If you are a homeowner, you may have received an advertisement for a service line protection plan. However, you may not understand the purpose of such a protection plan.

Many homeowners do not realize they are responsible for the lines or pipes that run through their property until an issue arises. As the property owner, you are responsible for any connecting lines from your home to the street. 

Let’s say your incoming water line springs a leak. It may be a slow leak that takes a long time to realize, or it can be more evident by discovering a prominent wet spot in your yard. Either way, you are responsible for repairing, not the water company.

An estimate for replacing a water line in your yard runs from $2,000 – $10,000 per HomeAdvisor. The total cost will depend on the distance from the street to the house, whether you need to dig a trench or whether using a trenchless process is possible. For example, the cost per linear foot to replace a water line ranges from $50 to $250. You will be hit with a hefty bill if your home sits far back off the street.

Homeowner’s insurance companies do not include service line protection as standard coverage.

However, your provider may be able to add a rider to your homeowner’s policy that will consist of service line protection coverage. You need to review your coverage with your insurance agent to be confident you have this coverage.

Many utility companies offer coverage as well. These are not insurance policies but function more like a home warranty. You can read this previous blog post for more information on how a home warranty plan works.

Read the fine print whether you go with a homeowner’s policy rider or a utility company coverage. For example, you may not have coverage for all the utility lines that enter your home. 

Policies can include:

• Sewage
• Water
• Gas
• Electricity
• Internet
• Telephone
• Fiber Optics
• Steam

These service lines can become damaged by many different means. For example, damage to underground lines can occur due to shifting ground caused by earthquakes or nearby construction, tree roots, or corrosion. 

Some common causes of damage come from:

• Rodents
• Freezing
• Construction
• Rust
• Landscaping accidents
• Digging into the property
• Wear and tear
• Electrical or mechanical breakdowns

Service line protection plans each have their distinct coverage policies. Be sure to read and compare programs before deciding which one to purchase.

Some items that may be covered include:

• Repair of line
• Line excavation
• Loss of use if you must vacate
• Outdoor property repairs
• Replacement Costs

Again, it is imperative to read the service line protection plan you are considering to understand the coverage available to you. Do not assume all plans are alike.

Some common items not covered under a service line protection plan include:

• Water well damage
• Septic systems
• HVAC systems
• Fuel tanks
• Sump pumps
• Lines that run under but are not connected to the home.

A rider is necessary if you purchase through an insurance company and will increase your homeowner’s insurance bill. In addition, it would be added to your utility bill if you purchase through a utility company. The monthly charge varies.

New York City offers a service line protection plan covering water and sewer lines through American Water Resources (AWR).

Coverage is available to most residential and mixed-use properties with a 2-inch or smaller service line. The cost of coverage is added to your water and sewer bill and costs $66.84/year for water and $114.60/year for sewer.

The program offers unlimited protection for covered repairs with no service or deductible fees. You would simply contact AWR directly to schedule necessary repairs. Service requests will be answered promptly, and the timing depends on the type of repair.

Do you need a service line protection plan? Certainly, purchasing a service line protection plan is an individual choice. Some advice will tell you that a newer home might not need it. I have heard of a newer home having some issues. The age of the house may not be an issue, but it’s more likely that the older home is more likely to be something that can happen. Ask your neighbors if they have had previous problems. 

If you maintain a substantial emergency repair fund, you may choose not to purchase coverage. However, you may benefit from such a plan if you cannot save for a large emergency repair fund. Keep in mind that some policies have a waiting period of at least 30 days before coverage begins.

I have personally seen the value of having a service line protection plan and saved over $6,000 on a costly repair. Unfortunately, we will see more water line issues in our area as winter approaches due to the freezing temperatures. If you are considering adding a service line protection plan, now may be the best time to finalize your decision.

Contact me, Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate, if you are considering buying or selling a home. As a Brooklyn real estate agent with over 30 years of experience, I understand the real estate process and can help you reach your homeownership goals. Reach me by phone at (718) 253-9500 ext. 1901 or by email at [email protected].

Your debt-to-income ratio (DTI) is a simple way of calculating how much of your monthly income goes toward debt payments. The DTI will reveal if your debt is out of proportion with your income. Maintaining a manageable debt level is essential to good financial health.

If you have applied for a mortgage, you most likely know about this calculation. Your debt-to-income ratio is how lenders determine your ability to make monthly payments on the money you plan to borrow.

Lenders use the DTI to determine how much money they can safely loan you toward a home purchase or mortgage refinancing without significant risk. Of course, everyone knows that their credit score is essential in qualifying for a loan. But in reality, the DTI is equally as important as the credit score.

Lenders usually apply a standard called the “28/36 rule” to your debt-to-income ratio to determine whether you’re loan-worthy. 

The first number, 28, is the maximum percentage of your gross monthly income that the lender will allow for housing expenses. The total includes payments on mortgage principal, interest, property taxes, and homeowner’s insurance. This is usually called PITI, which stands for principal, interest, taxes, and insurance. The lender may want to include additional cost like homeowner association dues into that number as well.

The second number, 36, refers to the maximum percentage of your gross monthly income the lender will allow for housing expenses PLUS recurring debt. When they calculate your recurring debt, they will include credit card payments, child support, car loans, and other obligations that are not short-term.

Let’s look at how to calculate your debt-to-income ratio.

Your monthly gross earnings $6,000

28% $1,680 maximum monthly mortgage payment*

*Your maximum monthly mortgage payment includes principal, interest, taxes, and insurance (PITI). This number is what a typical lender will allow for a conventional mortgage loan monthly payment. In other words, the 28 figure determines how much house you can afford.

Your monthly gross earnings $6,000

36% $2,160 total allowable monthly debt*

*This figure represents the TOTAL debt load that the lender will permit. 

Total allowable monthly debt $2,160

Less maximum monthly mortgage payment $1,680

Allowable additional recurring monthly debt $   480

If your monthly obligations on recurring debt exceed $480, the size of the mortgage you’ll qualify for will decrease proportionally. If you are paying $600 per month on recurring debt, for example, instead of $480, the lender must reduce your monthly mortgage payment by $120 to $1,560 or less. The difference means a lower mortgage amount and a smaller home.

Remember, if you have a car payment, it has to come out of that difference. So in our example, your car payment is included in the $480. However, with the recent escalation in the cost of cars, it isn’t unusual these days to reach a $500+/month car payment, even for a modest vehicle, so that doesn’t leave much room for other types of debt.

Some lenders will consider the maximum percentage over 36%. But the desired maximum is not to exceed 36%. Each lender determines its guidelines. 43% is the highest a borrower can have and still qualify for a loan.

The bottom line is that too much debt can ruin your chances of qualifying for a home mortgage. 

Remember, the debt-to-income ratio is something that lenders look at separately from your credit history. That’s because your credit score reflects your payment history. It’s a measurement of how responsibly you’ve managed your use of credit. Your credit score also reflects your debt-to-credit ratio or credit utilization. Credit utilization reflects how much credit you have used versus how much credit is available to you. But your credit score does not take into account your level of income. That’s why the DTI is treated separately as a critical filter on loan applications. This Equifax article explains the differences between debt-to-income and debt-to-credit ratios.

Even if you have a PERFECT payment history, but the mortgage you’ve applied for would cause you to exceed the 36% limit, you may still not qualify for the loan by reputable lenders.

The 28/36 rule for the debt-to-income ratio is a benchmark that has worked well in the mortgage industry for years. Of course, mortgage products may change as the lending market shifts, but a satisfactory credit score and the acceptable debt-to-income ratio have not changed. As a result, you may be able to qualify for a loan above these limits, but it may cost you more in interest or downpayment.

But make sure you understand the worst-case scenario before taking on one of these non-conforming loans. The 28/36 rule for debt-to-income has been around so long simply because it works to keep people out of risky loans.

Mortgages used to be pretty simple to understand. 

You paid a fixed interest rate for 30 years, or maybe 15 years. Today there are many mortgage programs, such as adjustable-rate, 40-year, interest-only, option-adjustable, or piggyback mortgages, each of which may be structured in various ways.

If your DTI disqualifies you for a conventional 30-year fixed rate mortgage, you should think twice before squeezing yourself into another type of mortgage just to keep the payment manageable. Be sure you understand the loan terms thoroughly before signing the closing paperwork.

Instead, consider increasing your initial down payment on the property to lower the amount you’ll need to finance. It may take you longer to get into your dream home using this more conservative approach, but that’s certainly better than losing that dream home to foreclosure because increasing monthly payments have driven your debt-to-income ratio sky-high.

You can also work on decreasing your debt to income-ratio. 

Ways to reduce your debt-to-income ratio are:

1. Pay down your debt.
2. Increase your income.
3. Don’t incur additional debt.

Whether you are considering purchasing a home or not, keeping an eye on your debt-to-income ratio makes good financial sense. It is easy to get over your head when other lines of credit are more easily accessible.

It is also important to remember that you will have additional costs involved with home ownership, not just principal, interest, taxes, and insurance. You can read more about the other expenses involved in home ownership in this previous blog post. 

Planning for a home purchase is an exciting time. Learning all you can about the home buying process is essential whether you are a first-time or experienced homebuyer.

You can improve your financial life by understanding and monitoring your debt-to-income ratio. Whether you are buying a house, a car, or consolidating debt, this simple calculation will help your stay on track.

Contact me, Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate, if you are considering buying or selling a home. As a Brooklyn real estate agent with over 30 years of experience, I understand the real estate process and can help you reach your homeownership goals. Reach me by phone at (718) 253-9500 ext. 1901 or by email at [email protected].

An ounce of prevention is worth a pound of cure couldn’t be more true when it comes to home maintenance tips. Unfortunately, summer seems to be flying by quickly, and before you know it, we will be inundated with pumpkin-spiced everything!

When you spend the time handling home maintenance properly, you can save money on expensive repairs and extend the longevity of appliances and essential components of your home. 

Regular home maintenance may not prevent things from happening to your home, but it allows you to evaluate and plan for necessary replacement costs in advance. An emergency may cost you a lot for repairs, and your homeowner’s insurance coverage may not include it. To learn more about homeowners’ insurance coverage, you can read this previous blog post.

While the weather remains warm, it is an optimal time to do some outside evaluation of your home. 

Let’s look at some home maintenance tips to address on the outside of your home:

Gutters

A properly functioning gutter system should allow water to flow correctly and exit the downspouts, ideally 5 feet away from the home. Visually inspect the system for signs of wear, damage, or leakage. An easy way to check without standing out in a rain shower is to spray water on the roof and watch how it flows from the house. A blockage may need attention if you witness an overflow in any of the gutters. If you are considering adding gutter guards, now is an excellent time for installation before the leaves begin to fall. Even with gutter guards, mud and debris can build up in the gutters causing issues over time. Recommendations are that gutters be cleaned twice a year, even with gutter guards installed. This article describes the different types of gutter guards and how to clean gutters.

Roof

As a homeowner, you should visually inspect your roof periodically. A pair of binoculars will allow you to look closely at the roof for missing or loose shingles and potential flashing or ridge vent issues. You can also check your roof from the inside in your attic. Look for signs of moisture, discoloration, or mold. These are indicators that there may be water penetration through the roof that a professional roofer should address. While in the attic, check the insulation to see if it is adequate.

Paint

Check your exterior paint to determine if it is time for a fresh coat. Paint can help protect your home from winter leaks. Peeling and chipping paint expose wood elements to wrought. It is essential to paint exterior surfaces when the heat and humidity are lower. The beginning or end of summer is usually a better time to tackle exterior painting for proper coverage and curing. Spending the extra time to prepare the surfaces properly will help extend the life of your painted surfaces. Professionals estimate that a well-painted exterior surface should be good for up to 10 years.

Windows

Check window caulking to ensure they are correctly sealed. While checking the windows, a thorough cleaning is in order. The recommended method is to clean frames first where dirt accumulates. Then, remove the screens, and rinse and dry them. Clean the window and replace the screens when finished.

Decks

Inspecting your deck annually is a good safety habit to adopt. It is crucial if you have an elevated deck. The first thing to check for is mold, mildew, screw pops, and loose boards. Next, check where the deck meets the house for a solid connection. Also, check that handrails and railings are firmly secured. Finally, thoroughly clean the deck frequently. A proper seal will help to extend the life of your deck. Sprinkle water onto your deck; if it beads up, the seal coat is good; if it doesn’t, it is time to reseal it.

Grill

Deep clean your grill at least once per season by cleaning grates of any debris and burned grease. Another good practice is to turn burners on high and let them run with the lid closed to burn off any built-up grease periodically throughout the summer.

Mold

Check your home’s siding for any mold growth throughout the summer. It is more likely to occur in home areas that receive little sunshine. Clean the area with a mold solution or diluted chlorine. Be sure to test for colorfastness before washing with any mold-killing solution.

Gardens

Maintain plants to prevent overgrowth near air conditioners and sidewalks.  Periodic weeding is needed to maintain the appearance and keep plants healthy. 

These home maintenance tips will help to protect your home from unwanted emergency repairs and keep your home looking good. 

There are also areas of the interior of your home to maintain during the summer months. 

Refrigerators

In the summer, refrigerators may need more energy to cool. Keep the coils clean by vacuuming or gently wiping dust away. Check door gaskets for cracks or tears and wash with soap and water. Remember to replace the water and ice filters if you have them.

Sink Disposals

Sink disposals can become smelly and clogged. Ways of cleaning out your kitchen disposal vary from ice cubes to borax. Find the method you prefer, and be sure to clean the disposal to eliminate odors periodically.

Range Hood

The filter of your range hood or over the stove microwave vent needs cleaning to remove built-up grease and grime. You can soak the filter or run it through your dishwasher. Once removed, you can also gently clean the fan blades inside.

Dryer Vents

Keeping dryer vents clean will prevent fires. In addition, a clogged dryer vent can also damage your dryer. A proper ventilation system should include an exterior vent following building codes. You can hire a professional cleaner to do the job thoroughly. Depending on how long or hard it is to reach the vents, you may be able to do it yourself.

Bathroom Fans

Your bathroom fan removes moisture from the bathroom and keeps it from recirculating in your HVAC system. However, it can become clogged with dust and dirt because it draws moisture. Turn off the power to the fan, remove the cover to clean, and gently clean the blades inside.

Ceiling Fans

The blades of a ceiling fan collect dirt and dust. Therefore, periodically clean the fan blades. Keeping fan blades clean is especially important if you or a family member suffer from allergies or asthma. There are many products on the market that make this project easy. 

HVAC Filters

Checking your filters monthly is a good practice. Recommendations are to replace filters annually to optimize your system. Dirty filters can damage your unit or make it work harder, increasing your utility usage.

It is hard to think about interior home maintenance tips in the summer when we want to be outside enjoying ourselves. You may want to save these for a rainy day, but making the time to handle these tasks will pay off in the long run.

An excellent general home maintenance tip is to keep a checklist of the items you need to do for the season. Then, you can refer to this list and check off the tasks as you complete them. Of course, you will need to refine your checklist yearly.

Contact me, Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate, if you are considering buying or selling a home. As a Brooklyn real estate agent with over 30 years of experience, I help many home buyers and sellers through the entire process. Reach me by phone at (718) 253-9500 ext. 1901 or by email at [email protected]

Many wonder if now is a good time to buy a Brooklyn Home. The news reports tell us interest rates are rising, and homes are not selling in a flash as they have been.

There is a cooling down in the market. But, this may be the right time for you if you are in the market for a home.

But, first, you need to ask yourself a couple of questions.

1. Are you comfortable with the monthly payment?
2. How long do you plan to stay in the home?

The federal government told us they would increase the interest rate late last year to curb inflation. In June 2022, they raised the interest rates by three-quarters of a percentage point. The increase was the most significant rate increase in nearly 30 years.

Inflation occurs when prices increase and purchasing power decreases. The loss of purchasing power affects your cost of living, which will cause a decline in economic growth. To keep inflation within acceptable levels, the federal government manages the supply of money and credit.

Inflation management may create a recession, but not a housing crisis as we saw in 2008. If inflation can be appropriately managed, the federal government may be able to avoid a recession. Unfortunately, economists are not as optimistic in their outlook and predicted a recession, while the Treasury Secretary, Jane Yellen, states a recession is not a certainty. 

Regardless of the expert’s prediction, the best time to buy a home is when you need one. 

I recently heard an analogy that says, “Marry the house, but date the mortgage.”

The analogy simply means if you find a home that is perfect for you and checks all the boxes on your must-have list, don’t pass it up. It may be a long time before you find a similar home. The mortgage rates rise and fall. If you are comfortable with the monthly payment and plan to stay in the house for the long term, you can refinance your mortgage when the rates fall low enough for it to make financial sense.

In the current market, inventory is generally still low, although there are more houses on the market than there were a few months ago. To put it in perspective, the June 2022 Monthly Housing Market Trend Report by Realtor.com indicates in June 2022; inventory was down 53.2% compared to June 2019. 

Although the time it takes a home to sell has increased in some areas, you will find most areas are still selling quickly, with a national average of 32 days on the market. Reports say that 32% of homes under contract in June 2022 had an accepted offer within one week of hitting the market. Additionally, Redfin reported that the average sale-to-list price ratio was 102.2% in June 2022.  Although these figures are down from a year earlier, they are still impressive statistics.

In the New York – Newark – Jersey City, NY, NJ, PA metro area, the median list price was $700,000, representing a 9.4% year-over-year increase. 

Mortgage rates are higher but still not considered high by historical standards. This chart shows the change in interest rates from the 70s. The quick rise in interest rates has caused the market to be in chaos. Typically, interest rates do not increase this rapidly. Rate increases have affected a buyer’s purchasing power.

Home prices do not decline when interest rates climb. As a result, the cost of a home will not drastically drop, but the rate at which prices increase is slowing. As a result, sellers may expect longer sales times. Remember that before the pandemic, it was not unusual to take up to 3 months (not days) to sell a home.

Buyers who were waiting on the sidelines should evaluate their motivations to move. Owning a Brooklyn home is a way to build your wealth; check out this previous blog post to find out how. The rental market has also changed, which may still make purchasing a home desirable.

There are many benefits to owning a Brooklyn home that may outweigh the higher mortgage interest rates.

Some benefits include:

1. Strengthening credit with a good mortgage payment history.
2. A fixed monthly payment is not affected by a landlord’s annual rent increase.
3. Build equity as you pay down your mortgage.

If you determine you are comfortable with the monthly payment at the current interest rate, you will need to ask yourself a few additional questions.

1. Do you have enough emergency savings in case something happens to the home?
2. Is your credit score in good standing?
3. What is your maximum price range?

You will need to contact a lender to evaluate your financial situation and pre-qualify you for a mortgage. A lender’s pre-approval is essential to:

1. Provide a seller proof that you can afford their home and not take it off the market only to find out you can not obtain a mortgage.
2. Ensure you are looking in the proper price range.

Talk with your lender about refinancing possibilities when interest rates drop. Be sure you understand any restrictions on your loan that would prevent you from taking advantage of lower interest rates in the future. 

Conventional loans tend to have less restrictive rules on refinancing. However, government-backed mortgages such as FHA, USDA, and VA loans are slightly different. As you discuss the type of mortgage you qualify for with a lender, be sure you understand the refinance rules for each program.

It is important to note that you will be charged closing costs to refinance. However, you may find a no-closing-cost refinance loan, or you may be able to roll the closing costs into your new loan balance.

There are many considerations to refinancing that you should discuss with your lender if you think that will be a future strategy if you are planning to marry the house, but date the mortgage!

Although the media reports a change in the market, it doesn’t mean we are in a lousy market. The unprecedented market that we have been experiencing wasn’t going to last. It lasted far longer than anyone imagined. The current activity in the market is stable and better than some years before the pandemic.

If you are considering a Brooklyn home purchase, Contact me, Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate. As a Brooklyn real estate agent with over 30 years of experience, I help many home buyers understand the home buying process. Reach me by phone at (718) 253-9500 ext. 1901 or by email at [email protected]

Prepare for an enjoyable summer by following these home & safety tips before you begin celebrating. The term ‘safety first’ became popular through the 20th-century movement to reduce workplace hazards and has been used since 1910 in the United States.

The concept of ‘safety first’ has been with us since then. And I think it is a wise way to approach our homes and summer activities.

It is that time for cookouts, bonfires, outdoor activities, and the lazy, hazy days of summer. But before you start enjoying those favorites, start with preparation for the fun ahead!

Home Maintenance

The best place to start our discussion about home & safety tips is with our home maintenance. Summer’s high temperatures and storms can take a toll on our homes. So begin by thoroughly checking your home to determine any overdue maintenance issues.

Some items that you should check around your home include:

1. Security

Burglary rates are higher in the summer. Therefore, taking the time to check that locks, doors, and security systems are functioning properly will be time well spent. 

2. Garage

Clean and declutter your garage. The ability to pull your car into your garage during an expected storm could prevent hail or wind damage to your vehicle.

3. Weatherstripping and caulking

We don’t often consider the advantages of weatherstripping and caulking in the summer. However, checking and making necessary repairs can help prevent bugs from entering the home and keep your home cooler, lowering your cooling expenses. 

4. Sump Pump

If your home has a sump pump, take some time to ensure it is fully functioning. Heavy rain can cause a water backup in your home. A functioning sump pump will remove excess water from the home’s interior and lessen the risk of mold growth.

5. Exterminate 

Seal up any cracks in walls, and find a safe insect repellent to prevent future damage from insects.

6. Home tech

Smart home technologies allow us to use light timers, motion detection lights, smart doorbells, cameras, and other security measures to keep our homes safe from intrusions.

7. Tree and Shrub Maintenance

Trim any overhanging branches to prevent damage to your home. In addition, you should trim large shrubs back to prevent intruders from having a hiding place.

8. Children

Check your home for potential hazards like pesticides, cleaning supplies, electrical wires, etc. Make sure all dangerous chemicals are not within reach. 

9. Safety equipment

Be sure to have a fire extinguisher, first-aid kit, and emergency contact information accessible.

Fire and Grilling Safety

Whether cooking on the grill or enjoying an evening fire, remember there is a danger if not handled properly.

1. Flammable materials 

Keep a clear zone of 10 feet of the grill or fire pit for flammable materials.

2. Supervise

Don’t leave fires or grills unattended. Be sure to extinguish any fire before going in for the night thoroughly.

3. Children and Pets

Keeping children and pets at least 3 feet from the fire is advisable.

Pool Safety

Relaxing poolside is a summertime favorite. However, precautions can prevent accidents in home pools and hot tubs.

1. Swimming Lesson

Teach children how to swim and be comfortable around water. Provide water wings or swim vests to new or insecure swimmers. Supervising children in or near the pool is the best safety measure.

2. Fencing and Gates

Your municipality may have fencing requirements. Even if they do not, installing a gate and fence can protect household members. In addition, consider installing an alarm on the gate or backdoor, so you are alerted when someone opens it.

3. Safety equipment

Keep a floatation device, pole, and first-aid kit available poolside in case of emergencies. Also, consider having sunscreen available to reapply while swimming.

4. CPR Certification

Maintaining CPR knowledge can be beneficial in an emergency. Familiarize yourself with the techniques to help someone who may be drowning or in distress. Here are some tips from the American Red Cross to help.

Personal Safety

Add personal safety to your list of home & safety tips for summer. Take care of yourself and others by paying attention to risks brought on by the summer weather. Understanding how to prevent weather-related harm will ensure an enjoyable summer.

1. Hydration

Drink plenty of fluids. Water is the best choice, but you can also consider sports drinks, tea, coconut water, and fruit juice. Avoid soda, beer, wine, and hard liquor for hydration. If you are under a doctor’s care, ask your doctor for the best practices for your condition.

2. Body Temperature

Air-conditioned areas are best to help maintain a safe body temperature when the temperatures are high. Locate a cooling center in the community if you do not have air conditioning in your home during high heat warnings. Avoid sitting in a car or leaving children or pets in the car. If you have to be outdoors, take breaks from the heat when possible. Use a cool shower or bath to cool down. 

3. Protection

Wear sunscreen, hats with a wide brim, and lightweight, light-colored clothing outdoors. Avoid strenuous or high-energy activity during the high heat of the day.

4. Heat Exhaustion

Familiarize yourself with the signs of heat exhaustion. Muscle pain, cramps, spasms, heavy sweating, paleness, weakness, dizziness, headache, nausea, confusion, rapid pulse, and fainting can all be warning signs.

Weather

Proper weather preparedness is encouraged by the National Weather Service year-round. However, summer weather can turn dangerous quickly and is a big part of our summer home & safety tips.

1. Air quality

Summer air quality can cause a risk to older adults, children, and people with heart or lung disease. Stay inside if possible. Limit the amount of time spent outdoors to essential activities. Limit the use of cars, gas-powered lawn mowers, and other vehicles during this time. Do not burn during an air quality alert.

2. Beach

Waves and currents can be affected by the weather. Before heading to the beach, check weather reports, tide, and conditions. Check the beach area for warnings. Familiarize yourself with the location of life stations on the beach.

3. Drought

Lack of precipitation for an extended period and high heat can cause a drought. Dry conditions can lead to brush fires or wildfires. Comply with all burning restrictions and other directives during this time.

4. Flood

Floods can occur anytime during the year. Learn what to do before, during, and after a flood to increase the chances of survival for you and your family and protect your property. Also, familiarize yourself with what to do if you are driving and hit a flooded road.

5. Heat

Heat is one of the leading weather-related killers in the United States. It is particularly hard on young children, older adults, people with medical conditions, and pregnant women. 

6. Hurricanes

Hurricanes and tropical storms can be devastating. Storm surges, heavy rain, damaging winds, tornadoes, high surf, and rip currents can all result from such a storm. Learn how to protect yourself, your family, and your property before a storm approaches your area. Proper preparation is the key.

7. Severe Thunderstorms

Hail, wind gusts, and lightning can wreak havoc on property and personal safety. Be cautious and take cover.

Having fun in the sun is one of the greatest joys. I hope these home & safety tips help you have a wonderful, safe summer experience.

If you’d like some tips on transforming your outdoor space, check out this past blog post.

Contact me, Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate. As a Brooklyn real estate agent with over 30 years of experience, I help sellers and buyers achieve their real estate goals. Reach me by phone at (718) 253-9500 ext. 1901 or email at [email protected]

You need to begin to declutter your Brooklyn home before you start to organize it. We have been spending more time at home due to the pandemic. Living and working from home may take a toll on the organization you once had. Often when you are working from home, cleaning and organizing have taken a back seat to get out of the house.

If you find it is time to organize, the first step you need to take is to declutter your Brooklyn home.

Organizing and decluttering serve different purposes. If you begin to organize before you declutter, you merely move your clutter from one spot to another. 

Many clients get serious about decluttering before they are ready to sell their homes. However, once they have gone through the process, many remark that it was freeing, enjoyable, or something they wish they had done sooner!

An organizational system will not help you manage clutter. You accumulate clutter when you hold on to things you don’t need, love, or use. So the simple first step is to go through your belongings and determine what you want to keep. 

Organizers like Marie Kondo and The Home Edit have become so popular they now have highly viewed Netflix shows featuring these organizers in action.

You must decide how to tackle the decluttering process throughout your home. Room by room may make the most sense for you. Here are some thought provokers to declutter your Brooklyn home by room:

Living Room

• Unused decor
• Used candles
• Old games
• Unidentified cords for electronics
• Broken furniture
• Magazines and books

Kitchen

• Expired food and spices
• Old dish towels, sponges, etc.
• Unused utensils
• Broken glass or crockery
• Plastic food storage without lids
• Broken or infrequently used small appliances

Bedrooms

• Unworn clothing and shoes
• Old bedding, pillows, etc.
• Unwanted accessories
• Unused gifts
• Outdated jewelry

Bathrooms

• Old toiletries
• Expired medicine
• Unused makeup
• Tattered/stained towels
• Excess hair products
• Out-of-date sunscreen
• Unused personal appliances

Office

• Old pens/stationery supplies
• Unnecessary paperwork and receipts 
• Unused books/CDs/DVDs
• Unfunctional equipment
• Old electronics
• Unused inks/batteries/cords

Garage

• Unused tools
• Old paints and chemicals
• Unnecessary bikes and sports equipment
• Unused pet items
• Miscellaneous stored items

Outdoors

• Broken or unused yard tools
• Old toys
• Unused planters and pots
• Broken furniture

When you organize without thorough decluttering, you are only temporarily solving your issues. Moving the clutter out of sight is not eliminating it. You are just moving the chaos around and temporarily creating the appearance of organization. In the end, this short-term solution does not fix the problem.

When you don’t declutter first, you waste your time, energy, space, and money. 

After you spend the initial time and energy organizing the clutter, you will inevitably need to spend more time reorganizing when the first system fails to provide the desired results.

When items that need decluttering take up space, where do you put the things you actually use? Freeing storage space will allow better storage options for the items you use in your home.

You can save money when you declutter your Brooklyn home by not repurchasing things you already own because you couldn’t find them. You will also save money on purchasing organizing materials such as baskets, bins, and other organizing staples because you have less to store.

Get Started

Start with one small step if it seems overwhelming. Then, when you feel the pleasure of tackling one drawer or one closet, you will be more likely to keep going.

Tips to declutter your Brooklyn home:

• Start with a small time increment per day to build your momentum.
• Create three categories: Keep, Donate, Sell
• Donate items as soon as possible after each decluttering session.
• If you haven’t worn a clothing item in the past six months, you probably can declutter it.
• Create a checklist of areas to declutter
• Before and after photos will help you see the potential for your entire home.
• A friend may be able to help you discard items if you are struggling.
• Determine if you should relocate an item to another area of your home.
• Follow the one-in-one-out rule by removing one item for every new thing you bring into your home.
• Use clear storage bins to keep you organized.
• If an item needs repair, schedule it. If you don’t have it fixed in 30 days, you can let it go.
• Do not multitask during a decluttering session.
• Look at your home through the eyes of a visitor.
• Understand that you will make a mess before you get organized.

Do yourself a favor and don’t strive for perfection. Judging yourself and your space against others or, heaven forbid, a television show will create unnecessary pressure. Instead, create a space and systems that work for you.

Mental Health Benefits of DeCluttering

When you declutter, the benefits to your mental health include feeling calmer, happier, and more in control. In addition, the absence of clutter and a tidier space can help you feel more mentally relaxed.

Believe it or not, cluttered environments can increase your stress levels. However, most people find they are more productive and improve their mental and physical health by decluttering. 

Benefits of decluttering include:

Lower the risk of asthma and allergies.

Keeping clutter to a minimum reduces the dust, mold, and mildew that triggers asthma and allergies.

Focus is improved.

Clutter can be distracting and make things difficult to find. It is easier to focus on your tasks when you know where to find needed items.

Self-esteem is affected.

Surprisingly, self-esteem can be improved when your living space is organized by restoring feelings of being in control and pride.

Relationships improve.

Conflicts seem to lessen when clutter is under control in your home.

Find the lost treasures.

You may find items on your shopping list or something you haven’t been able to locate for some time in your clutter.

Studies have shown some characteristics of people who find decluttering challenging:

• Time management and follow-through are difficult for them.
• Procrastination tendencies make it hard to get started on a project.
• Easily sidetracked from their task.
• Wanting everything to be perfect deters them from tackling the job.
• Helping others first is more important to them.

Don’t despair; having a clutter issue in your home does not mean you are a hoarder. Only 2.5% of Americans suffer from a hoarding disorder, a diagnosed psychiatric disorder. Hoarders can’t organize or manage their current possessions, yet they collect more.

If you are considering selling your home, this past blog post discusses three tips to get top dollar for your home. Cleaning and decluttering is one of those tips!

Contact me, Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate. As a Brooklyn real estate agent with over 30 years of experience, I help sellers declutter and prepare their homes for sale. Reach me by phone at (718) 253-9500 ext. 1901 or email at [email protected]

Have you seen a for sale sign in front of a home with a sign rider hanging from it that says home warranty protection plan included? What is a home warranty, and is it valuable?

I have found some confusion about what a home warranty is and how it works.

A home warranty protection plan is a service contract, not an insurance policy. 

Standard home warranties will cover all or components of a home’s major systems like electrical, plumbing, heating, and air conditioning systems. Coverage of home appliances and other components will vary depending on the company from which you purchase them.

Often you will see a seller offer a home warranty when they list their home for sale. This is because home warranties have become a popular inclusion in the sale of the house. However, if a seller does not include a home warranty with the sale of the property, a buyer can purchase a home warranty themselves. 

Existing homeowners can also purchase home warranties. They are not only for newly purchased homes.

What is the difference between a home warranty protection plan and homeowner’s insurance?. 

Homeowner’s insurance covers your home and personal belongings from significant dangers like fires, storms, and theft. Homeowner’s insurance also covers liability for injury of people who do not reside in your home if something occurs while on your property. In contrast, a home warranty will provide you with a reduced rate of repair expense for the covered systems and appliances defined in the policy coverage.

In this past blog post, you can learn more about homeowner’s insurance.

Although mortgage lenders require home insurance, a home warranty is an optional item. Both home insurance and a home warranty will be a safeguard if something goes wrong with your home but in different ways.

There are benefits to having a home warranty, but you need to understand how a warranty works.

Coverage varies by company. You need to thoroughly evaluate what is covered and what is not before deciding whether it is the right home warranty protection plan for you. You may want to look at several different warranty companies before deciding.

There are several reasons a seller would want to purchase one when they list their Brooklyn home for sale:

1. They will receive coverage during the listing period.
2. The seller is responsible for maintaining the property in its current condition until closing.
3. If a covered item needs repairing before closing, its cost is limited to the service fee.
4. A home warranty can be an incentive for a buyer, and they will likely ask for one in their offer.

The buyer also has several reasons they want to have a home warranty protection plan included in their home purchase:

1. It provides buyers with the peace of mind that unexpected repair costs can be minimal shortly after closing a home.
2. They may have to restore their savings after paying the closing costs before they can begin home repairs.
3. If they are new to an area, they can access vetted service providers with one call.
4. They don’t have the DIY experience to handle the repairs.

According to SoFi Learn, the average costs to repair are:

• Electrical – $141 – $419 for minor repairs, $2,000 – $6,000 for full electrical wiring.
• Roof Repair – $300 – $2,000 for partial repair.
• HVAC – up to $577 for A/C repair, $5,000 – $12,500 for replacement.

Rocket Mortgage estimates an average home warranty costs between $300 – $600. One significant repair can cover the cost of the warranty.

Newly constructed home warranties are available.

The majority of home warranty plan purchases are for existing homes. You may not need to buy a home warranty when purchasing a newly constructed home. 

Many builders offer warranties on construction components. The new appliances should also have warranties provided by the manufacturer. Some private contractors may not have a warranty option; therefore, some home warranty companies offer an option for new homes. You can consider purchasing a home warranty protection plan when your builder and manufacture warranties expire.

Coverage under a home warranty will vary from company to company.

It is important to stress that not all home warranty coverage is the same, and you must read and understand the policy offered to you. In addition, if there are older systems in the home, they may not be able to be repaired due to the availability of replacement parts, making the replacement cost significantly higher.

How does a home warranty protection plan work?

Most home warranties have a required service fee. Service fees average around $100 per service call. 

You will need to contact the warranty company to file a warranty claim. Many companies require that you contact them first to receive a qualifying service provider’s contact information. However, many have exceptions for emergencies. Be sure to read the fine print.

When the service provider arrives, you will need to pay the service fee. After evaluating the situation, the service provider and warranty company will determine the necessary action to remedy the issue. Exclusions under warranty can incur additional expenses for the homeowner.

The pros and cons of home warranties include:

PROS

• Peace of mind of paying for unexpected repairs.
• Cost is limited to the service fee for covered items.
• The convenience of using vetted service providers.
• Reliability on the experience and skill of service providers.
• The current warranty may be transferable if you sell your home.

CONS

• Denial of claims due to coverage.
• Contacting the home warranty company before contacting a service provider is often required.
• A maximum dollar limit per year could apply.
• The home warranty company has the authority to decide whether to repair or replace.
• Appliance coverage is usually an additional cost.
• Not all components and costs are covered.
• Terms and conditions may be confusing or vague.
• There are limitations and exceptions to a home warranty protection plan.

Do your research before selecting a home warranty plan.

Many real estate firms have recommendations based on their experience with home warranty companies. You may also want to check with friends and family to see if they have experience with any home warranty protection plans.

It is good practice to check with the Better Business Bureau rating on any company you consider using. 

The BBB bases ratings on:

You can also search on the internet by merely typing the company name followed by “complaints” to find additional information.

Conclusion

A home warranty protection plan is often a reassurance to homeowners that they can save substantial expenses of repairs for their home. However, each individual must assess if a home warranty is right for them based on their financial situation, home condition, and knowledge of home repairs. Nevertheless, many homeowners have benefitted from having a policy.

Contact me, Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate. As a Brooklyn real estate agent with over 30 years of experience, I help buyers and sellers achieve their real estate goals. Reach me by phone at (718) 253-9500 ext. 1901 or email at [email protected].

It is tempting to forgo the services of a real estate professional when you are selling your home in a hot real estate market. Although we are still in a favorable market, the increasing interest rates will lower the buying pool.

As interest rates increase, buyers who were on the margins of qualifying for a higher mortgage may now have to lower the price range of the home they are looking to purchase. This may reduce the pool of buyers in any given price range.

Along with the higher interest rates, increased inflation can reduce the amount of cash a buyer is willing to invest in their new home. This will begin to decrease the amount of competition for homes.

A real estate professional has the skills, experience, and expertise it takes to navigate the highly detailed and involved process of selling a home. That may be why the percentage of people who list their houses on their own, known as a For Sale By Owner or FSBO, is decreasing. 

Here are five reasons why selling with a real estate professional makes more sense, even in today’s hot market:

1. They Know The Buyer’s Hot Buttons

Before deciding which projects and repairs to take on, connect with a real estate professional. They have first-hand experience with today’s buyers, what the buyer expects, and what you need to do to ensure your house shows well.

If you don’t lean on their expertise, you may spend your time and money on something that isn’t essential. Previously, I discussed the possibility of over-improving your home in this blog post. In today’s low-inventory market, buyers are willing to take on more renovation work themselves. A survey from Freddie Mac finds that:

“. . . nearly two-in-five potential homebuyers would consider purchasing a home requiring renovations.” 

 In the hot real estate market we have been experiencing, the home inspection process has been less contentious than before the market fired up.

Familiarity with staging techniques to make your home more appealing to buyers is a strength of most real estate professionals. They tour a  lot of houses and know what makes a buyer light up.

A professional can help you decide what you need to tackle. It’s not canned advice you could find online – it’s recommendations specific to your house, price range, and area.

2. They Help Maximize The Number Of Buyers Who Tour Your Home

Recently, the average home has been getting 4.8 offers per sale, according to recent data from the National Association of Realtors (NAR), and that competition is pushing prices up. While that’s promising for you as a seller, it’s essential to understand your agent’s role in bringing buyers to your home.

Real estate professionals have various tools at their disposal, such as social media followers, agency resources, and the MLS, to ensure that most qualifying buyers view your house. According to realtor.com:

“Only licensed real estate agents can list homes on the MLS, which is a one-stop online shop of sorts for getting a house seen by thousands of agents and home buyers. . . . This is certainly one of many good reasons why the majority of home sellers decide to employ the services of a listing agent rather than going it alone.”

The real estate community is well-connected. Real estate professionals network with other real estate professionals sharing information on upcoming homes for sale and the buyers they represent. As a result, a well-connected real estate agent may share information about your home before the house is available to the public with real estate professionals who have buyers interested in homes like yours. 

Without access to these tools and networks, your buyer pool is limited. And you want more buyers to view your house since buyer competition can drive your final sales price higher.

3. They Understand The Legal Requirements

Today, more disclosures and regulations are mandatory when selling a house, whether you are using a real estate agent or doing it yourself. Unfortunately, the number of legal documents you’ll need to understand and utilize is increasing. That’s why Investopedia says:

“One of the biggest risks of FSBO is not having the experience or expertise to navigate all of the legal and regulatory requirements that come with selling a home.”

A real estate professional knows exactly what needs to happen, what all the paperwork means, and how to work through it efficiently. They’ll help you review the documents and avoid any costly missteps that could occur if you try to handle them on your own.

There are many timelines to meet after a contract is signed in that fine print! Your real estate professional will make sure everyone meets their deadlines to keep the agreement moving forward, prevent any loopholes for the buyer, and that your home will close on time.

4. Real Estate Professionals Are Trained Negotiators

If you sell without a real estate professional, you’ll also be solely responsible for all the negotiations. That means you’ll have to coordinate with:

• The buyer – who wants the best deal possible.
• The buyer’s agent – who will use their expertise to advocate for the buyer.
• The inspection company – that works for the buyer and will almost always find concerns with the house.
• The appraiser – who assesses the property’s value to protect the lender.

Instead of going toe-to-toe with all these parties alone, lean on an expert. They’ll know what levers to pull, how to address everyone’s concerns, and when you may want to get a second opinion.

There may be issues that arise during the sale of a home. An experienced real estate professional knows how to put out fires that may otherwise kill the deal.

5. They Know How To Set the Right Price for Your House

If you sell your house on your own, you may overshoot your asking price. That means you’ll leave money on the table because you priced it too low, or your house will sit on the market because you priced it too high. Pricing a home requires expertise.

“. . . There is no easy or universal way to determine market value for real estate.”

Real estate professionals know the ins and outs of how to price your house accurately and competitively. To do so, they compare your house to recently sold homes in your area and factor in the current condition of your house. These factors are crucial to making sure your home is appropriately priced to move quickly while getting you the highest possible final sale price.

An experienced real estate professional knows how to price ahead of the market. This means that the price should not necessarily reflect what is happening today but what will happen in the next few weeks or months ahead. For example, if the buyer pool begins to shrink due to increased interest rates, the competition will not be the same as a few months ago. With fewer buyers in the market, sales prices may begin to stabilize. Pricing your home too high is a risk. Traditionally, an overpriced house sells for less than if priced correctly.

For Sale By Owner homes typically sell for 14% less than similar homes listed by real estate professionals. Paying a real estate commission would still yield a for sale by owner more profit than going it alone.

Bottom Line

There’s a lot that goes into selling your house. So instead of tackling it alone, reach out to a trusted real estate professional to make sure you have an expert on your side throughout the entire process.

Contact me, Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate. I can help buyers and sellers achieve their real estate goals. Reach me by phone at (718) 253-9500 ext. 1901 or email at [email protected]

Brooklyn homeownership is a foundational step to building your wealth.

Wealth building simply refers to increasing the net value of your total assets. Wealth building over time is one of the advantages of homeownership.

The calculation of net worth is simple. You calculate it by subtracting the amount of money you owe (liabilities) from the amount of money your possessions are worth (assets.) 

Net Worth = Assets – Liabilities

Brooklyn homeownership can help you build wealth in two ways. 

First, you build equity by paying down your mortgage. 

A percentage of each mortgage payment goes towards a reduction in the total amount owed. Typically, the first few years of mortgage payments apply to interest, not the principal. However, more and more of each payment is applied to the outstanding principal amount as time passes. Before you know it, your $300,000 loan is down to $50,000, and you’ve gained $250,000 in wealth.

The second way to build wealth through Brooklyn homeownership is appreciation. 

Each year, the value of your home will increase or decrease slightly based on market prices. However, over time, real estate has consistently appreciated. 

Home prices rose 18% in 2021, according to CoreLogic’s Home Price Index. Bank of America predicts a 10% appreciation rate through 2022, even with the expected interest rate increases.

Due to the unprecedented real estate market of 2021, home values rose thanks to low housing supply and high buyer demand. Unfortunately, there were not enough homes to meet this high buyer interest,  so bidding wars began driving home prices up. The rising prices mean your home is worth more in today’s market when you own a home. And as home values climb, your equity does too. 

How Rising Equity Impacts You

In addition to building your overall net worth, equity can also help you achieve other goals like buying your next home. It works like this: when you sell your house, the equity you built up comes back to you in the sale.

In a market where you’re gaining so much equity, it may be just what you need to cover a significant portion – if not all – of the down payment on your next home. So, if you’ve been holding off on selling and worried about being priced out of your next home because of today’s home price appreciation, rest assured your equity can help fuel your move.

As the mortgage interest rates begin to climb, buyers will be more eager to purchase now. So if you are considering selling, now is time to take advantage of the lack of inventory available to buyers.

Equity can be a real game-changer if you’re planning to make a move. 

Wealth Building Example

Let’s see a simple demonstration of how advantageous Brooklyn homeownership can be. Assume you bought a home in 2005 for $400,000 and, for simple mathematics, paid nothing for a downpayment. Over the next ten years, your mortgage payments reduce the outstanding mortgage by $100,000 and the home increases in value to $600,000. The value of your home as a net asset has grown to $300,000 [$600,000 minus $300,000 mortgage balance]! You would have missed out on $300,000 in wealth if you had rented during this period. 

Historically, homeownership is one of the best ways for families to build wealth. However, if you don’t currently own a home, you may want to consider purchasing now.

As inflation rises, the link between financial security and homeownership will become especially important.  As Leslie Rouda Smith, President of the National Association of Realtors (NAR), says:

“Homeownership is rewarding in so many ways and can serve as a vital component in achieving financial stability.”

Owning a Home Is a Building Block for Financial Success

Recently NAR conducted a report that details several homeownership trends and statistics. This information includes the difference between the net worth of homeowners and renters. The report stated that the net worth of a homeowner was about $300,000, while the wealth of a renter was about $8,000 in 2021. Therefore, a homeowner’s net worth is roughly 40 times higher than a renter’s. This report shows how owning a home can be a key factor when building your overall net worth.

Is the gap between a homeowner’s net worth and a renter’s surprising to you?

The net worth gap between owners and renters primarily exists because homeowners build equity. As a homeowner, your equity grows as your home appreciates in value and you make your mortgage payments each month.

In other words, when you own your home, you have the benefit of your mortgage payment acting as a contribution to a forced savings account. And when you sell, any equity you’ve built up comes back to you. But, as a renter, you’ll never see a return on the money you pay out in rent every month.

Additionally, homeownership provides you with a fixed monthly payment that will not increase with a fixed-rate mortgage. Renters expect an increase from year to year. Each annual increase affects your available cash for investing or saving.

If you are interested in buying a home, you need to ask yourself a few questions.

How much home can you afford? 

You need to meet with a mortgage lender to obtain a prequalification letter. The lender will review your financial information to determine your maximum mortgage amount. Your lender can explain the different mortgage options.

Where will you find the money?

Mortgages come at a cost. You most likely will need to have accessible cash for some portion of your purchase. Hopefully, you are actively saving for your home purchase. If you own a home, you may be able to tap into the equity to purchase a new home. In addition, some mortgages will allow you to receive gift money from a relative if you do not have adequate savings.

How can you continue to save money after buying?

Your lender will provide you with an amortization table that shows the total cost of the mortgage for the loan duration. It can be shocking to see the amount you will pay over time due to interest. You can cut the cost by paying your mortgage off early. Making additional payments toward your principal will save you on additional interest costs.

A biweekly mortgage instead of monthly can also save you money, Or simply add an extra payment each year, for a total of 13 payments and designate that it is to apply to your principal balance. This tactic could cut your mortgage by several years.

If you are interested in reducing the length of your home mortgage, speak with your lender and financial planner to see what will work best to meet your financial goals.

If you are a first-time homebuyer, you can find some helpful information in this previous blog post.

According to a recent Gallup Poll, real estate remains ranked top in America’s opinion of the best long-term investments since 2013. One significant advantage to Brooklyn homeownership, as opposed to other investment vehicles, is that you also have a place to live. 

Having a trusted real estate professional to help you, whether buying or selling, is crucial in this current real estate climate. In addition, an agent who knows the area and market well can be a valuable asset to your wealth-building team.

Contact me, Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate. As a Brooklyn real estate agent with over 30 years of experience, I can help buyers and sellers achieve their real estate goals. Reach me by phone at (718) 253-9500 ext. 1901 or by email at [email protected]

The buyer and seller need to know about a real estate appraisal in any home sale.

The buyer will have the real estate appraisal completed as part of their mortgage. The responsibility for paying for the appraisal is part of the buyer’s mortgage costs. Determining value is a key factor in the buyer’s ability to obtain a mortgage.

The seller will need to provide access to their property to complete the appraisal. Most sales agreements with a mortgage contingency will be subject to a real estate appraisal. The appraiser will justify the sales price through their assessment process for the buyer and seller.

The property’s fair market value must come in at or above the sales price. A lender will not loan money for the mortgage without a satisfactory appraisal. The buyer and seller will need to revisit their negotiation if the value is below the sales price.

The Uniform Standards of Professional Appraisal Practice (USPAP) are the standards an appraiser must follow.

What is an appraisal?

Real estate appraisal or property valuation determines the property’s value based on the highest and best use of the real property (which basically translates into determining the property’s fair market value). 

A buyer and seller can request an appraisal for different reasons:

1. Transfer of ownership of real property.
2. Establish a basis for the exchange or reorganization for investors.
3. Provide a mortgage underwriter a value of the security for a mortgage loan.
4. Estimate value for tax or other legal purposes.
5. Determine gift or inheritance taxes.
6. Estimate the value of real property in an estate.

The person who performs this real estate appraisal is the real estate appraiser.

The value as determined by real estate appraisal is the fair market value. 

The real estate appraiser may use various methods to calculate value. However, a systematic approach will determine the fair market value.

1. The sales comparison approach is commonly used to determine value based on recent sales of comparable properties in the local real estate market.
2. An alternative method, the cost approach, would estimate the cost of rebuilding, minus an estimate for depreciation, plus the land value.
3. The income capitalization approach can determine the net earning power the property will support for investment properties.

The appraiser will collect data on the market area, the subject property, and comparable properties. Once assembled, the appraiser must analyze the data collected. Supply and demand is a factor that helps to understand the competitive position of the property in the current market.

The appraiser will calculate the property’s fair market value from this analysis. A written appraisal report will show the methods used to determine the value and the information used in the analysis. Finally, the appraiser certifies that the report will be completed in an unbiased, objective manner.

Timing

There is no need for the seller to have a real estate appraisal completed before putting their home on the market unless there is an extenuating circumstance. The lender is the most interested party in the appraisal more than any other party in the sale. In fact, a lender is not likely to accept an appraisal done outside their network.

The lender will order the appraisal after the buyer applies for their mortgage. The appraiser will schedule a time with the seller to visit and examine the property based on their availability. 

Once they visit the home, the appraiser will begin the preparation of their appraisal report. It may take several days or weeks for the appraiser to deliver the information to the lender.

Sales Contract

One of the indications of value an appraiser considers is the contract between two unrelated parties, the buyer and seller, for the sale and purchase of the home. Thus, a copy of the executed sales agreement will be provided to the appraiser by the mortgage company.

Comparable Sales

In general, when you are selling your primary residence, the person buying it will make it his primary residence, too. However, if the buyer obtains a mortgage, the lender will require an evaluation of similar houses sold in the same neighborhood to prove the fair market value. The appraiser will generally find homes within a ½ mile radius of the subject property that has sold in the past six months. 

A real estate agent may choose to provide sales comps they used to determine the offering price to the appraiser, but the appraiser cannot just automatically use them in their appraisal. As an unbiased party to the sale, they must determine the comparability to the subject property.

What can a seller do to prepare for the appraiser’s visit?

If you’ve let your hair down, get your home back into “show” condition before the appraiser comes.

Everything you know about preparing your home for sale, well-mulched flower beds, minor repairs addressed, lack of fingerprints, lack of clutter, and all the rest apply.

The age of the home and the “effective age” are needed in the Uniform Residential Appraisal Report form under the “General Description.” Therefore, how well your home appears affects the number under “effective age.

The Uniform Appraisal Report requires information about materials (and their condition) used for floors, walls, trim and finishing elements, bathroom floors and wainscots, and interior doors. For this reason, appraisers train themselves to notice these detail. Provide a good impression by dusting, polishing, and eliminating scratches and fingerprints.

The Report also asks about kitchen equipment (refrigerator, range and oven, disposal, dishwasher, fan and hood, microwave, and washer and dryer). Be sure all appliances are clean and operating well.

Amenities such as fireplaces, patios, decks, porches, fences, and sheds will be included in the report. If an appraiser is going to take note of these things, they should be swept, cleaned, and in good condition. Also, clean out the gutters. If it rains on the day of your appraisal, you want your house to handle the rainwater well.

Here is an example of a  “comments” section of an appraisal: “The subject is well maintained, and no physical, functional, or external inadequacies are noted. Marketability is enhanced by hardwood flooring throughout most of the home, an updated kitchen, fresh interior and exterior paint, transom windows, built-ins, a front porch, a rear patio, large storage shed, and 4 fireplaces, etc.” An appraiser will evaluate your home carefully.

The importance of preparing your property before the listing is not only for potential buyers but also for the appraisal process. Be sure to keep your home free of clutter as best you can until the appraiser has visited.

An experienced real estate agent can help you price a property correctly before listing it for sale. They should use a similar method as the appraiser using the sales comparison approach. Understanding the appraisal process should help you understand why real estate agents place so much importance on pricing the house correctly.

Contact me, Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate. As a Brooklyn real estate agent with over 30 years of experience, I can help you prepare your home for potential buyers and the real estate appraisal. Reach me by phone at (718) 253-9500 ext. 1901 or by email at [email protected]