7 Pricing Myths to Stop Believing If You Ever Hope to Sell Your House

7 Pricing Myths to Stop Believing If You Ever Hope to Sell Your House

By Cathie Ericson

Pricing your own home is hard, what with all the history and hopes this magic number entails. Of course, you want to make a profit. Of course, all that money you spent installing a swimming pool or a half-bath will be recouped, because you’re leaving your digs in better shape than when you bought it, right? Right?

Well, not necessarily. Too many home sellers fall prey to myths about home pricing that seem to make sense at first, but don’t jibe with the reality of real estate markets today. To make sure you haven’t bought into any of this malarkey—since the buyers you’re trying to woo sure haven’t—here are some common pricing myths you’ll want to rinse from your brain so you kick off your home-selling venture with realistic expectations. It’s time to get real, folks!

1. You always make money when you sell a home

Sure, real estate tends to appreciate over time: The National Association of Realtors® estimates that home prices will jump 5% by the end of 2017 and continue rising 3.5% in 2018. But selling your home for more than you paid is by no means a given, and your return on investment can vary greatly based on where you live.

The NAR also found, for instance, that the cost of single-family homes increased in about 87% of the metros it studied, but prices actually dropped in 23 markets. So don’t assume you’ll walk away with a profit until you’ve examined what’s up in your area first.

2. Price your house high to make big bucks

We know what you’re thinking: “Hey, it’s worth a shot!” But if you start with some sky-high asking price, you’ll soon come back to Earth when you realize that an overpriced home just won’t sell.

“While the payday might sound appealing, you’re actually sacrificing your best marketing time in exchange for the remote possibility that someone will overpay for your home,” says Kathleen Marks, a Realtor® with United Real Estate in Asheville, NC.

While certain buyers might be suckered in, this becomes far less likely if they’re working with a buyer’s agent who will know all too well when a home is overpriced, and advise their client to steer clear. And this can lead to problems down the road (as our next myth indicates).

3. If your home’s overpriced, it’s no big deal to lower it later

Sorry, but overpricing your home isn’t easily fixed just by lowering it later on. The reason: Homes that have lingered on the market for months—or that have undergone one or more price reductions—make buyers presume that something must be wrong with it. As such, they might still steer clear, or offer even less than the price you’re now asking.

Bottom line: “Price your home appropriately from the beginning for your best shot at having a quick and easy sale,” Marks recommends.

4. Pricing your home low means you won’t make as much money

Similarly, sellers are often leery of pricing their home on the low end. But as counterintuitive as this seems, this strategy can often pay off big-time. Here’s why: Low-priced homes drum up tons of interest, which could result in a bidding war that could drive your home’s price past your wildest dreams.

5. You can add the cost of any renovations you’ve made

Let’s say you overhauled your kitchen or added a deck. It stands to reason that whatever money you paid for these improvements will be recouped in full once you sell—after all, your home’s new owners are inheriting all your hard work.

The reality: While your renovations might see some return on investment, you’ll rarely recoup the whole amount. On average, you can expect to get back 64% of every dollar you spend on home improvements. Plus that profit can vary greatly based on which renovation you do.

Check out this list of common renovations and their return on investment to know what you can actually expect.

6. A past appraisal will help you pinpoint the right price

If you have an appraisal in hand, from when you bought or refinanced your house, you might think that’s a logical place to start to price your home. It’s not!

An appraisal assigns your home a value based on market conditions at a specific date, so it becomes old news very quickly. In fact, lenders typically won’t accept appraisals that are more than 60 days old.

“Since lenders know markets can change in six months’ time, it’s important for sellers to understand that a previous appraisal is never a reliable source for the current value of a home,” Marks says.

7. Your agent might overprice the house to make a bigger commission

Don’t even go there, says Realtor Raena Janes of RJHomes in Tucson, AZ.

“While it’s true that an agent’s commission is based on the selling price of a house, the disparity will end up being negligible,” she says. For example, the difference in commission between a $300,000 house and one that’s $310,000 is about $150.

“No real estate agent is going to lose a sale for the sake of a couple hundred dollars,” she explains.

 

Selling a home takes knowledge and resources.  Contact the Caton Team for a free consultation.

The Caton Team is comprised of Susan and Sabrina Caton – a mother/daughter in law team.  We are full time, local Realtors with over 25 years of combined Real Estate experience.  How can The Caton Team help you?

I read this article at: https://www.realtor.com/advice/sell/home-pricing-myths/?identityID=9851214&MID=2017_0908_WeeklyNL&RID=353497822&cid=eml-2017-0908-WeeklyNL-blog_1_homepricingmyths-blogs_sell

Remember to follow our Blog for the local real estate beat, a pulse on the San Francisco Peninsula at: https://therealestatebeat.wordpress.com

Got Questions? – The Caton Team is here to help.  

Email Sabrina & Susan at:  Info@TheCatonTeam.com

Call us at: 650-568-5522  Office: 650-365-9200

Want Real Estate Info on the Go?  Download our FREE Real Estate App:  http://thecatonteam.com/mobileapp

HomeSnap: http://www.homesnap.com/Sabrina-Caton

Visit our Website at:   http://thecatonteam.com/

Visit our INSTAGRAM page:  http://instagram.com/thecatonteam

PINTREST: https://www.pinterest.com/thecatonteam/

Visit us on FACEBOOK:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

YELP us at: http://www.yelp.com/biz/the-caton-team-realtors-sabrina-caton-and-susan-caton-redwood-city

Or YELP me:  http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Twitter: https://twitter.com/TheCatonTeam

Connect with us professionally at LinkedIn:  https://www.linkedin.com/in/sabrinawendtcaton

https://www.linkedin.com/in/susancatonrealtor

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Effective. Efficient. Responsive.  What Can The Caton Team Do For You?

Berkshire Hathaway HomeServices – Drysdale Properties

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE# 70000218/ Office BRE #01499008

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8 Home Projects with a High ROI

8 Home Projects with a High ROI

Article Submitted by Fixr.com

With warmer weather and longer days, summer is the ideal time of year to take on a project in or around your home. Many contractors and other pros often find this time of year a little slower, as many homeowners are waiting until fall to tackle big interior projects, which means that you’ll have an easier time finding the right person for the job.

These eight projects are designed to add value to your home, without breaking the bank at the same time. Tackling them now will make your home more comfortable for the coming months, while ensuring that you can get maximum ROI when the time comes to sell.

1. Fix Window Leaks

Air gap around your windows could be driving your air conditioning bill up higher than it needs to be this summer. Old or leaking windows can cause you to lose as much as 20% of the energy you use to heat and cool your home, which can also make it less comfortable as well.

There are two ways to fix window leaks: installing new replacement windows, or installing weatherstripping around your existing windows. While both will help you save money on your energy bills, replacement windows will also help you recoup about 73.9% ROI at time of resale.

Cost: Weatherstripping your windows costs around $168 on average, while replacement windows cost between $650 and $1,500.

Money Saving Tips: Get an energy audit done on your home before you start replacing windows. You may find that only a few need to be replaced, while the rest can be caulked or weatherstripped to save.

2. Basement Remodel

Remodeling your basement is a great way to increase your existing living space, without the hassle or expense of a major addition. Basements are often cooler in the hot summer months than the rest of the home, so remodeling can help you gain more usable living areas during this time of year. A basement remodel featuring things like waterproofing or french drain installations can also recoup you about 70% at time of resale.

Cost: A full basement remodel including a new bathroom can cost around $50,000. However, waterproofing costs around $5,000, while installing a new set of stairs costs around $1,000 to $2,000.

Money Saving Tips: Simply waterproofing your basement will help make the area livable, allowing you to simply paint the concrete walls and floors, and begin furnishing the room for less.

3. Bathroom Remodel

Bathrooms are among the most frequently used rooms in the home. During the humid summer months, older bathrooms can often become home to things like mold and mildew, which makes now the best time to start remodeling. A bathroom remodel, including all new fixtures, shower, and ceramic tile can recoup you around 64.8% at time of resale, while making your home healthier and more functional at the same time.

Cost: A full scale bathroom remodel costs around $18,000. However, there are many components that can be done for less, such as installing a new bathroom fan to help dry out the room for $350 – $400 or putting in a new mirror for $120 – $150.

Money Saving Tips: Cosmetic updates to an otherwise functional bathroom can save you a lot of money. Simply painting the walls or replacing the sink and faucet can give your bathroom a facelift for less.

4. Add Attic Insulation

Another way to help lower energy costs this summer is to add some insulation to your attic. Most homes are underinsulated, particularly in this area, which can contribute to higher energy costs. Insulating your attic will make your home more comfortable, while saving you money on your AC bill this summer. Best of all, attic insulation recoups a whopping 107% at time of resale.

Cost: The cost to insulate an attic is around $400 for fiberglass insulation.

Money Saving Tips: Purchase the highest R-value you can find for your climate, and you’ll save even more on your energy bills year round.

5. Build a New Deck

Enjoy more time spent outdoors this summer on a new wood deck. Decks increase your usable outdoor space, make entertaining easier, and have a rate of return at around 71.5%. Start this project early in the summer to make the most of your new space before fall.

Cost: The average cost to build a new deck is around $10,630.

Money Saving Tips: If you have an existing deck, consider having it repaired, rather than replacing it. Often pressure washing and staining a deck, while replacing some of the boards can help extend its life.

6. Replace Your Roof 

After a long winter filled with ice dams, your roof may be in poor condition and in need of replacement. Don’t wait until summer storms send water pouring in through your ceiling; have your roof taken care of at the start of the season to ensure that it’s in good condition for the rain to come. A new roof will help you recoup about 68.8% at time of resale as well.

Cost: The average cost of a roof replacement is around $6,000.

Money Saving Tips: If the majority of your roof is in good condition, you may want to opt for a partial replacement or roof repair to save money.

7. Replace Your Siding 

Siding is just as important as your roof when it comes to both protecting your home from the elements, and to giving it its curb appeal. The nicer weather of the summer makes this the ideal time of year to take care of this important project. Replacing your siding can recoup you as much as 76.4% at time of resale. Replacing your siding can also help you take care of other issues such as rotting fascia, and can improve the appearance of your home at the same time.

Cost: The average cost of replacing your siding is around $7,510 for vinyl siding.

Money Saving Tips: If your siding is in decent condition, consider making repairs to those areas that require it, and painting the entire exterior to give it a fresh look for less.

8. Universal Bathroom Design 

Universal design is one of the newest trends that’s recouping costs in a big way. In many cases, universal design costs less than a complete bathroom remodel, but can make your home easier to sell because it appeals to a wider group of people. Take on the project this summer when plumbers aren’t as busy to get the job done faster. This type of project also recoups about 68.4% at time of resale.

Cost: The average cost of universal bathroom design is around $9,000.

Money Saving Tips: Many things in a universal bathroom can be installed DIY for less, including lever handles on faucets and a universal height toilet.

To find out more about projects you can tackle around your home, be sure to visit the Cost Guides.

The Caton Team is comprised of Susan and Sabrina Caton – a mother/daughter in law team.  We are full time, local Realtors with over 25 years of combined Real Estate experience.  How can The Caton Team help you?

I read this article at: http://styledstagedsold.blogs.realtor.org/2017/08/07/8-home-projects-with-high-roi/?tp=i-H43-Bb-cg-bixC-1p-EHi7-1c-biVU-1ODR8u&om_rid=8990942%20&Om_ntype=RMOdaily&om_mid=2398

Remember to follow our Blog for the local real estate beat, a pulse on the San Francisco Peninsula at: https://therealestatebeat.wordpress.com

Got Questions? – The Caton Team is here to help.  

Email Sabrina & Susan at:  Info@TheCatonTeam.com

Call us at: 650-568-5522  Office: 650-365-9200

Want Real Estate Info on the Go?  Download our FREE Real Estate App:  http://thecatonteam.com/mobileapp

HomeSnap: http://www.homesnap.com/Sabrina-Caton

Visit our Website at:   http://thecatonteam.com/

Visit our INSTAGRAM page:  http://instagram.com/thecatonteam

PINTREST: https://www.pinterest.com/thecatonteam/

Visit us on FACEBOOK:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

YELP us at: http://www.yelp.com/biz/the-caton-team-realtors-sabrina-caton-and-susan-caton-redwood-city

Or YELP me:  http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Twitter: https://twitter.com/TheCatonTeam

Connect with us professionally at LinkedIn:  https://www.linkedin.com/in/sabrinawendtcaton

https://www.linkedin.com/in/susancatonrealtor

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Effective. Efficient. Responsive.  What Can The Caton Team Do For You?

Berkshire Hathaway HomeServices – Drysdale Properties

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE# 70000218/ Office BRE #01499008

12 Tips to Tighten Up Your Online Security 

It’s always a good time to evaluate your internet habits.  Here are 12 Tips on how to tighten up your online security…

Install updates immediately. They often patch the latest viruses.

Get anti-virus software for all devices.

Watch devices. Hackers install spyware in under 30 seconds.

Strengthen passwords.Use caps and lower case, numbers, punctuation marks. Write in an address book. If hacked, change passwords. Never re-use passwords.

Get two-factor authentication. Adds an extra step at log-in, usually sends a text with a code. You’ll know if anyone tries to log in from another device.

Avoid free Wi-Fi. Public Wi-Fi draws hackers. Make your smartphone a password-protected mobile hotspot and connect.

Keep data to yourself. Don’t store credit card info and passwords on sites or browsers. Enter it each time.

Don’t click on a link in an email or text, even from someone you know (hackers hijack contacts). Hover your mouse over link, or copy and paste it into a search engine, to see where it goes.

Don’t download unexpected attachments. Call sender first.

Back everything up. Use outboard hard drive, cloud service, or both. Then ransomware criminals can’t hold your data for ransom because you always have an up-to-date copy.

Use a credit monitoring service, such as EZ Shield, Identity Guard or Lifeflock. If hacked, freeze accounts at all three credit bureaus.

Slow down! Hackers love people in a hurry. Carefully check details.

 

Thank you Michael Haigh with Supreme Lending for sharing this.  If you’re interested in purchasing a home, contact Mike at (415) 269-4461 / michael.haigh@supremelending.com or Apply Here!

 

– Thanks for Reading,

Sabrina

 

Remember to follow our Blog for the local real estate beat, a pulse on the San Francisco Peninsula at: https://therealestatebeat.wordpress.com

Got Questions? – The Caton Team is here to help.  

Email Sabrina & Susan at:  Info@TheCatonTeam.com

Call us at: 650-568-5522  Office: 650-365-9200

Want Real Estate Info on the Go?  Download our FREE Real Estate App:  http://thecatonteam.com/mobileapp

HomeSnap: http://www.homesnap.com/Sabrina-Caton

Visit our Website at:   http://thecatonteam.com/

Visit our INSTAGRAM page:  http://instagram.com/thecatonteam

PINTREST: https://www.pinterest.com/thecatonteam/

Visit us on FACEBOOK:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

YELP us at: http://www.yelp.com/biz/the-caton-team-realtors-sabrina-caton-and-susan-caton-redwood-city

Or YELP me:  http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Twitter: https://twitter.com/TheCatonTeam

Connect with us professionally at LinkedIn:  https://www.linkedin.com/in/sabrinawendtcaton

https://www.linkedin.com/in/susancatonrealtor

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

 

The Caton Team – Susan & Sabrina – A Family of Realtors

Effective. Efficient. Responsive.  What Can The Caton Team Do For You?

Berkshire Hathaway HomeServices – Drysdale Properties

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE# 70000218/ Office BRE #01499008

Buying a home? Here’s what the Equifax breach could mean for you.

Buying a home? Here’s what the Equifax breach could mean for you.

We should all be paying attention to the recent Equifax data breach, estimated to potentially impact the personal data of 143 million U.S. consumers. Not great odds considering that’s one third of the entire country. But, if you’re currently applying for a mortgage or buying a home, you need to stay extra alert.

Back up. So, what happened?

On September 7, Equifax revealed that hackers gained access to company data that contained sensitive information including social security and driver’s license numbers. You go to Equifax’s cybersecurity page to see if your data may be included in the breach, but there’s really no definitive way to tell. Just assume your data was impacted and play it safe.

Why is this such a big deal?

While data breaches are nothing new in recent years (think Target and TJMaxx), this one is especially sensitive due to the nature of the data as well as the shear number of consumers impacted. As one of the country’s three credit reporting companies, Equifax holds the keys to A LOT of your personal data — enough to do major damage including stealing your identity or even purchasing a home in your name.

At the same time, in today’s online, cloud-based world, any organization could be at risk.

“I’m not surprised that anyone gets hacked these days. If the Pentagon and White House can be hacked, any of the three credit agencies could, too,” said personal finance expert and syndicated real estate columnist Ilyce Glink, publisher of ThinkGlink.com.

What does this mean for homebuyers?

If you’re in the process of applying for a mortgage or buying a home, this credit breach couldn’t have come at a worse time. Housing columnist Ken Harney recently laid out a few scenarios that could impact your home purchase.

Hackers could create new accounts in your name that put you into debt and drain your FICO credit score. We know your credit score is at the center of your purchase–it determines what type of loan you qualify for and your interest rate. That’s a big deal considering most first-time homebuyers choose a 30-year loan.

Fraud can ultimately impact your ability to qualify for a home loan. Furthermore, getting your credit file corrected can take time and cause you to lose out on your home contact.

What can you do?

Check your credit report. The most important first step is to check your three credit reports free at annualcreditreport.com to determine if anyone has tampered with your accounts. It also provides you with a baseline credit report as you monitor for any changes.

Review your monthly statements. Don’t rely on auto payments for your credit card or other bills. Review your statements and be on the lookout for anything out of the ordinary.

Review your bank statements. Review your bank statements weekly. Set up mobile banking alerts so you know if any unplanned transaction takes place.

Fraud alerts. Consider placing a fraud alert on your files. It warns creditors to take extra steps to verify your identity before issuing credit in your name. To set up, contact one of the three major credit reporting companies and they will send your request to the other two bureaus.

Credit freeze. Although credit freezing isn’t typically recommended before a major purchase, experts including Terry W. Clemans, executive director of the National Consumer Reporting Association, now give this guidance. A credit freeze makes it harder for someone to open a new account in your name. Keep in mind that a credit freeze won’t prevent a thief from making charges to your existing accounts. You’ll have to contact each company to set it up and costs may vary.

File your 2017 taxes ASAP. This is the year to file your taxes early — take action before any scammer can. Tax identity theft happens when someone uses your Social Security number to get a tax refund or a job.

Credit reporting companies

Equifax: 1-800-525-6285 or www.equifax.com

Experian: 1-888-397-3742 or www.experian.com

TransUnion: 1-800-680-7289 or www.transunion.com

I read this article at: https://downpaymentresource.com/buying-home-heres-equifax-breach-mean/

Remember to follow our Blog for the local real estate beat, a pulse on the San Francisco Peninsula at: https://therealestatebeat.wordpress.com

Got Questions? – The Caton Team is here to help.  

Email Sabrina & Susan at:  Info@TheCatonTeam.com

Call us at: 650-568-5522  Office: 650-365-9200

Want Real Estate Info on the Go?  Download our FREE Real Estate App:  http://thecatonteam.com/mobileapp

HomeSnap: http://www.homesnap.com/Sabrina-Caton

Visit our Website at:   http://thecatonteam.com/

Visit our INSTAGRAM page:  http://instagram.com/thecatonteam

PINTREST: https://www.pinterest.com/thecatonteam/

Visit us on FACEBOOK:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

YELP us at: http://www.yelp.com/biz/the-caton-team-realtors-sabrina-caton-and-susan-caton-redwood-city

Or YELP me:  http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Twitter: https://twitter.com/TheCatonTeam

Connect with us professionally at LinkedIn:  https://www.linkedin.com/in/sabrinawendtcaton

https://www.linkedin.com/in/susancatonrealtor

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Effective. Efficient. Responsive.  What Can The Caton Team Do For You?

Berkshire Hathaway HomeServices – Drysdale Properties

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE# 70000218/ Office BRE #01499008

 

Click Here for Help with Down Payment Assistance Programs in California

Hello Fellow Californians!

I personally understand that struggle of coming up with the down payment to buy a home.  20% in any price range can be a daunting figure to save up for.  And if you’re buying in an appreciating market, for instance, the Silicon Valley – then sometimes you can’t save fast enough!

Thankfully the California Association of Realtors created a website where you can search for downpayment assistance programs statewide.  We added it to our website – please check out the link below…

http://thecatonteam.com/downpaymenthelp

We know you’ll have questions – so please feel free to contact us any time.

Call our desk at 650-568-5522 – you can also leave a message or email us at Info@TheCatonTeam.com

Prefer to send a text – happy to share my private cell!

 

The Caton Team Realtors is here to guide the way.  What can we do for you?

 

Remember to follow our Blog for the local real estate beat, a pulse on the San Francisco Peninsula at: https://therealestatebeat.wordpress.com

Got Questions? – The Caton Team is here to help.  

Email Sabrina & Susan at:  Info@TheCatonTeam.com

Call us at: 650-568-5522

Want Real Estate Info on the Go?  Download our FREE Real Estate App:  http://thecatonteam.com/mobileapp

HomeSnap: http://www.homesnap.com/Sabrina-Caton

Visit our Website at:   http://thecatonteam.com/

Visit our INSTAGRAM page:  http://instagram.com/thecatonteam

PINTREST: https://www.pinterest.com/thecatonteam/

Visit us on FACEBOOK:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

YELP us at: http://www.yelp.com/biz/the-caton-team-realtors-sabrina-caton-and-susan-caton-redwood-city

Or YELP me:  http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Twitter: https://twitter.com/TheCatonTeam

Connect with us professionally at LinkedIn:  https://www.linkedin.com/in/sabrinawendtcaton

https://www.linkedin.com/in/susancatonrealtor

 

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Effective. Efficient. Responsive.  What Can The Caton Team Do For You?

Berkshire Hathaway HomeServices – Drysdale Properties

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE# 70000218/ Office BRE #01499008

Co-borrowing on the rise: What makes for a smooth deal?

With so much talk about “Equity Share” and helping buyer get into homes – it’s time to talk about how it works.  Thought I would share this article BY LEW SICHELMAN

Co-borrowing on the rise: What makes for a smooth deal?

The most important consideration isn’t getting into a co-borrowing deal, but how all parties plan to get out of it.

Ever since Ugh married Meg and they could barely afford their first cave, there have been co-signers named Mom and Pop making mortgages possible.

But co-signers can come in many forms. Another relative, friend, employer, roommate, significant other or even an investor can agree to be on a mortgage that someone can’t qualify for on his or her own.

Nowadays, slightly more than one in every five houses purchased with financing in the first quarter — 22 percent — involved co-borrowers, according to Attom Data Solutions. That’s up from 20 percent for the same period last year and in 2015, when the real estate information company first began tracking the phenomenon.

The incidence of co-borrowers is even higher in 11 of the country’s largest cities. In Miami, a whopping four out of every 10 single-family dwellings purchased in January, February and March were bought with an unmarried co-borrower. In Seattle, the share of co-borrower purchases was 37 percent; in San Diego and Los Angeles, 28 percent.

The main reason homebuyers need co-borrowers is because they can’t qualify to purchase the house they want, says Attom Chief Economist Daren Bloomquist, who co-signed for his wife’s sister and her husband so they could afford to buy in pricey Southern California.

Housing prices are so expensive in some locations that without help, many buyers might be relegated to the rental market forever.

And some buyers don’t have the credit scores, credit histories or the debt-to-income ratios to buy, even at a reasonable price. On top of that, many buyers are looking at houses beyond their means.

Blomquist is seeing a rise in companies offering to help young buyers in exchange for a piece of the action in the form of shared appreciation. Outfits such as unison.com “are institutionalizing the idea of co-borrowing and shared equity,” he explained.

All of this begs the question: How should you approach a co-borrowing situation, both as a buyer and as a co-signer?

When co-borrowing gets complicated

The most important consideration isn’t getting into a co-borrowing deal, but how all parties plan to get out of it.

While clear heads prevail — when both sides are excited about the deal and there have been no disagreements yet — you should sit down together and decide how and when it will end.

It might make sense for the agreement to last long enough for the buyer to build up credit, income and cash reserves to eventually buy out the co-signer. But what if interest rates rise, and it’s unwise for the buyer to seek a new loan? In that scenario, the deal might include some kind of buffer, either a period of time or a certain mortgage rate.

The main point to parse is what share of the profits the co-borrower will be entitled to, if there are, indeed, any profits to split. A relative may not want anything in return — thanks, Mom and Dad! — but a less partial signer might want a healthy chunk.

It’s easy to identify profit if a buyer agrees to sell and move on. But if there is no sale, the parties will need to know the home’s value at the time the deal is to be dissolved.

An appraisal, the cost of which should be borne equally, is in order in this case. But if one side or the other disagrees with the valuation, it might be a good idea for each party to pay for their own appraisal. If there is any difference between the two, one option could be to split the difference down the middle.

The parties should also have a plan for if the value of the property goes down: Will the co-signer share in the loss, and to what extent?

Another aspect of the deal that people tend to forget is improvements made to the property during the co-owner period. Usually, the buyer foots the bill for things such as landscaping and an addition. But will he or she have to share in the value these and other features that add to the home’s worth?

Co-signers on the mortgage are not on the title and have no ownership interest in the place. Yet their own debt-to-income ratio could take a hit because they have incurred debt by co-signing. Consequently, their ability to obtain their own mortgage, home equity loan or even a credit card could be limited.

Remember, too, that if a buyer doesn’t make the house payments as promised, the lender will come to the co-signer, who will be responsible not just for the payments but also late fees and, if it comes to that, collection fees and lawyer’s fees. Late payments are likely to take a heavy toll, as is a co-signer’s personal relationship with the buyer.

To protect themselves and keep tabs on “tardy alerts,” co-borrowers should insist that both they and the buyer be billed separately by the mortgage company.

Lew Sichelman’s weekly column, “The Housing Scene,” is syndicated to newspapers throughout the country.

The Caton Team is comprised of Susan and Sabrina Caton – a mother/daughter in law team.  We are full time, local Realtors with over 25 years of combined Real Estate experience.  How can The Caton Team help you?

I read this article at: https://www.inman.com/2017/08/30/co-borrowing-on-the-rise-what-makes-for-a-smooth-deal/

Remember to follow our Blog for the local real estate beat, a pulse on the San Francisco Peninsula at: https://therealestatebeat.wordpress.com

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Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Effective. Efficient. Responsive.  What Can The Caton Team Do For You?

Berkshire Hathaway HomeServices – Drysdale Properties

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE# 70000218/ Office BRE #01499008

Did you get hacked?

Below is a link from the California Association of Realtors with some great tips on monitoring your credit AND the link to see if your information was breached.  It’s a good idea to check our credit report each year to make sure there are no surprises. Click on the link below for my information!

http://www.car.org/aboutus/mediacenter/news/equifaxhack

Thank you for reading,

Sabrina

 

The Caton Team – A Family of Realtors

Remember to follow our Blog for the local real estate beat, a pulse on the San Francisco Peninsula at: https://therealestatebeat.wordpress.com

Got Questions? – The Caton Team is here to help.  

Email Sabrina & Susan at:  Info@TheCatonTeam.com

Call us at: 650-568-5522  Office: 650-365-9200

Want Real Estate Info on the Go?  Download our FREE Real Estate App:  http://thecatonteam.com/mobileapp

HomeSnap: http://www.homesnap.com/Sabrina-Caton

Visit our Website at:   http://thecatonteam.com/

Visit our INSTAGRAM page:  http://instagram.com/thecatonteam

PINTREST: https://www.pinterest.com/thecatonteam/

Visit us on FACEBOOK:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

YELP us at: http://www.yelp.com/biz/the-caton-team-realtors-sabrina-caton-and-susan-caton-redwood-city

Or YELP me:  http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Twitter: https://twitter.com/TheCatonTeam

Connect with us professionally at LinkedIn:  https://www.linkedin.com/in/sabrinawendtcaton

https://www.linkedin.com/in/susancatonrealtor

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Effective. Efficient. Responsive.  What Can The Caton Team Do For You?

Berkshire Hathaway HomeServices – Drysdale Properties

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE# 70000218/ Office BRE #01499008