Many houses have been on the market because of a weak sales, remained unsold and vacant. In nearly all cases-from a cash flow standpoint-renting out a house in this situation is preferable to leaving it vacant. But many factors should be considered first. Coming from the seller, it always sounds so simple: “I can’t sell my house, so at least I can get it rented and slow the loss of dollars paid to my mortgage company and paid for taxes and insurance.”
Well, not so fast. Was the house properly prepared for sale? If so, will those preparations be enough for renting it out? When ready to put it back on the market, will the seller have to do anything to the house to make it salable? If so, the damage deposit will cover those costs, correct?
Renting out a house that has been for sale for an extended period due to weak market conditions is certainly an option that should be considered. However, there are additional factors that may affect whether or not renting is the best option for your property:
1) Sellers should be aware that many rental market cycles are similar to sale market cycles. In some parts of the country, sales slow down during the fall and continue to decrease until after the first of the year. This is also true with the rental market in many of these same areas. So to assume that a home will be easy to rent once the sale-market peak has passed is not usually true.
2) Get prepared. Getting a home ready for the rental market is a critical part of renting. If the home was not properly prepared for the sale market, then it will likely not be ready for the rental market either. In fact, I believe that with renting, preparation is even more important. It is vital not to overlook this very significant factor in renting out a house.
3) Sellers should be conscious of the fact that if the house is in great shape with new carpet and fresh paint, it will need some of the same tasks when it’s time to put the home back on the market. Hopefully, the carpet won’t need to be replaced, but it will need to be cleaned. The walls will need to have a fresh coat of paint, or at least a touch-up, and the cleanliness of the house will have to be addressed. So, in many cases, the house has to be prepared for the market twice.
4) People looking to rent don’t care about the cost of the mortgage, taxes, insurance, or management fees. They will be willing to pay the market rent and no more. If a seller must cover all of these expenses in order to rent, he or she will likely be better off reducing the sale price further and cutting his or her losses with a lower sale price. There are no guarantees when it comes to renting. The tenant may have some bad luck and not be able to afford the rent, and many components of your home are always at risk for a malfunction. Steady income from a single-family rental home is certainly no guarantee.
5) Anything that is provided in a rental home must work. Sellers should realize that just because they opted not to repair and use a component of the home, it doesn’t mean that they don’t need to fix or replace that item for a tenant. All appliances in the home at the time of renting should be operational. Renting out a house that won’t sell is certainly a great option for some situations. However, it does not apply to every case. Smart agents need to inform their sellers to carefully weigh their options prior to committing to renting out a house that they really want to sell.
Saturday, February 9, 2008
Friday, February 8, 2008
S.588 small businesses and independent contractors in South Carolina
S.588, legislation that would allow small businesses and independent contractors to pool together as a cooperative to negotiate a group health care plan, cleared the House and Senate! On Tuesday, REALTORS® attending the Capitol Conference visited the State House to speak with their legislators in support of S.588 and influence policy as it was being made. Thanks to their efforts, the Senate amended the House-passed version of S.588 with language more inclusive of real estate licensees and sent the legislation back to the House for concurrence. Conference attendees had the opportunity to watch this happen from the Senate gallery.
The House agreed to the Senate amendment Thursday morning, and on Thursday afternoon the bill was enrolled for ratification as an Act. Once ratified, it will go to the Governor's desk for his signature to become law.
If S.588 becomes law, this legislation will be key in providing new health insurance options to REALTORS® and small businesses in South Carolina. SCR leadership and staff are now researching the feasibility of SCR forming a health group cooperative through which members could purchase health insurance.
www.843Realtor.com
The House agreed to the Senate amendment Thursday morning, and on Thursday afternoon the bill was enrolled for ratification as an Act. Once ratified, it will go to the Governor's desk for his signature to become law.
If S.588 becomes law, this legislation will be key in providing new health insurance options to REALTORS® and small businesses in South Carolina. SCR leadership and staff are now researching the feasibility of SCR forming a health group cooperative through which members could purchase health insurance.
www.843Realtor.com
Every day, 10,000 Baby Boomers celebrate
Every day, 10,000 Baby Boomers celebrate their 60th birthday. This represents an enormous opportunity for brokers and their agents. These 80 million home buyers are the largest, fastest-growing, most affluent group in history.Boomers have redefined aging. They live more vibrant and active lives than past generations, and their needs are diverse. They’re purchasing second homes, moving to get closer to their grandchildren, or to address health concerns. The list goes on and on.
www.843Realtor.com
www.843Realtor.com
Thursday, February 7, 2008
D.R. Horton swings to 1Q loss on charges
D.R. Horton Inc., the nation's largest homebuilder, said Thursday it swung to a loss in its fiscal first quarter, due to hefty charges to write off inventory and land values as the housing slump continues to worsen.
Losses for the quarter ended Dec. 31 totaled $128.8 million, or 41 cents per share, compared with profit of $109.7 million, or 35 cents per share, a year ago. The 2008 quarter includes $245.5 million in pretax charges to write down inventory and the value of land deposits.
Revenue plunged to $1.71 billion from $2.8 billion a year ago. The builder closed on 6,549 homes, down sharply from 10,202 in the 2007 period.
Analysts surveyed by Thomson Financial expected a loss of 25 cents per share on revenue of $1.62 billion.
D.R. Horton said its sales order backlog of homes under contract at Dec. 31 was 8,138 homes ($2.0 billion), compared to 16,694 homes ($4.7 billion), at Dec. 31, 2006. The cancellation rate for the first quarter was 44 percent.
"Market conditions remained challenging in our December quarter as inventory levels of both new and existing homes remained high while pricing remained very competitive," said Donald R. Horton, chairman, in a statement. "Lending standards continue to be more restrictive than during the previous year, and buyers continued to approach the home buying decision cautiously."
Horton said he expects the housing environment to remain challenging. The company's 2008 goal is to generate at least $1 billion in cash flow from operations. In the first quarter it generated more than $550 million in cash flow from operations, mainly driven by $476 million in cash generated by reducing our inventories.
www.843Realtor.com
Losses for the quarter ended Dec. 31 totaled $128.8 million, or 41 cents per share, compared with profit of $109.7 million, or 35 cents per share, a year ago. The 2008 quarter includes $245.5 million in pretax charges to write down inventory and the value of land deposits.
Revenue plunged to $1.71 billion from $2.8 billion a year ago. The builder closed on 6,549 homes, down sharply from 10,202 in the 2007 period.
Analysts surveyed by Thomson Financial expected a loss of 25 cents per share on revenue of $1.62 billion.
D.R. Horton said its sales order backlog of homes under contract at Dec. 31 was 8,138 homes ($2.0 billion), compared to 16,694 homes ($4.7 billion), at Dec. 31, 2006. The cancellation rate for the first quarter was 44 percent.
"Market conditions remained challenging in our December quarter as inventory levels of both new and existing homes remained high while pricing remained very competitive," said Donald R. Horton, chairman, in a statement. "Lending standards continue to be more restrictive than during the previous year, and buyers continued to approach the home buying decision cautiously."
Horton said he expects the housing environment to remain challenging. The company's 2008 goal is to generate at least $1 billion in cash flow from operations. In the first quarter it generated more than $550 million in cash flow from operations, mainly driven by $476 million in cash generated by reducing our inventories.
www.843Realtor.com
Wednesday, February 6, 2008
Valentine’s Day Purchasing
Valentine’s Day Purchasing Trends
According to surveyed U.S. small business owners, Valentine’s Day consumers are last-minute shoppers. In fact, 46% expect their customers to shop the week of Valentine’s Day, with 11% waiting until the final day to pick up gifts. In terms of anticipated spending, Valentine’s Day shoppers are not expected to be as thrifty this year as they were last year. In 2007, 53% of small businesses said their customers would spend less than $25, whereas in 2008 only 39% expect their customers will spend this total on a token of their affection.
Small businesses also expect online sales to play a large role in this year’s Valentine’s Day sales. More than half (59%) expect online sales will increase this year.
According to U.S. small businesses, consumers can expect to receive traditional gifts from their loved ones this year. Although still the most anticipated gift, flowers dropped in popularity from 51% last year to 41% this year. “Dinner” ranked next in popularity at 23% - up five percentage points from last year, and jewelry was predicted to be the most purchased item by 18% of respondents, followed by chocolate at 14%.
Buy the ultimate Valentine's gift and purchase Real Estate in Myrtle Beach SC
www.843Realtor.com
According to surveyed U.S. small business owners, Valentine’s Day consumers are last-minute shoppers. In fact, 46% expect their customers to shop the week of Valentine’s Day, with 11% waiting until the final day to pick up gifts. In terms of anticipated spending, Valentine’s Day shoppers are not expected to be as thrifty this year as they were last year. In 2007, 53% of small businesses said their customers would spend less than $25, whereas in 2008 only 39% expect their customers will spend this total on a token of their affection.
Small businesses also expect online sales to play a large role in this year’s Valentine’s Day sales. More than half (59%) expect online sales will increase this year.
According to U.S. small businesses, consumers can expect to receive traditional gifts from their loved ones this year. Although still the most anticipated gift, flowers dropped in popularity from 51% last year to 41% this year. “Dinner” ranked next in popularity at 23% - up five percentage points from last year, and jewelry was predicted to be the most purchased item by 18% of respondents, followed by chocolate at 14%.
Buy the ultimate Valentine's gift and purchase Real Estate in Myrtle Beach SC
www.843Realtor.com
Tuesday, February 5, 2008
House economic stimulus package
The American Homeowners Grassroots Alliance urges the U.S. Senate to pass the Senate Finance Committee’s improvements to the House economic stimulus package when it votes on the amendments next week, and to move to a conference with the House of Representatives and quickly work out any differences.
The one year economic stimulus package passed by the House of Representatives increases to $729,750 maximum loan limit eligible for purchase by Fannie Mae, Freddie Mac and FHA programs, provides cash rebates to taxpayers, and provides investment incentives for business. The Grassroots Alliance believes that the Fannie Mae, Freddie Mac and FHA program loan limit increases will help reduce foreclosures by enabling many more homeowners to refinance their mortgages at lower rates. It is not a total solution to foreclosures, but anything that reduces foreclosures will help stabilize home prices, which benefits all homeowners. The infusion of cash through rebates to taxpayers earning less than $75,000 individually or $150,000 per couple will help stimulate the economy by putting the money in the hands of consumers most likely to spend all or most of that money, maximizing the stimulative effect.
The Finance Committee package, which had bipartisan support, would add some new provisions to the House economic stimulus package and modify the rebate provisions. It is slightly more costly ($157 billion first year cost vs. $146 billion for the House bill) and would add new provisions to the House package that would benefit homeowners and the economy in several ways. The new tax incentives in the Senate Finance Committee stimulus package add little to the cost of the package (about $5.5 billion) but will help homeowners and stimulate further recovery in the housing sector. They will put money back into the economy by encouraging the purchase of energy-efficient home-related products and services, and put money back in the hands of American homeowners by lowering their monthly energy bills, which is especially important to those homeowners who have seen their energy costs soar as a result in the increase in home heating oil prices. According to the American Council for an Energy-Efficient Economy the incentives could reduce carbon emissions by 97 MMT of carbon and energy costs by $22 billion thru the year 2030. They include:
A homeowners tax credit (up to $500) for consumers for installing energy efficient furnaces, windows, exterior doors, metal roofs and insulation to make their homes more efficient; the credit is also available for the installation of energy efficient furnaces, boilers, central air conditioners, heat pumps or water heaters.
A new residential homes tax deduction for builders that erect new homes that exceed the national model energy code by 50% (subject to certification) and to producers of manufactured homes that exceed a national model building code by 30% or that meet Energy Star standards. This will also help the beleaguered home construction industry and make new homes more affordable for move up buyers, helping the entire real estate sector.
A set of appliance manufacturer tax credits to encourage production of very high-efficiency appliances such as clothes washers, dishwashers, and refrigerators (so-called “white goods”). This will also help reduce remodeling costs and global warming, and help the remodeling sector.
Like the House economic stimulus package the Senate Finance Committee package provides cash rebates. They are slightly less generous but are more fair, applying to more homeowners as well as to disabled veterans. The Senate version would extend rebate eligibility to 20 million seniors and 250,000 disabled veterans who will also receive rebate checks of $500 per individual, $1,000 per couples and $300 per child. In the house bill the rebates are $600 for individuals and $1,200 for couples. The cutoffs for rebate eliility were doubled, from the House’s $75,000 individual/$150,000/couple to $150,000/300,000. “This will put money in the hands of many senior homeowners on fixed incomes who have had a difficult time keeping up with real estate tax increases, and is an opportunity for our country to show thanks and respect for the 250,000 disabled veterans who have sacrificed so much for their country,” according to AHGA’s President.
The Senate plan also extends unemployment insurance benefits for 13 weeks in all states and ads another 13 weeks for states at risk of high employment. AHGA supports this provision as well, because it will help so many homeowners in many states or industries with depressed economies and will also put additional money back into the economy quickly. For homeowners in many industrial states it may not be enough to save their homes from foreclosure, but at least it will enable them to feed their families and buy a little more time for them to find a job. There is also high unemployment in many business sectors that serve homeowners. The extension would help unemployed real estate agents, construction workers, mortgage executives and many others who serve American homeowners.
The Senate will vote on the Senate Finance package and possibly a separate series of other measures during the week of February 4. Among them are proposals giving more help for low-income people to pay for winter heating, fund municipal bonds to help homeowners facing foreclosure, and temporarily expanding benefits for the poor who rely on food stamps. AHGA believes these amendments would also help many American homeowners who need our help and would also offer additional economic stimulus.
Some Republicans are expected to filibuster the Senate Finance package and any other amendments to the House economic stimulus package because of the additional cost or because it will slow the process.
Many homeowners are Republicans (about 1/3, according to a 2000 Presidential exit poll, and many of the remainder are fiscal conservatives as well (1/3 of homeowners were Democrats and 1/3 Independents in the same poll). AHGA respects the need for fiscal prudence, but believes that the slight increased cost (7.5%/$11 billion) is well worth it and should not present a major hurdle in light of President Bush’s and the overwhelming House Republican support for the $146 billion the House package. The difference can be whittled down in conference, and in any event the additional cost could be more than offset if both parties simply agreed to eliminate all earmarks in future spending bills.
Even with the potential expansion of the House economic stimulus package by the Senate the week of February 4, Congress can still easily achieve the February 15 deadline it has set to send the package to the President. To do that the Senate and House would have to name conferees immediately after the Senate votes and agree to send the compromise version of the package back to their respective bodies for final approval quickly.
The differences in cost between the two measures are so minor and the benefits of the provisions the Senate wants to add are so self evident, that legislators should be able to work out those differences quickly. AHGA urges all American homeowners to contact both of their U.S. Senators by email and/or telephone and urge them to support all of these measures. The phone numbers and email addresses of all U.S. Senators are available in the Congressional lookup on the AHGA website (www.AmericanHomeowners.org).
The American Homeowners Grassroots Alliance is a nonprofit consumer advocacy organization dedicated to assisting homeowners better understand the significant economic issues affecting their home and their lifestyle, and empowering them to make their voices heard by state and federal officials. More about AHGA is at www.AmericanHomeowners.org.
www.843Realtor.com
The one year economic stimulus package passed by the House of Representatives increases to $729,750 maximum loan limit eligible for purchase by Fannie Mae, Freddie Mac and FHA programs, provides cash rebates to taxpayers, and provides investment incentives for business. The Grassroots Alliance believes that the Fannie Mae, Freddie Mac and FHA program loan limit increases will help reduce foreclosures by enabling many more homeowners to refinance their mortgages at lower rates. It is not a total solution to foreclosures, but anything that reduces foreclosures will help stabilize home prices, which benefits all homeowners. The infusion of cash through rebates to taxpayers earning less than $75,000 individually or $150,000 per couple will help stimulate the economy by putting the money in the hands of consumers most likely to spend all or most of that money, maximizing the stimulative effect.
The Finance Committee package, which had bipartisan support, would add some new provisions to the House economic stimulus package and modify the rebate provisions. It is slightly more costly ($157 billion first year cost vs. $146 billion for the House bill) and would add new provisions to the House package that would benefit homeowners and the economy in several ways. The new tax incentives in the Senate Finance Committee stimulus package add little to the cost of the package (about $5.5 billion) but will help homeowners and stimulate further recovery in the housing sector. They will put money back into the economy by encouraging the purchase of energy-efficient home-related products and services, and put money back in the hands of American homeowners by lowering their monthly energy bills, which is especially important to those homeowners who have seen their energy costs soar as a result in the increase in home heating oil prices. According to the American Council for an Energy-Efficient Economy the incentives could reduce carbon emissions by 97 MMT of carbon and energy costs by $22 billion thru the year 2030. They include:
A homeowners tax credit (up to $500) for consumers for installing energy efficient furnaces, windows, exterior doors, metal roofs and insulation to make their homes more efficient; the credit is also available for the installation of energy efficient furnaces, boilers, central air conditioners, heat pumps or water heaters.
A new residential homes tax deduction for builders that erect new homes that exceed the national model energy code by 50% (subject to certification) and to producers of manufactured homes that exceed a national model building code by 30% or that meet Energy Star standards. This will also help the beleaguered home construction industry and make new homes more affordable for move up buyers, helping the entire real estate sector.
A set of appliance manufacturer tax credits to encourage production of very high-efficiency appliances such as clothes washers, dishwashers, and refrigerators (so-called “white goods”). This will also help reduce remodeling costs and global warming, and help the remodeling sector.
Like the House economic stimulus package the Senate Finance Committee package provides cash rebates. They are slightly less generous but are more fair, applying to more homeowners as well as to disabled veterans. The Senate version would extend rebate eligibility to 20 million seniors and 250,000 disabled veterans who will also receive rebate checks of $500 per individual, $1,000 per couples and $300 per child. In the house bill the rebates are $600 for individuals and $1,200 for couples. The cutoffs for rebate eliility were doubled, from the House’s $75,000 individual/$150,000/couple to $150,000/300,000. “This will put money in the hands of many senior homeowners on fixed incomes who have had a difficult time keeping up with real estate tax increases, and is an opportunity for our country to show thanks and respect for the 250,000 disabled veterans who have sacrificed so much for their country,” according to AHGA’s President.
The Senate plan also extends unemployment insurance benefits for 13 weeks in all states and ads another 13 weeks for states at risk of high employment. AHGA supports this provision as well, because it will help so many homeowners in many states or industries with depressed economies and will also put additional money back into the economy quickly. For homeowners in many industrial states it may not be enough to save their homes from foreclosure, but at least it will enable them to feed their families and buy a little more time for them to find a job. There is also high unemployment in many business sectors that serve homeowners. The extension would help unemployed real estate agents, construction workers, mortgage executives and many others who serve American homeowners.
The Senate will vote on the Senate Finance package and possibly a separate series of other measures during the week of February 4. Among them are proposals giving more help for low-income people to pay for winter heating, fund municipal bonds to help homeowners facing foreclosure, and temporarily expanding benefits for the poor who rely on food stamps. AHGA believes these amendments would also help many American homeowners who need our help and would also offer additional economic stimulus.
Some Republicans are expected to filibuster the Senate Finance package and any other amendments to the House economic stimulus package because of the additional cost or because it will slow the process.
Many homeowners are Republicans (about 1/3, according to a 2000 Presidential exit poll, and many of the remainder are fiscal conservatives as well (1/3 of homeowners were Democrats and 1/3 Independents in the same poll). AHGA respects the need for fiscal prudence, but believes that the slight increased cost (7.5%/$11 billion) is well worth it and should not present a major hurdle in light of President Bush’s and the overwhelming House Republican support for the $146 billion the House package. The difference can be whittled down in conference, and in any event the additional cost could be more than offset if both parties simply agreed to eliminate all earmarks in future spending bills.
Even with the potential expansion of the House economic stimulus package by the Senate the week of February 4, Congress can still easily achieve the February 15 deadline it has set to send the package to the President. To do that the Senate and House would have to name conferees immediately after the Senate votes and agree to send the compromise version of the package back to their respective bodies for final approval quickly.
The differences in cost between the two measures are so minor and the benefits of the provisions the Senate wants to add are so self evident, that legislators should be able to work out those differences quickly. AHGA urges all American homeowners to contact both of their U.S. Senators by email and/or telephone and urge them to support all of these measures. The phone numbers and email addresses of all U.S. Senators are available in the Congressional lookup on the AHGA website (www.AmericanHomeowners.org).
The American Homeowners Grassroots Alliance is a nonprofit consumer advocacy organization dedicated to assisting homeowners better understand the significant economic issues affecting their home and their lifestyle, and empowering them to make their voices heard by state and federal officials. More about AHGA is at www.AmericanHomeowners.org.
www.843Realtor.com
Monday, February 4, 2008
House passed three immigration bills
The House spent most of the week in their Chamber dealing with legislation related to immigration. The House passed three immigration bills this week: H.4400 (Harrell) the House's comprehensive immigration reform bill; S.392 (Ritchie) the Senate's immigration reform bill, which was amended to the House -passed version of H.4400; and H.4347, a joint resolution relating to reimbursement costs for the incarceration of illegal immigrants. It is expected that immigration bills passed in the House will be received in the Senate next week.
www.843Realtor.com
www.843Realtor.com
Sunday, February 3, 2008
foreclosure has fueled scam artists
The rise in homeowners facing foreclosure has fueled an increase in the number of scam artists trying to make a buck off of their misfortune, according to the National Foundation for Credit Counseling.
These scam artists usually promise to help people stay in their homes. But those offering the bogus foreclosure rescues are the ones who end up ahead, by generating a quick profit for themselves or stripping away the value of the home, the foundation said in a news release.
"Scam artists can evict a family from their own home and then sell it on the open market before the homeowner has any idea of what is going on," said Gail Cunningham, spokeswoman for the foundation. The NFCC's Homeowner Crisis Resource Center Web site has a page dedicated to educating people on how to recognize and stay away from such scams. Visit the site.
But Freddie Mac took a different approach to getting the message across. It posted a two-minute YouTube video that demonstrates how these con artists can dupe unsuspecting, distressed homeowners. View the Freddie Mac video.
These scam artists usually promise to help people stay in their homes. But those offering the bogus foreclosure rescues are the ones who end up ahead, by generating a quick profit for themselves or stripping away the value of the home, the foundation said in a news release.
"Scam artists can evict a family from their own home and then sell it on the open market before the homeowner has any idea of what is going on," said Gail Cunningham, spokeswoman for the foundation. The NFCC's Homeowner Crisis Resource Center Web site has a page dedicated to educating people on how to recognize and stay away from such scams. Visit the site.
But Freddie Mac took a different approach to getting the message across. It posted a two-minute YouTube video that demonstrates how these con artists can dupe unsuspecting, distressed homeowners. View the Freddie Mac video.
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