What Percent of Asking Price Should You Offer?

Most Realtors will tell buyers that the price of a home is negotiable. However, there is no set rule for what percent of a home's asking price to offer the seller. You don't want to overpay, but an offer too low may offend the seller. Your offer price should depend on a number of factors, including:

The appraised value. Whereas asking prices are determined by sellers and their real estate agents, home appraisals are determined by third-party professionals. They can help you determine the true value of a home.

The housing market. If the housing market favors sellers over buyers, you'll need to offer more in order to remain competitive.  Paying in cash also increases the competitiveness of offers. This situation is somewhat true of today's housing market, in which limited supply does not meet the high demand. Sales of nearby comparable homes can help you evaluate the market, which varies geographically.

Seller motivation. How eager is the current owner of a home to sell it? Consider a family that has been relocated due to a parent's career. The family has already moved, but its prior home is still on the market. Considering the family is losing money on maintaining the home, and not deriving any benefit, a lower offer stands a better chance than it might for a family that has not yet moved and faces little time pressure.

How long the house has been on the market. This is linked to seller motivation. The longer the house sits on the market, the more work it is for the owners to constantly clean it for showings, consult with their Realtor, etc. Also, sellers who are eager to move will likely grow impatient if buyers do not show interest in their house. Therefore, generally speaking, the longer a home sits on the market, the more likely its owner(s) will be to accept a lower offer.

Overall, many Realtors advise buyers to offer at least 90% of the asking price. However, as noted above, this figure is dependent on many moving parts. In some markets, buyers may even find it necessary to make offers above the asking price. This is one of the reasons that having an experienced Realtor familiar with the area in which you are buying is so crucial. Interested in buying or selling a home in Central Ohio? Contact me to see how I can help!

Columbus New Year's Eve Events

As we celebrate Christmas or other winter holidays, it's easy to forgot to make New Year's Eve plans! Read about some of Central Ohio's New Year's Eve events, below:

Columbus' Renaissance Hotel's New Year's Eve gala is promised to be better this year than ever before, with some of the Midwest's top DJs, upgraded lighting and sound, increased staff to shorten drink lines, and the ability to accommodate large groups. General admission tickets can be purchased for $99, and include 6 drinks, hors d'oeuvres from 8:00pm-10:30pm, and a pizza bar from 1:00am to close. Additional drink tickets can be purchased for $5 each. VIP tickets are selling for $139. In addition to the benefits accompanying general admission tickets, VIP tickets grant access to the VIP section and bars (serving premium alcohol) and a tour of the Watershed Distillery, valid until May 1, 2015.  Feel free to book a room at the hotel for a discounted rate (be sure to mention that you are a part of the "Nite Magic" group).

Other festive places to ring in the new year include:

• Park Street Saloon in the Arena District: Advertises live bands, pizza from Mikey's Late Night Slice, three dance floors, and a complementary Champagne toast at midnight. 
• Shadowbox Live's Backstage Bistro: Featuring 3+ hours of music from the Urban Jazz Coalition, a dinner banquette, and a Champagne toast at midnight.
• Funny Bone Comedy Club and Restaurant: Listen to stand-up comedian Roy Wood, Jr. and enjoy a pre-show dinner buffet.
• Camelot Cellars: a costume masquerade ball including a Champagne toast at midnight, food from Hubbard Grille, live music by Brave Weather, and burlesque performances. 
• Union Cafe in the Short North: offers a three course dinner and Vegas-syle DIVAS show.
• First Night Columbus: This family-friendly event offers activities for those of all ages, such as movies, a performance by the Fort Hayes School Band, face painting, and fireworks.

For even more options on how to spend New Year's Eve in Columbus, Ohio, click here.

The Most and Least Stressed Out Cities

CNNMoney published a list of the most and least stressed out U.S. cities, based on a variety of factors including traffic, cost of living, employment, and poverty rate. The results:

The 5 Most Stressed Out Cities:

1. New York, NY. Long commutes average 40 minutes each way and housing costs are double the national average. Poverty and unemployment rates are also above the national average. Residents experience long workdays and a high cost of living.
2. Detroit, MI. Detroit is known for its high crime rate, unemployment rate of around 9%, and its poverty rate that exceeds 25%.
3. Los Angeles, CA. Commuters deal with heavy traffic, no public transportation, and a high cost of living. 
4. Riverside/San Bernardino, CA. The effects of the recession hit this construction-industry city especially hard. Residents face long commutes, high unemployment, and a 20% poverty rate.
5. Houston, TX. Thanks to the oil industry which can require 80-hour work weeks, Houston has the longest average workweek of all 55 places CNNMoney analyzed.  Traffic is also problematic.  

The 5 Least Stressed Out Cities:

1. Salt Lake City, UT. Low unemployment, a low cost of living, and short commutes make for a balanced work-life. 
2. Rochester, NY. Short commutes average 21 minutes each way, and work days are shorter than average. 
3. Raleigh, NC. A low cost of living, low unemployment, lots of green space, and proximity to mountains and beaches make Raleigh a relatively happy and healthy city. 
4. Minneapolis, MN.  Minneapolis benefits from low crime, lots of jobs, a healthy lifestyle, and a low poverty rate (11%). 
5. Richmond, VA. Shorter work days, low unemployment, and a poverty rate below 12% (one of the lowest of the 55 cities studied) earns Richmond its spot as the 5th least stressed U.S. city.

View the full list of the most stressed out cities and the least stressed out cities.

Help! My Home Won't Sell.

Has your home been sitting on the market for longer than normal? Typically in a hot market, homes sell within one month. In more sluggish conditions, it can take six months to one year. Read about the top 10 reasons that homes don't sell. Leaving your home on the market for a prolonged time can make it appear "stale," and buyers may assume that there is something inherently wrong with it that has prohibited it from selling already. Fortunately, there are a number of actions you can take if your home won't sell:

• Ask your Realtor for feedback. You Realtor can talk to buyers' Realtors about what their clients thought about your home. You can then make changes based on that feedback. If your Realtor hasn't already given you this insight, ask for it. If you're dissatisfied with your Realtor, talk to him/her about your concerns. You may also speak to the firm's broker. Lastly, consider re-listing it with a different Realtor once your listing agreement expires. Contact me if this is something you're interested in!

• Reduce the asking price. A too-high asking price is the number one reason a home doesn't sell. If you're home has been listed for a while already, you may need to adjust your asking price to current economic conditions. In an exceptionally dry time, this may even mean taking a loss on your home. You should also look at what comparable homes are selling for in order to determine your price. One way to do this is by attending local open houses. 
• Revamp its appearance. Try to look at your home from an objective perspective (look at photos and video footage). What turns you off? De-clutter your home by cleaning it and putting your belongings out of sight. Stripping wallpaper and repainting your home in neutral colors generally makes your home more attractive to buyers. Similarly, make sure your lawn is well kept--you want to make the best first impression possible! When buyers do see your home, make sure you are not home. This invites the buyers to stay longer and talk openly about your home. 
• Take your home temporarily off the market. On the Multiple Listing Service (MLS), each home is accompanied by a number indicating listing date. Taking your home off the market and then re-listing it essentially "refreshes" your home and gives it a new listing status. Consider re-listing at peak times, which tend to be April-June and September-November. You may be required to wait a certain amount of time or make changes to your listing (for example, asking price) before you can re-list.
• Rent it out. If you're house is vacant but not selling, consider renting it out. This allows you to capture rental income and re-list your home for sale in more advantageous seller conditions. Not ready to be a landlord? Don't worry--you can hire a property manager who will do the work for you!

What Affects Your Home Insurance Premium?

Home owner's insurance protects your property and belongings from unforeseen circumstances (such as a fire) by providing both property insurance and liability coverage. In some instances, you cannot control the premium you pay. Consider the following:

• Home age and materials. These two factors affect the premium you'll pay for home owner's insurance. Older homes are more prone to electrical, plumbing, roofing and foundation problems and thus can increase your premium. Check with your insurance provider to see if renovations can keep these related expenses down. Wood materials often warrant a higher premium because they are more susceptible to fire and water damage. 
• Location. Lower premiums are granted to homeowners who live near fire stations and not in flood plains or areas prone to natural disasters such as earthquakes. Additionally, neighborhoods with a high claim frequency may charge homeowners a higher premium.   

Fortunately, there are many things you are can do to lower your home insurance premium, such as:

• Increase your deductible. Generally speaking, there is a tradeoff between your monthly coverage payment amount and your deductible. A higher deductible means you will face lower monthly payments, but should you make a claim, you will be held responsible for paying more upfront.
• Find a provider who is a good fit for you. For example, some companies will charge higher premiums to pet owners. When shopping for an insurance provider, search for one that is pet-friendly and does not up-charge for pets.
• Keep your credit score as high as possible, which requires you to pay bills on time and avoid accumulating high levels of debt.
• Increase security by installing an alarm system, gated entrance, insurer-approved locks, or fence. These measures all result in a reduced likelihood that your home will be damaged or destroyed. Have fire sprinklers and an extinguisher, and take other precautions as needed. For instance, if you live in hurricane-prone region of the U.S., install hurricane shutters. Remember that floor insurance is a separate entity than home owner's insurance and should also be considered based on where you live.

Baby Boomers Staying Put

In the past, many empty-nesters downsized upon sending their children away for school and growing older. However, the Baby Boomers are defying this traditional pattern. With roughly 10,000 people reaching age 65 each day for the next 15 years, and 17% of the 76 million Boomers already in retirement, the decisions this generation makes are central to the housing market.  63% of Baby Boomers plan to stay in their current home once they retire, according to a survey of 4,000 Baby Boomer households conducted by the non-profit Demand Institute. Why? Many simply are not financially ready, with a substantial amount of equity tied up in their homes. The financial crisis caused the average Boomer household's net worth to drop from $200,000 in 2007 to $143,000 in 2013 according to Federal Reserve data. Additionally, the median outstanding mortgage balance for 50- to 69-year olds more than doubled from $48,743 in 1992 to $118,000 in 2013.

The financial situation is particularly tough for those also in the sandwich generation--middle aged people who find themselves supporting both aging parents and their children. This recent phenomenon can be explained by an increase in the average life expectancy in conjunction with an increased number of "adult children" living at home. A 2013 Pew Foundation survey of 2,511 U.S. adults revealed that at least 15 percent of middle-aged adults are financially supporting both their parents and children.

The Baby Boomers surveyed placed little weight on "aging-friendly" homes, with only 1/5 planning to live in a senior housing. This is despite the fact that roughly 75% reported serious health issues such as arthritis or high blood pressure.

Flipping a Home: It's Not For Everyone!

The idea of buying a house, tearing down a wall, replacing countertops, and painting the place before selling it for a substantial profit is appealing. However, experts warn that it’s it nowhere near that easy.  Flipping a house takes a substantial amount of money, experience, education, and time: the average flip takes 101 days according to MarketWatch. Brendon DeSimone, author of “Next Generation Real Estate,” states that house flipping is a full time job and is not something people who work 9-5 jobs can reasonably manage.

How much will it cost?

The median cost to improve filliped homes is almost $5,000. However, many projects cost more. A significant kitchen remodel costs roughly $55,000, while a bathroom costs $16,000. To be safe, experts advise adding 10% to your projected project budget, and not to rely on making a profit. Instead, home flippers should be financially stable even if they only break even. It may be worth tackling bigger projects, though: flips associated with building permits have a 50% ROI. This is much higher than the average ROI of all flips (including ones that solely involve cosmetic changes), which is 13%. Indeed, there is a positive correlation between how much an investor spends on a home and his ROI.

What type of home should I buy?

If you want to flip a house, look for undervalued properties. Professionals look for homes approximately 30% under market value. These can be outdated fixer-uppers, foreclosures, short sales, or homes sold at an auction. It’s no secret that these homes offer the best potential to flip, so be prepared to act quickly if you see a home with great potential.

How will I be taxed?

If you flip a home on the side (i.e, you still have a full time job doing something else), that’s considered an investment as opposed to a business. If you hold onto a house for a year or less, the proceeds are classified as a short-term capital gain and will be taxed at your regular income. If you own it for over a year, it’s considered a long-term capital gain, which is taxed at 15% of the gain.

What else should I consider?

Location is key! When looking for a home, look for a fixer-upper in a great location. Central to location is school district, since a good school district helps homes in that area maintain their value. Richard Davis, creator and star of A&E’s reality show “Flip This House” also warns people who are unfamiliar with the real estate and construction businesses against flipping homes. He comments on an MSN article, “I mean, my wife is a doctor, you don’t see me going out doing heart surgery.”  In other words, flipping homes is not a hobby—it’s a profession that requires technical skills, time, and money. Finally, you should be familiar with anti-flipping regulations: houses sold less than 90 days after they were purchased are not eligible for FHA mortgage insurance.

The best (and worst!) cities to flip homes in:

According to RealtyTrac, the best place to flip a home is Pittsburgh, PA. Here, the average purchase price is $54,949 and the average flipped price is $103,755. That’s a ROI of 89%! Other cities with good flip potential include Philadelphia, Memphis, Detroit, Seattle, Baltimore, Milwaukee, Atlanta, Rochester, and Washington. Each of these cities have ROIs between 43-56%. On the other hand, Indianapolis-Carmel is the worst place to flip a home, with an average purchase price of $163,400 and an average flipped price of $144,400—an ROI of -12%. Other cities with a negative ROI include Tampa/St. Petersburg/Clearwater, Houston, and Charlotte.