with their individual real estate needs. Please do not hesitate to call as these arise, and your referrals are always appreciated, too. We hope you find the following real estate tips and updates useful. — Tom

Our thoughts on "Zestimates" has become a researching tool for buyers and sellers. Part of that research includes looking at the "Zestimate", which is Zillow's estimation on the value of a house. While Zillow and other sites like Trulia and RedFin might be a general starting point, in our opinion they do not come close to replacing the timely analysis of a full-time, knowledgeable real estate agent. These general starting points can be similar to the findings of an inexperienced real estate appraiser, particularly in active or "hot" markets. A 2016 Indy Star article citing a noted former economist who created his own housing price algorithm, studied Zillow's estimates and determined that while they offer a "ballpark value", they are typically off by more than $10,000. In just this past year we have seen a couple off by up to $150,000.

What sites like Zillow are missing is that they have never been inside your home, and they are slow in taking into account present day market conditions. They do not know what updates or additions you have made. Some of their data is incorrect, including mistakes or omissions in sales prices and property tax records. While these sites allow users to submit corrections and data updates (which we believe consumers rarely take the time to do in our hurry up world), they still do not appear to be immediately updating their "Zestimate" to reflect the changes.

Zillow and the like, along with weak appraisers, certainly can be far apart from the knowledge and expertise offered in a timely market analysis by a qualified agent.


5 Fixes That Can Raise a Home’s Value

For home owners looking to spruce up their home before listing it, there’s plenty they can do to attract more buyers and potentially boost the value of their home too.

Veteran real estate professionals recently weighed in at This Old House on some of the best home improvement projects they believe can help a home show better. Here are a few of their ideas:

  1. Open up the space

    Create more space, whether that’s even removing a kitchen island or knocking out a nonstructural wall. Right now buyers want a wide open floor plan, the living room right off the kitchen. They are into big spaces, Kristin Wellins, senior manager of program development at ERA Real Estate, told This Old House.

  2. Light it up.

    Keep the home bright: Have windows open to let the natural light flow in, consider lights that use motion detectors to turn themselves off, or install sun tubes, a reflective material that funnels natural light from a hole cut in a rooftop down through a ceiling fixture in a room. "High wattage bulbs make small spaces feel larger, and soft lighting brings warmth to empty spaces," This Old House notes.

  3. Enhance the front door.

    "Don’t underestimate the power of a front door," Willens says. "People make up their minds in the first seven seconds of entering a house." Have an overhang on the front porch, such as an awning or portico above the front door, suggests Roger Voisinet, a real estate professional in Charlottesville, Va.

  4. Pay attention to the floors.

    Spend some money on the floors, suggests the real estate professionals surveyed by This Old House. Even a $600 to $900 investment could help boost the home’s value by possibly $2,000, they say. Get a carpenter or handyman to eliminate distracting squeaks from floors, repair any broken tiles, patch damaged floor boards, and remove wall-to-wall carpeting, they suggest.

  5. Tackle easy bathroom upgrades.

    Bathroom upgrades can quickly get pricey but a few upgrades can still make a big difference. For example, swap frosted glass for clear glass, remove any rust stains, apply fresh caulk, update doorknobs and cabinet pulls, replace faucets, buy a new toilet seat, or install a low-flush toilet.

    Source: "Brokers Tell All: 10 Ways to Boost House Value," This Old House (September 2016)

Helping Buyer's and Seller's In Private Transactions

95% of most residential real estate transactions have common features. When properties aren't listed through real estate agents but somehow a Buyer and Seller find each other, it's best to have someone in your corner … who understands the process … involved in the transaction to hold things together. Since Tom is also a real estate attorney, we can still help with those transactions. Some of the typical ways we can assist these Buyers and Sellers are:

The typical charge for this type of assistance is anywhere from $1,500 - $2,500, depending on time invested.. Please feel free to get in touch if we can ever be of assistance with these types of transactions.

Buying Power

When purchasing a home, a major factor is always the current level of interest rates. Throughout history, the average interest rate is 8.600%. Today, interest rates are hovering around 4%, but are slowly climbing as we have seen in the last few months. As rates increase, it affects what we like to call your "Buying Power". For example, if you wanted to purchase a home with 10% down and a principal and interest payment of $1,500, at today's rate of 4.000%, you would be looking at homes around $346,500. However, as rates climb, your Buying Power diminishes in value. In the same scenario, if rates were to rise to 5.500%, and you still wanted a monthly payment of $1,500, you would be looking at homes priced around $291,500. Seeing interest rates at 7.000% would not be shocking to those who have been in the business for a long time. (During the old guy's 28+ years in the business, he has seen fixed rates as high as 13%.) At that rate, keeping at the same payment level of $1,500 with 10% down, homes at the $247,500 price level would be within your range. At the historical average of 8.600%, you would be looking at houses around $212,000. As you can see, interest rates play a large role in your Buying Power.

Important Factors To Consider When Selling A Home

When selling a home, we focus on four main aspects: location, condition, timing, and price.

  1. Location is one thing you cannot change, but some areas are more popular than others at a given time. For example, in communities with a superior public school system, it is fairly typical to see higher home prices.
  2. The condition of your home is also vital. The more pristine it is inside and out, with popular current features and colors, the better.
  3. Timing is also key, and a bit of a wild card. Certainly selling a home in 2009 was much more difficult than selling a home in today's market, but there is always a finite amount of Buyers in certain price ranges at a given point of a six month listing period. This aspect might be the most difficult of all to pinpoint as it is ever-changing.
  4. The current market value of your home can be a bit of a moving target, so it is important to be as accurate as possible when assessing its value.

Putting together a comprehensive market analysis is our final step in establishing the value of your home. We research sales in your neighborhood from the past two years, and find comparable homes in terms of floor-plan, square feet, condition, bedrooms, bathrooms, special features, etc. Once the home is in its best anticipated condition, and we have established what we believe the highest value of the home might be, we are ready to list.

After a concentrated marketing effort, and 30 days or 5 showings with no actively interested buyers (whichever comes first), we encourage strategic price reductions and re-marketing. We are constantly reviewing current active, pending, and sold statistics every 30 days in an attempt to find the most potential number of Buyers available at given price points during our listing period. Failure to pay attention to these statistics often makes it difficult to sell the property during the given time it is listed.

Ultimately the timing is the wild card in relation to price.

We hope these thoughts might be helpful when you consider selling a home.

When Does It Make Sense to Refinance?

This is a question we are frequently asked. The answer is easy to determine.

There are fees associated with refinancing your note and mortgage. The lender you choose will have fees for a credit report, an appraisal of the property, document preparation, processing, underwriting, messenger service, potential points of the loan (a point is one percent of the mortgage amount), and so on. Not all of these fees are the same for each lender, or the cost they charge for them. There will also be other charges for title insurance, mortgage release fees, recording fees, and a closing fee.

Remember two things. First, the lender should disclose all these fees to before you choose to use them. They do this with a Good Faith Estimate. Secondly, you can choose the title insurance company of your own liking. This is not the lender's right and some offer better discounts on your previous title work than others.

Once you have all of your up front costs, the question is easy to answer. You simply take the amount of your current payment minus the amount of your new payment and divide this into your up-front costs. This will give you the amount of months it will take you to pay off these costs before you start saving money. If you are going to live in the property longer than this number of months, then it makes sense to refinance.

Cost to Refinance divided by (Old payment - New Payment) = Number of Months Before You Start Saving Money.

Just like with any of your other real estate needs, give us a call if you are thinking about refinancing. We can tell you what to watch for and refer you to competitive and competent lenders and title insurance vendors. We would be more than happy to help!

So You Want To Lease A House

So you own an investment property, or a home that might not be selling for the value you would like to obtain, and you want to lease it. What are the important steps you need to take?

McNulty Real Estate Services provides property management for a reasonable fee. We would be more than happy to help with all of the above, and then some.

How Much Homeowners Insurance Should You Carry?

Annual homeowners insurance premiums run between $300 and $1,000, on average, according to the Federal Reserve Bureau. A typical homeowners policy, designed to pay for damages or losses resulting from fire, lightening, tornadoes, hail, explosions and theft, provides six different types of coverage; your house, other buildings, your belongings, additional living expenses, liability, and medical.

Your house is for your actual house, including an attached garage if you have one. Other buildings include freestanding garages, sheds or other structures on the property. Your belongings includes furniture, appliances, clothing, and jewelry - virtually everything inside the house that is not part of the structure itself. Additional living expenses includes coverage for lodging associated with living away from your home in the event your house becomes uninhabitable. Liability coverage protects you from lawsuits filed by others and may also cover damage or injuries caused by pets. Medical coverage will pay for medical bills when someone is injured on your property, but does not pay for your own (or your family's) medical expenses.

Flood and Earthquake insurance is going to be separate from your regular homeowners insurance policy. Each must be obtained independently, especially if either is a risk for the area you live.

The Deductible will apply no matter the amount of coverage you obtain. Simply put, you will pay this amount every time you file a claim before your insurance kicks in. In general, you should get the highest deductible you can afford since that lowers the overall cost of insurance. Homeowners insurance is not designed to pay for every broken window or dented section of gutter or downspout. It should be used to pay for major losses or damage, and you should have sufficient cash reserves to cover the occasional mishap or accident.

The Bottom Line you should start with the replacement cost of your home, add coverage for the other listed factors and you will end up with a total estimated amount of coverage that you need. Once you have that figure, consult with several trusted insurers to get the best price for your insurance dollar. In addition to the rate you pay for insurance, it's important to find a knowledgeable agent who can help make sure you have no gaps in coverage. Check credentials, ask friends and family for referrals and, in the end, this due diligence will give you the peace of mind you deserve as you end your search for homeowners insurance.

Written By: Jim Probasco - January 7, 2016

So You Want To Rent A Piece Of Property

How does the process typically work?

McNulty Real Estate Services provides assistance to Tenants. We would be more than happy to help with all of the above, and then some.

Understanding Earnest Money

How does the process typically work?

Earnest Money is a very important part of the home-buying process. It tells the Seller that you're a committed Buyer, and helps fund your down payment. Assuming that all goes well, and your offer is accepted by the Seller, the Earnest Money check is deposited in an escrow account. The Earnest Money will go toward the down payment, and closing costs, when it appears as a credit on your closing statement.

How much Earnest Money should you put down? On average you can expect to put 1-2% of the total purchase price as Earnest Money.

Who holds the Earnest Money and when do you need to submit it? Typically, once on offer is accepted, you have 1-2 days to submit the Earnest Money which is most commonly held by the Seller's agent in an escrow account. If the Seller is unwilling or unable to fulfill any of their obligations in the accepted Purchase Agreement, a Mutual Release is signed by both parties and the Earnest Money is returned to the Buyer. If the Buyer is unable or unwilling to satisfy any of their obligations in the accepted Purchase Agreement, a Mutual Release is signed and the Seller retains the Earnest Money.

Inspection Overview

As per the standard purchase agreement, when responding to an inspection report on a resale home a Buyer should focus on major items, and not minor issues. See below for a list of some major items that we will always include in an inspection response, and the more common minor items that we would typically not submit for repair.

Top Major Repairs

  1. Roof — Leaking roof. However, if the roof is just old, but not leaking, then it’s not a response item.
  2. Windows — If 3 or more windows have failed thermal seals.
  3. HVAC — Hole in the heat ex-changer (replace), faulty operation requiring service.
  4. Water Heater — Leaking water heater.
  5. Major electrical issues.
  6. Septic and Well concerns.
  7. Holes in siding, waffling siding, missing roof shingles.
  8. Foundation issues, and or water penetration causing mold remediation
  9. Radon remediation if it is higher than 4.0 pCi/L.
  10. Termite treatment if evidence of active termites, as well as termite damage repair.

Top Minor Repairs

  1. Leaky faucets.
  2. Missing drain stoppers.
  3. Loose toilets (as long as not leaking).
  4. Interior door issues (loose knobs, missing floor guides, etc.).
  5. Small holes in walls.
  6. Cracked window pane.
  7. Missing screens.
  8. Minor electrical items like GFI requirements or grounding concerns.
  9. Common minor cracks in driveways, patios, porches, or basement floors and walls.
  10. Minor water seepage into a basement or crawl space. Usually improvement to exterior drainage will solve this problem.

Four Social Benefits To Owning A Home

Besides the primary economic reason for owning a home (appreciating asset with tax deductible expense features), we thought you might be interested in the following article detailing additional benefits to home ownership.

Daily Real Estate News | Wednesday, October 25, 2017

Improved educational performance, higher civic participation, lower crime rates, and improved health remain the biggest social benefits linked to homeownership, according to a new research paper by NAR Chief Economist Lawrence Yun and research economist Nadia Evangelou, which appears in The Journal of the Center for Real Estate Studies. Some findings from the latest research cited in the paper include:

Health. Children of homeowners tend to be happier and healthier than children of nonowners, even after factoring in income and education levels. More recently, studies have found the wealth-building effect of homeownership and the sense of control it often brings in a stable housing market can positively affect homeowners’ mental and physical health. On the other hand, some studies suggest that areas where housing distress is high tend to see greater rates of mental health and stress-related health diagnoses among residents.

Crime. Research has confirmed homeowners have a lower instance of involvement in crime than nonowners. Also, neighborhoods with stable housing options—regardless of ownership structure—are more likely to have lower crime rates. Some studies have found, however, that foreclosure levels do influence burglary and violent crime rates.

Education. Researchers have found homeowners tend to accrue more wealth and save more money—such financial practices are associated with lower rates of homeowners’ children dropping out of school.

Civic engagement. Homeownership and residential stability continues to be linked with an increased likelihood of electoral participation. Homeowners remain more likely to participate in local elections and civic groups than renters, the paper states.

"Owning a home embodies the promise of individual autonomy and is the aspiration of most American households," the researchers note. "Homeownership allows households to accumulate wealth and social status, and is the basis for a number of positive social, economic, family, and civic outcomes."

Source: "Social Benefits of Homeownership and Stable Housing," The Journal of the Center for Real Estate Studies (2017)

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