Prudential Gary Greene, Realtors
Galveston Island and Tiki Island, Texas

Renters - determine how much mortgage you can afford.

Posted on May 12, 2008
 

How Big a Mortgage Can I Afford?

 

Not only does owning a home give you a haven for yourself and your family, it makes great financial sense, too.

 

This calculation assumes a 28 percent income tax bracket. If your bracket is higher, your savings will be, too.

 

Rent: _________________________

 

Multiplier: X       1.32

 

Mortgage payment: __________________

 

Because of tax deductions, you can make a mortgage payment—including taxes and insurance—that is approximately one-third larger than your current rent payment and end up with the same amount of income.

 

For more help, use Fannie Mae’s online mortgage calculators at

http://www.fanniemae.com/homebuyers/calculators/index.jhtml?p=Resources&s=Calculators

 

 

 

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10 Things to Take the Trauma out of Homebuying

Posted on February 24, 2008
                                         10 Things to Take the Trauma Out of Homebuying

 

  1. Find a real estate professional whos simpatico. Homebuying is not only a big financial commitment, but also an emotional one. Its critical that the practitioner you choose is both skilled and a good fit with your personality.

 

  1. Remember, theres no right time to buy, any more than theres a right time to sell. If you find a home now, dont try to second-guess the interest rates or the housing market by waiting. Changes dont usually occur fast enough to make that much difference in price, and a good home wont stay on the market long.

 

  1. Dont ask for too many opinions. Its natural to want reassurance for such a big decision, but too many ideas will make it much harder to make a decision.

 

  1. Accept that no house is ever perfect. Focus in on the things that are most important to you and let the minor ones go.

 

  1. Dont try to be a killer negotiator. Negotiation is definitely a part of the real estate process, but trying to win by getting an extra-low price may lose you the home you love.

 

  1. Remember your home doesnt exist in a vacuum. Dont get so caught up in the physical aspects of the house itselfroom size, kitchenthat you forget such issues as amenities, noise level, etc., that have a big impact on what its like to live in your new home.

 

  1. Dont wait until youve found a home and made an offer to get approved for a mortgage, investigate insurance availability, and consider a schedule for moving. Presenting an offer contingent on a lot of unresolved issues will make your bid much less attractive to sellers.

 

  1. Factor in maintenance and repair costs in your post-homebuying budget. Even if you buy a new home, there will be some costs. Dont leave yourself short and let your home deteriorate.

 

  1. Accept that a little buyers remorse is inevitable and will probably pass. Buying a home, especially for the first time, is a big commitment, but it also yields big benefits.

 

  1. Choose a home first because you love it; then think about appreciation. While U.S. homes have appreciated an average of 5.4 percent annually from 1998 to 2002, a homes most important role is as a comfortable, safe place to live.

    

Reprinted from REALTOR Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS

Copyright 2005. All rights reserved.                        www.REALTOR.org/realtormag           

 

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Profiling a Condo Buyer

Posted on February 23, 2008
Condo Buyers: Who They Are and What They Want When Purchasing a Home
by Harika “Anna” Barlett, NAR Research

Historically, condominiums and co-ops account for around 12 percent of existing-home sales. Results from the 2007 NAR Profile of Home Buyers and Sellers* indicate that between July of 2006 and June of 2007, about one-in-ten home buyers purchased an apartment or condominium in a building with 5 or more units; an additional two percent of home buyers purchased a duplex, apartment or condominium in a building with 2 to 4 units.

Condo buyers have characteristics distinct from buyers of other types of homes, and those characteristics also differ between the two groups of condo buyers identified above. Knowing the traits of these buyers, their home feature preferences, and their home purchase process can help real estate professionals better serve these segments of the market, while enhancing their own business. Following is an analysis of those traits based on data from the 2007 NAR Profile of Home Buyers and Sellers and the 2007 NAR Profile of Buyers’ Home Feature Preferences.**

Who They Are
The median age of the typical home buyer was 39. But the typical buyer of condominiums in buildings with five or more units was younger than the typical home buyer – a median age of 38. The opposite was true for the typical buyer of condos in two-to-four unit buildings who had median age of 41.

There were also differences in median household income between all buyers and condo buyers. Median 2006 household incomes of the two groups of condo buyers were nearly the same ($60,400 - $60,700), but about $14,000 lower than the median household income of all buyers, which was $74,000. Some of this income difference is due to differences in household size and the number of income earners. While married couples constituted 62 percent of all buyers, their share among condo buyers in 5+ unit buildings was less than one-third, and among condo buyers in 2-4 unit buildings was 44 percent. Forty-one percent of 5+ unit building condo buyers and 29 percent of buyers of condos in 2-4 unit buildings were single females, compared to 20 percent of all buyers.

Condo buyers also tend to have fewer children under 18 living at home. While households with no children accounted for 60 percent of all buyers, their share was more than 80 percent among all condo buyers.

Condo buyers in 5+ unit buildings were more racially diverse than their counterparts who purchased condos in 2-4 unit buildings. Among the first group, 77 percent identified themselves as white, compared to 84 percent among the second group. Sixteen percent of the first group of buyers were born outside United States, and seven percent reported a language other than English as their primary language, compared to 9 percent and 4 percent of the second group, respectively.

Compared to all buyers, the shares of first-time buyers were also higher among both groups of condo purchasers. More than half of condo buyers in 5+ unit buildings (53 percent), and nearly half of condo buyers in 2-4 unit buildings (48 percent) were first-time buyers. For all buyers, the share of first-time purchasers was 41 percent.

Geographically, the share of condo buyers in a 2-4 unit building was proportionally much higher in the Northeast, and smaller in the South and the West. The share of those who purchased a condo in a 5+ unit building was proportionally lower in the South and higher in the West.

Why They Purchased a Home and How Long They Expect to Own it
Condo buyers were more likely than all buyers to report that the primary reason for their home purchase was a desire to own a home of their own or establish a household (41 percent among buyers in 5+ unit buildings and 38 percent among buyers in 2-4 unit buildings, compared to 33 percent for all buyers). Those who purchased a condo in a 2-4 unit building also had a higher tendency than other home buyers, including other condo buyers, to have traded down to a smaller size home (10 percent among buyers in 2-4 unit buildings; 6 percent among buyers in 5+ unit buildings; 4 percent of all home buyers). Those who purchased a condo in a building with 5+ units were more likely than others to cite financial security reasons for their home purchase.

Additionally, one-in-ten condo buyers mentioned it was very likely that they would buy another home within two years (comparable number among all buyers was 7 percent).

Condo buyers in 5+ unit buildings reported they expect to stay in the home they purchased for a median of five years, and those in 2-4 unit buildings for a median of 10 years – similar to results for all buyers. Among recent home buyers who had owned and recently sold a condo, their actual tenure in the condo they sold was five years for those who sold a condo in a 5+ unit building, and seven years for those who sold one in a 2-4 unit building.

What They Purchased and Where
Overall, slightly over one-in-five home buyers purchased a newly built home, and the rest purchased a previously owned home. The results were similar for all condo purchasers.

Nearly half of condos purchased in buildings with 5+ units (47 percent) were located in urban or city areas, compared with about one quarter of condos in 2-4 unit buildings (26 percent). These percent ages are significantly larger than the 16 percent of all recently purchased homes located in these areas. Fifty-six percent of all recently purchased homes were located in suburban areas. The comparable shares were about one third among recently purchased condos in 5+ unit buildings, and 42 percent among those in 2-4 unit buildings. Only about ten percent of condos in 5+ unit buildings were located in small towns, compared to one-quarter of condos in 2-4 unit buildings, and 16 percent of all homes.

The median size of recently purchased condos in 5+ unit buildings was 1,110 square feet with a median price of $210,000. That was much smaller but more expensive than the 1,550 square foot median size of condos in 2-4 unit buildings, which cost a median of $173,000. Condo buyers in 5+ unit buildings cited size of the home as the biggest compromise they made among the characteristicsof the home they purchased.

Factors That Influenced Neighborhood Choice
The quality of neighborhood, the most frequently cited reason impacting buyers’ choice of a neighborhood, was somewhat more important for condo buyers in 2-4 unit buildings than other condo buyers. For those buyers in buildings with 5+ units, convenience to job was equally important as the quality of the neighborhood. Overall affordability of homes, convenience to friends or family, quality of the school district, and home in a planned community were more important factors among buyers in 2-4 unit buildings. Convenience to entertainment or leisure activities, parks or recreational facilities, and public transportation were more influential among buyers in buildings with 5+ units.

How the Importance of Desirable Home Features Differed Among Condo Buyers
While energy efficiency of a home, central air conditioning, a garage, and a walk-in closet in master bedroom were among the most desirable features for most home buyers during their search for a home, there were significant differences in the importance of many home features for the two groups of condo buyers. Condo buyers in buildings with 5+ units placed more importance on neighborhood features, including proximity to work, shopping, restaurants and entertainment areas, and public transportation, having high speed Internet access, hardwood floors, high-end kitchen appliances, and reserved parking. Condo buyers in 2-4 unit buildings gave higher rankings to finding a home with a garage, or a garage with two or more spaces, an eat-in kitchen, and an air filtration system.

Looking for a Home
5+ units used real estate agents (83 percent), the Internet (81 percent), open houses (53 percent), television (8 percent), and billboards (11 percent) to a greater extent than did other condo buyers. While over three-quarters (77 percent) of those who purchased a condo in a 2-4 unit building used real estate agents, they also used home books or magazines (32 percent) to a larger extent than the first group.

For both groups of condo buyers, when it came to finding the home they finally purchased, the most frequently reported information source was real estate agents. Indeed, over one-third of condo buyers in each group indicated they first found the home they purchased through a real estate agent. But there were also significant differences between the two groups. Those who bought a condo in a building with 5+ units were more likely to first hear about their condo via the Internet (29 percent versus 22 percent), and those who purchased a condo in 2-4 unit buildings were more likely to have found it through a friend, relative, or neighbor (11 percent versus 7 percent).

Real Estate Professionals and Condo Buyers
Home buyers who work with an agent most frequently rely on friends, relatives, or neighbors for referrals to help them find their real estate agent. For more than half of condo buyers in 2-4 unit buildings this was the most dominant way of finding an agent. Although much less frequently, buyers in this group also reported more often than other buyers to have found their agents through personal contact by agent by telephone, mail, email, etc.

While 42 percent of condo buyers in buildings with 5+ units also relied on referrals by friends or relatives, buyers in this group were more likely than other condo buyers to find their agents through the Internet, through referral by another real estate agent or broker, or by walking into or calling a real estate office.

Among the benefits provided by their real estate agents, condo buyers were more likely than other home buyers to report that their agents helped them understand the home buying process, negotiated better sales contract terms for them, provided a better list of service providers, and a better list of mortgage lenders. This is probably because a greater share of condo purchasers were first-time buyers and consequently unfamiliar with the home purchase transaction process.

Conclusion
Knowing the demographic characteristics and specific needs of different segments of home buyers help real estate professionals develop better ways to communicate and target their services according to the needs and requirements of their clients. Additionally, since referrals are the best source of future business, improved service also improves real estate agents’ business.

While housing market activity is slower than in recent years, there are still over six million households a year purchasing homes. Housing continues to be a good long-term investment and the best way of wealth accumulation for most households. The condo market is especially important for first-time buyers and those trading down to a smaller size home, and will continue to constitute an important segment of the market. Many first-time buyers with a desire to own a home of their own start by purchasing a condo. As reported by recent condo buyers, real estate agents can particularly add value to the home purchase transaction by helping these buyers understand the home buying process, negotiating better price and contract terms, and providing guidance for additional services required during the complex process of home purchase.

*In August 2007, NAR mailed an eight-page questionnaire to a national sample of 150,000 home buyers and sellers who purchased their homes between July 2006 and June 2007, according to county records. It generated 9,966 usable responses; the adjusted response rate was 6.9 percent. All information is characteristic of the 12-month period ending in June 2007 with the exception of income data, which are for 2006. Due to rounding and omissions for space, percentage distributions for some findings may not add up to 100 percent.

**The complete 2007 NAR Profile of Home Buyers and Sellers is available for purchase online. Buy it now>. Or it can be ordered by calling 1-800-874-6500. The cost is $50 for NAR members and $125 for non-members.


  
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The Pros and Cons of Condos

Posted on February 12, 2008
 

The Pros and Cons of Condos

 Condominiums and townhouses offer an affordable option to single-family homes in most areas. But consider these facts before you buy.

 

  1. Storage. Some condos have storage lockers, but usually there are no attics or basements to store belongings.

 

  1. Outdoor space. Yards and outdoor areas are usually smaller in condos, so if you like to garden or entertain outdoors, this may not be a good fit. However, if you hate yard work, this may be the perfect option for you.

 

  1. Amenities. Many condo properties have swimming pools, fitness centers, and other facilities that would be very expensive in a single-family home.

 

  1. Maintenance. Many condos have onsite maintenance personnel to care for common areas, do repairs in your unit, and let in workers when you’re not home.

 

  1. Security. Many condos have keyed entries and or even door attendants. Plus, you’ll be closer to other people in case of an emergency.

 

  1. Reserve funds and association fees. Although fees generally help pay for amenities and provide savings for future repairs, you will have to pay the fees agreed to by the condo board, whether or not you’re interested in the amenity or not.

 

  1. Resale. The ease of selling your unit is more dependent on what else is for sale in your building, since units are usually fairly similar. Single-family homes usually are more individual.

 

  1. Freedom. Although you have a vote, the rules of the condo association can affect your ability to use your property. For example, some condos prohibit home-based businesses. Others prohibit pets. Read the covenants, restrictions, and bylaws of the condo carefully before you make an offer.

 

  1. Proximity. You’re much closer to your neighbors in a condo or townhome. If possible, try to meet your closest prospective neighbors before making a decision.

 

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8 Steps to Getting your Finances in Order Before Buying a Home

Posted on February 6, 2008

 

8 Steps to Getting Your Finances in Order 

 

  1. Develop a family budget. Instead of budgeting what you’d like to spend, use receipts to create a budget for what you actually spent over the last six months. One advantage of this approach is that it factors in unexpected expenses, such as car repairs, illnesses, etc., as well as predictable costs such as rent.

 

  1. Reduce your debt. Generally speaking, lenders look for a total debt load of no more than 36 percent of income. Since this figure includes your mortgage, which typically ranges between 25 percent and 28 percent of income, you need to get the rest of installment debt—car loans, student loans, revolving balances on credit cards—down to between 8 percent and 10 percent of your total income.

 

  1. Get a handle on expenses. You probably know how much you spend on rent and utilities, but little expenses add up. Try writing down everything you spend for one month. You’ll probably see some great ways to save.

 

  1. Increase your income. It may be necessary to take on a second, part-time job to get your income at a high-enough level to qualify for the home you want.

 

  1. Save for a downpayment. Although it’s possible to get a mortgage with only 5 percent down—or even less in some cases—you can usually get a better rate and a lower overall cost if you put down more. Shoot for saving a 20 percent downpayment.

 

  1. Create a house fund. Don’t just plan on saving whatever’s left toward a downpayment. Instead decide on a certain amount a month you want to save, then put it away as you pay your monthly bills.

 

  1. Keep your job. While you don’t need to be in the same job forever to qualify, having a job for less than two years may mean you have to pay a higher interest rate.

 

  1. Establish a good credit history. Get a credit card and make payments by the due date. Do the same for all your other bills. Pay off the entire balance promptly.


 

 

 

Budget Basics Work Sheet

 

The first step in getting yourself in financial shape to buy a home is to know what you make and what you spend now. List your income and expenses below.

 

Income

 

Take-Home Pay/All Family Members

 

Child Support/Alimony

 

Pension/Social Security

 

Disability/Other Insurance

 

Interest/Dividends

 

Other

 

Total Income

 

 

Expenses

 

Rent/Mortgage

 

Life Insurance

 

Health/Disability Insurance

 

Vehicle Insurance

 

Homeowners or Other Insurance

 

Car Payments

 

Other Loan Payments

 

Savings/Pension Contribution

 

Utilities

 

Credit Card Payments

 

Car Upkeep

 

Clothing

 

Personal Care Products

 

Groceries

 

Food Prepared Outside the Home

 

Medical/Dental/Prescriptions

 

Household Goods

 

Recreation/Entertainment

 

Child Care

 

Education

 

Charitable Donations

 

Miscellaneous

 

Total Expenses=

 

Remaining Income After Expenses=

 

   Reprinted from REALTOR® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS®Copyright 2005. All rights reserved.                                  www.REALTOR.org/realtormag           

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Increase your rental revenue on your investment property

Posted on January 26, 2008
As more and more buyers are finding the value of Galveston Real Estate, the number of Galveston Vacation Rentals continues to grow.  The challenge now becomes how to increase your rental revenue while your investment appreciates over the next 5 to 10 years.
 
The property management company you choose is your partner in maximizing the revenues and bottom line for your home; but the property management company is not your sole resource of rental bookings.  While Prudential Gary Greene, Realtors advertises on Freerentals.com, vacationhomes.com, rentals365.com, myvacationrentals.com, rent.com, my1stchoice.com, redweek.com and Craig's List, we suggest you also place your home at websites such as VRBO.com and VacationRentals.com.  Many of our homeowners place their homes at these sites for a minimal sign up fee and name Prudential Gary Greene, Realtors as the contact agent.  The revenue generated from this type of shared advertising has increased tremendously for these homeowners.
 
We also suggest the homeowner assist with the on line listing of their home.  Many times the homeowner purchased the home to meet an emotional need as well as the investment need.  We like to take that emotion and transfer it to your listing on our websites through pictures and text.  Share with us the reason you feel your home stands out from any other home and we will transfer that information to your listing.  Tell us the nuances of your piece of paradise.
 
Another important factor in increasing the revenue on your home is maintenance of the home.  While we do our best to catch much needed repairs we do not have the eyes of you the homeowner.  When you are visiting your home please take the time to view it as a renter would.  Do the pillows need to be replaced?  Are your mattresses firm?  Does the shower head provide a good flow of water?  Are the handrails and deck boards secure?  There are  little things our home inspectors may not pick up on during their weekly visits but you as the home owner may notice while staying in your home.
 
Renters do not particularly care if the television offers HBO but they do strive for comfort, safety, and views.  Those breathtaking views are what bring guests to our Island month after month.  Maximize your views.  Remove heavy drapes and cheap blinds.  Move the TV up and out of the way of windows.  Does your living area need to be staged to maximize the view of the surf?  Sometimes we get complacent and take our lifestyle here for granted.  Visitors pay us to allow them to use what we own and enjoy anytime we want.  Let's give them their moneys worth and they will return time and time again.  Remember, the greatest factor in increasing your rental income is repeat business.  If a visitor falls in love with your home you can count on them returning the following year if not the following month.

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Prudential Gary Greene, Realtors : Galveston Island, Tiki Island, Pirates Beach, Jamaica Beach, Texas
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