When you understand your options, you can buy your first home with confidence. There are many types of real estate investment opportunities to consider. It does not matter if you are just looking for a home for you and your family or looking at investing in real estate to turn a profit; you are certain to be able to find the perfect property to fit all of your needs and wants. 

Types of Real Estate Investing

Understanding the different types of properties is the first step to buy your first home.

There are several different categories of homes and business properties in the types of real estate available. It does not matter if you are looking for a home or for a property that you can turn a profit. If you are going to make an investment then you should know about the different types of real estate investments that are available.

There are two major types of real estate investments that are available today; commercial and residential.

Each of these two investment types has specific guidelines that are set with them that will make a difference in the functions of real estate. Once you have decided which of the two types of real estate you want to invest in, you will be able to determine what is available to you.

Residential real estate has several different options. There are two types of homes referred to as single-family or multi-family homes. 

Most buyers think of a single-family home for their first purchase. A single-family home is completely independent of the other houses and is situated on a private lot.

Many find the affordability and maintenance of multi-family homes more appealing.  You can expect to have neighbors sharing the same walls with you. The types of multi-family homes include condominiums, cooperatives, or townhomes.  

Condominium ownership only includes the interior of the unit you are occupying, not the exterior walls. The condominium association owns the exterior of a condo building. In a cooperative, you own a share of the interest in the building, but you do not own the physical property. Although a townhome is an attached property, you own part of the physical building and a portion of the land. In all of these options, a homeowner’s association sets the rules and regulations for the homeowners. Each type of ownership usually provides different levels of maintenance for the property.

Commercial real estate, like residential real estate, is also divided into smaller categories. These will often be referred to as commercial properties and can range from office buildings to manufacturing sites. 

The main difference between a commercial building and a residential building is that there will be a different regulation approach. There will be different zoning rules for each type.

If you are in the right area, you could have the opportunity to invest in real estate property that has both commercial and residential areas in one. If you are thinking about having a business from your home or expanding into a business, this type of real estate investment may be an option for you. 

It does not matter if you want a cozy home or a place to start your own business; knowing the different types of real estate available to invest in is the best place to begin your search.

Purchasing Your First Home

The first step in real estate investing is usually to buy your first home. It is an important step to building better finances and living in a comfortable place. However, if you are considering purchasing a home, there are some things that you will want to know before you make a decision that you may regret later on.

Before you ever even attend an open house, you should ensure that you have done your research. You should know the going rates, how much other homeowners are paying every month, and what you can and cannot afford. You will also want to meet with a lender to help you determine the monthly investment you can afford. Understanding your monthly investment will prevent you from getting in over your head. Read this previous blog post to understand the total cost of homeownership.

The next step that you should take is hiring a real estate agent.

Real estate agents can research for you and find the homes that are best suited to your specific wants and needs. You will also want to make sure that the real estate agent has connections with other reputable service providers you will need on your home buying journey. If you utilize the help of professionals, your home buying experience will be much smoother than if you decide to go out on your own. 

Once you start looking at homes with your real estate agent, you need to make sure that you understand all of the terms they will be using. Some of these terms will refer to the market, loan terms, and other real estate jargon that you may not know. If you do not understand the meaning of something, do not be afraid to ask; after all, the real estate agent is there to help you in any way they can. If you take the time to learn the process involved with buying a home, you can be sure to get exactly what you want.

Preventing First Home Pitfalls

You are excited when you decide to buy your first home, but it can also be very stressful. There is also the potential of becoming a nightmare if you do not know what you are doing before making your purchase. In addition, you will experience financial changes when you buy your first home. There will always be those who will get in over their head.

The main thing you must know when purchasing your first home is where you stand with your search. One of the biggest mistakes that many first-time homebuyers will make is deciding on one specific home and then only investing in that home because they became emotionally attached to it. Unfortunately, emotional decisions can cause several problems. 

The first problem is that you may not be able to purchase the home because something happened during the process, and the deal fell through. 

The second problem that people will face is making an offer that is either too high or too low.

It is vital to make sure that you know what the house is worth and how it fits into your financial needs before you make an offer. This will prevent you from paying too much, and it will also prevent you from making an offer that is too low and not winning the bid.

It is essential not to let your emotions get in the way when you are searching for a home, but you should also keep your emotions in check after choosing a home. Even though you may have signed a contract on a home, the purchasing process is not over. There are still several steps that you will have to go through, with the home inspection being one. In addition, if there is a significant problem with the home, or if something goes wrong during the loan process, you will have to start your search over and find a different house. 

The last thing that you need to remember is your budget. To determine your budget, you can look at your credit history and your credit score. If you know what your credit score is, you will be able to estimate the type of loan that will be best for you, which will prevent you from purchasing more than you can afford. 

If you are careful from the beginning and keep your emotions in check when purchasing a home, you will be able to find the best home to suit your needs and wants.

Bargain Homes

You may not find the right size home for you when you go to buy your first home. However, it is possible to find larger homes at a more affordable price if you know the right places to look. 

You may be able to find home auctions or bank foreclosures in the area you would like to live. Many of these homes will be ones the previous owners could not pay for, and the bank foreclosed on them. Because there is no one paying for the house, the bank has to pay the carrying charges, and frequently the bank will lower the price of the home for a quick sale. To understand the pros and cons of buying a foreclosed property, check out this article by Investopedia. 

Your real estate agent has many resources available to help you. They will be able to compare the available homes and find homes that are lower priced.

You can do a lot of the research work on the internet, but you need to walk through a property before you decide to purchase it. Foreclosure properties are a mystery because the bank does not know the maintenance history of the home. You will also want to have inspections before you close on the house to avoid a money pit.

There is a lot to understand when you buy your first home. However, having an experienced real estate agent by your side through every step of the process is a decision you will not regret.

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 buy your first home with confidence. I can be reached by phone at (718) 253-9500 ext. 1901 or by email at [email protected].

Many home construction components go into the building of a home. Therefore, understanding home construction may give you a better insight into maintaining your home. 

If you are thinking of updating your home, pay careful attention to these important components before spending money. Check out this recent blog post if you are thinking about completing some updates.

Foundation

Construction begins with a good foundation. The first step is pouring footers to anchor the foundation walls. A common practice used to be to construct walls out of cinder blocks. However, as construction evolved, the use of poured concrete walls became more common.

Water penetration into a foundation can be one of the most costly issues faced by homeowners. In addition, water in the soil can also cause erosion which may affect the settling of the foundation.

Frame

Once the foundation is complete, the following home construction component is the framing of the house. It is during this stage that your home begins to take shape. Framing a home may be done on-site or using manufactured wall panels. A manufactured wall panel is built off-site to the home’s specifications and then delivered to the construction site saving time and labor constraints.

Again, water penetration can occur through a roof or window leak that can rot the framing of the home’s interior. Also, wood-boring insects such as termites and carpenter ants can damage the wood of the home’s framework.

Roof

The next step in construction is from the roof. Typically, plywood is attached to the framework. Underlayment is placed before the shingles are attached. To protect your home from the elements, you need shingles and flashing installed. Additionally, installing ventilation will allow hot air from the interior of your home to escape. Roof vents will prolong the life of your roof. 

Metal roofs are becoming popular and last longer than shingle roofs.

Roof leaks commonly occur around pipe vents and chimneys. Also, as your roof ages, you will want to watch for deteriorating and missing shingles. 

Window and Doors

Once the home is under roof, the next step is to install the windows and doors. Again, there are many types and styles to choose. The style of your home often dictates the style of the window, but the level of quality can vary.

There is a wide range of door types to select. Choices include a solid door, sidelights, or doors with partial glass.

The frame of windows and doors is usually a concern. If an entry does not have a roof or eve over it to protect from the elements, the wooden framework around the door can deteriorate.

Plumbing

There are two components of plumbing; supply and drainage. Pressurizing supply lines push the water to your faucets. The pipes must be strong to withstand the pressure. Copper piping was and remains an acceptable material, but PEX tubing is becoming a more popular choice because it is easier to install and harder to break. 

Drain lines are not pressurized, and therefore, different materials can be used. PVC pipe is a common choice in new construction. Many older homes will have cast-iron pipes. 

Plumbing issues arise from leaks around the toilet or bathtub. Pipes can also clog. Pay attention to any problems as quickly as possible to avoid a costly repair.

Electrical

A home construction component you would never imagine living without is your electrical system. The power enters the home through an electric panel, and circuits distribute the energy throughout the house. 

GFCI or grounded outlets are necessary around areas of water on the interior and exterior of the home. 

Electrical issues are unpredictable but do not frequently happen in a younger home.

Heating & Cooling

Another essential home construction component is the HVAC (heating, ventilation, and air conditioning) system. Here in Brooklyn, we need both heating and an air conditioning system. In some areas of the country, you may only need one or the other.

The standard today is a central forced-air system. But, there are other options available as well. Keeping your home at an optimal temperature will allow you to remain comfortable regardless of the season.

The life expectancy of most systems is 10-15 years. Therefore, changing your air filters regularly will help you prolong the life of your HVAC system. You should also have your system checked annually or per the manufacture’s recommendation.

Siding

The exterior walls of your home will be covered with some type of material. Brick exterior has been a time-tested material but more expensive than siding. There are many types of siding, but the most popular are vinyl, wood, and fiber cement siding. 

All types of siding are effective at protecting your home from the outdoor elements. 

Examine the exterior siding of your home at regular intervals to be sure there is no damage or missing pieces.

Gutters

Gutters catch the water running down from the roof and direct it away from the home through downspouts. The key is to keep moisture away from the foundation of your home to prevent damage. 

Keeping gutters clean and free of debris will allow them to function correctly and help to prevent ice build-up in the cold winter months.

Soffit and Fascia

The soffit is the underside of the overhang where the roof’s edge meets the siding. The soffit is vented and allows your home to breathe, regulating the temperatures. The fascia is the side of the overhang that gives your roof a finished appearance.

These parts are usually a maintenance-free material, but they do need attention. The soffit and fascia can become damaged over time and require replacement to ensure it continues to protect your home.

Drywall

Finishing the interior of the home is an exciting time where things start to take shape. Modern construction adopted the use of drywall (also known as sheetrock) over plaster walls. Drywall is attached to the studs that frame the home. 

The seams between the sheets of drywall are taped and finished to create a smooth appearance. 

Selecting the appropriate finish of paint for the area will help to protect the surface of the drywall. Generally, a higher gloss in the finish of the paint will make it easier to clean.

Finish Carpentry

We often refer to finish carpentry as interior doors, cabinets, baseboards, crown molding, and railings. Trim around doors and windows complete the appearance. Trim is used in many areas to complete the home’s aesthetic by covering gaps where different materials meet.

Crown moulding is a decorative ceiling trim that elevates the look of a room. In addition, there is cabinetry in the kitchen, baths, and built-ins throughout the home.

Routine cleaning and maintenance are needed.

Flooring

Flooring is the last of the home construction components we will be reviewing. Many different types of flooring are available. Styles in flooring change frequently and will depend on the function of the room. Hardwood, tile, and carpeting are classic choices. However, newer vinyl plank floors are durable and stand up to high traffic areas and pets well. 

Different types of flooring require separate maintenance and have various life expectancies. Check with the manufacturer for care instructions.

There are many home construction components. Knowing their function will help you understand the importance of caring for each element. Additionally, regular home maintenance is required no matter the age of your home.

It is helpful to create a seasonal checklist, so you don’t forget anything. Follow these seasonal checklists in this useful New York Times article.

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 have learned what home areas are important to maintaining. I can be reached by phone at (718) 253-9500 ext. 1901 or by email at [email protected].

President Biden has proposed a capital gains tax increase. At the time of writing this blog post, it has not yet passed. But, many are wondering how this increase would affect them when they sell their real estate holdings.

When was capital gains tax implemented?

Capital gains tax has been in existence as far back as 1913. Taxes were calculated at the ordinary tax rate of the time. The capital gains tax rate has been lower than the top ordinary income tax rate since the 1950s. The percentage of taxation and rules about the sale of capital assets has changed over the years.

Capital assets are homes, cars, investment properties, stocks, bonds, and collectible art with a useful life longer than one year. An asset sale can result in a short-term gain or a long-term gain. Assets held less than a year are considered short-term gains. Long-term gains pertain to assets held longer than one year.

Ordinary tax rates apply to short-term gains. Tax rates on long-term capital gains vary by filing status and income bracket; rates range from 0%, 15% to 20%. Higher-income taxpayers may have to pay an additional 3.8% net investment income tax (NIIT).

Let’s take a look at how capital gains affect real estate.

If you sell your primary residence, you first need to determine if you realize a loss or a gain. To calculate that information, you need to determine your basis. The basis is generally what you paid for the home. You can include the cost for some improvements, but not the expense for regular maintenance and repair of the house. A good rule of thumb is that improvements must add value to the property, change its use, or increase longevity. Consult with your tax professional to learn what can and can not be included to determine your basis.

Special exemptions apply for primary residences if you live in the home for two of the previous five years before the sale date. You also must have owned the house for at least two out of the last five years. They do not need to be the same two years for each requirement. You can only use this exclusion once every two years. There may be exceptions that can disqualify you, which is why you will need to consult with a tax preparer before filing your income tax return. 

If you qualify for the exemption, you will be able to exclude up to $250,000 of capital gains if you are a single tax filer and up to $500,000 of capital gains if you are married filing jointly. 

If you own a second home, it will not qualify for the capital gains exclusion. For example, you own a beach home that you live in for two months out of the year and rent out at other times.

How do capital gains apply to investment properties?

Investors must meet the requirements of living in the home to qualify for the exemption. If you have not, you will not be eligible for the exemption when you sell your investment properties.

Investment properties can also fall under short-term and long-term capital gains. The tax rate for this investment is calculated according to the ordinary income tax rate for your tax bracket if you held it for less than one year. Flipped houses usually fall into a short-term capital gains tax category because investors want to refurbish the home and turn it over quickly.

Any capital gains on an investment property held at least a year would be subject to long-term capital gains tax rates for the investor’s tax bracket.

Like a primary residence, you will need to calculate your cost basis, including purchase cost and any qualifying improvements. You calculate your gain by subtracting your sales price from your cost basis.

A 1031 Exchange can defer capital gains.

If investors want to sell a particular property and invest in a like-kind property, they may qualify for a 1031 exchange. This classification allows the investor to sell now and defer paying capital gains. A third-party facilitator is required to handle the process. The investor is under strict time limits to complete the exchange. The replacement property must be identified within 45 days and close within 180 days of selling the property. In the event of a missed deadline, capital gains tax is applicable.

What are the possible effects of the proposed changes?

The Biden administration’s proposed capital gains tax changes would increase the capital gains tax rates and limit the use of 1031 Exchanges. The proposal includes raising the capital gains tax rate to 39.6% for people making over $1 million per year. It is important to remember that this proposal will affect all capital assets, not just real estate, as we are talking about here.

It may seem that the capital gains tax will not affect many, but in areas where the cost of real estate has skyrocketed, that could be another story. For example, if the property has a low basis, the seller may make a significant capital gain when selling. This considerable gain could put them in a higher tax bracket triggering a higher capital gain tax rate.

Another area of concern in the proposed capital gains tax changes is eliminating stepping up the basis of inherited property. The capital gains on inherited properties are calculated on the home’s fair market value at the time of death or “stepping-up” the basis of the property from the owner’s original purchase price. Utilizing the stepping-up practice reduced the amount of capital gains the estate would be taxed on. 

Because of the increase in prices in New York, this could become an issue for families selling or inheriting long-held estate properties. You can find out more about the proposal’s effects on inherited properties in this recent article from Bankrate.

Should you sell your investment properties?

Real estate investors may be wondering if it is time to sell their investment properties. The answer is as individual as the investor. For example, if you need to sell and your property has held its value, it may be a good time for you to sell. In contrast, you may want to hold onto the property if the value has decreased yet the area expects to increase, and you don’t require cash right now.

There are so many variables to the proposed tax changes; you need to consult with a tax professional to understand how your portfolio will be affected and what the best next steps would be for you. It is unknown what the final changes will be in this proposed legislation and how far-reaching the effects will be.

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 find the right home for your primary residence or investment. I can be reached by phone at (718) 253-9500 ext. 1901 or by email at [email protected].

There are many myths about real estate agents floating about; many have been hanging around for years. Since 1900 real estate has been a profession, and many myths about real estate agents still exist.

Having over 30 years of experience in the Brooklyn real estate market, I can address these misunderstandings. In addition, I think I may have answered questions from family, friends, and clients over the years related to all 15 of these myths.

Real estate agents earn a 6% commission.

It is important to remember that commission is always negotiable. But, an average commission would be around 6%. That is a contractual agreement between the seller and the listing agent and brokerage they choose to sell their home. After a home sells, the 6% commission is split between the brokerage representing the seller and the brokerage representing the buyer. Assuming that is a 50/50 split, each brokerage receives a 3% commission.

The commission is split even further between the brokerage and their agent, depending on their agreed-upon split. For example, if that split were 50/50, the brokerage received 1.5%, and the agent received 1.5%. From the agent’s 1.5%, the fees the agent pays the brokerage are deducted. An individual agent in this scenario may only receive 1 – 1.5% of the sales price in commission depending on the brokerage fees they are required to pay. Although it sounds like a high commission, after splitting the commission several ways and paying for fees, you can see the agent only receives a small percentage of the total.

Real estate agents receive a salary.

Real estate agents receive compensation on a commission basis. Agents do not receive payment until the property closes. They work for 2-3 months or more before ever receiving any compensation for their time. If the sale falls through, an agent will not receive payment for their time and effort invested in the transaction.

Lenders, title companies, and inspectors pay real estate agents a kickback.

Kickbacks are defined as “an illegal payment intended as compensation for preferential treatment or any other type of improper services received.” An agent may have a legal arrangement with preferred service providers but must disclose their interest in any partnership to their clients. The U.S. Housing and Urban Development oversees the Real Estate Settlement Procedures Act (RESPA), which includes disclosure laws and prohibits kickbacks, referral fees, and unearned fees. RESPA is a highly regulated act. 

Real estate agents get reimbursement for their expenses.

Agents are not reimbursed for expenses from their brokerages. This is because they are running their own small independent business under the umbrella of their brokerage. Therefore, they are responsible for their expenses, including gas, car expenses, insurance, office supplies, office copies, renting a desk within the broker’s office, E&O insurance, MLS fees, etc. 

The real estate agent’s brokerage pays for marketing and advertising expenses.

Many brokerages advertise as a group. It appears that the brokerage is adverting properties, but in actuality, the agent is paying to participate in the ad. Like other general business expenses mentioned above, the real estate agent is responsible for all marketing and advertising expenses. These include professional photos, staging, brochures, advertising online and in print, etc.

Real estate agents get rich quickly.

Real estate sales is not a get-rich-quick career. Having 3-6 months’ worth of living expenses is a good rule of thumb for new real estate agents as they begin their careers. An agent can work with a buyer or seller for months before a property goes under contract. Once under contract, it can take 45-60 days for a home to close and the agent to receive their first commission check. Maintaining a consistent income takes discipline and a ton of effort for real estate agents. There is constant lead generation, contract preparation, listing appointments, showing homes, negotiating contracts, and facilitation of the closing that keep a real estate professional working long hours. Reaching a high percentage of referrals from past clients, friends and family is the goal of all career real estate agents. It takes time to build those relationships.

Real estate agents make too much money.

The National Association of Realtors tracks the average income of real estate agents annually. In 2019, the nationwide average was $49,700. Their study shows that agents with 16 years or more of experience average $86,500. Many find these statistics surprising. The confusion comes from agents advertising they are multi-million dollar producers. Multi-million dollar refers to the total sales price of the homes they sell. If an agent sold $2,000,000 in homes that averaged $250,000 each, they only sold 8 houses and may have only earned around $30,000, but they technically qualify as a multi-million dollar producer. That is a far cry from actually earning a million dollars.

Real Estate Agents are expensive to hire.

Hiring a real estate agent may cost you, but not hiring a real estate agent can cost you more. For example, did you know that sellers who choose to sell for sale by owner usually end up selling their home for less than they could with a real estate agent representing them? Not knowing the legalities of a real estate transaction can also cost you money. A real estate professional understands the local market and stays current on trends and issues that may affect a real estate transaction. If you are not a real estate agent yourself, do you have time to learn all the intricacies of the market?

Signing a contract with a real estate agent means you are stuck with them.

You should understand the terms of any contract before you sign. Most listing contracts and Buyer agency contracts have a defined period that will be effective. Ask the agent questions to understand how you can remedy any issues in your working relationship. For example, many brokerages will allow you to cancel or switch to a different agent within the brokerage to fulfill the contract period if you are dissatisfied with the agent you first contracted.

Working directly with a listing agent will save me money.

As a buyer, working with a listing agent can be a costly move. The listing agent’s fiduciary responsibility is to the seller. They may not have your best interests at heart. Representing both parties in a home sale is a tricky situation. This type of representation is Dual Agency. Some states permit dual agency, and others prohibit it. The states that prohibit dual agency are Alaska, Colorado, Florida, Kansas, Maryland, Texas, Vermont, and Wyoming. Here is a link to a previous blog post that discusses additional mistakes buyers may make.

A real estate agent can’t sell you a For Sale By Owner.

Most sellers who choose to sell their homes For Sale By Owner will pay a commission to the agent who brings a buyer. They are happy only to pay part of the commission. Because buyer agency is so common now, For Sale by Owners know that most buyers want to work with an agent. If they are not willing to pay the commission, they could lose many potential buyers. If you see a For Sale By Owner, it is best to have your real estate agent contact them first. Your agent can discuss the commission issue and set an appointment for you to see the home.

Real estate agents want you to pay higher prices because they earn more.

When you work with a buyer’s agent, their fiduciary responsibility is to you and your best interest. An agent will indeed make a higher amount based on the sales price. But the additional amount they would make would not be an incentive to disregard their duties to you as their buyer’s agent. A $10,000 difference in sales price would only net the agent approximately $150 more based on a 3% commission and a 50/50 split with their broker. A code of ethics governs a real estate professional. They take their responsibilities seriously. Not doing so could end up with a fine or suspension of their license.

Real estate agents can only show you their company’s listings.

An agent who is a member of the local Multi-List Board can show you any property listed in the MLS regardless of which company holds the listing. It is rare to find an agent who is not a member of the Multi-List these days. Therefore, the brokerage that offers the home for sale is statistically not the same brokerage that sells the home.

Real estate agents can work whenever they want.

Real estate agents are independent contractors. They do not have to punch a time clock every day. However, they do need to be available when their clients are available. So what may look for the outside as a flexible schedule may not indeed be. You may see your local real estate agent at the gym in the afternoon, but what you may not see is your local real estate agent working in the evening showing homes to their clients or missing an event because their client needs them.

National website portals are better than real estate agents.

National website portals have changed the way real estate agents do business. But it has not replaced an excellent local real estate agent. Real estate portals are fed through the local MLS. It takes time for a property to upload from the MLS to the website portals. Some days it seems to happen quickly, and other days it takes longer for that to occur. Your real estate agent can set up a search in the MLS to notify you when a new home is listed that meets your criteria. Getting that information quickly has been a definite advantage in the local sales market we have been seeing. Relying on your local real estate expert is the better route to take. Your local expert knows the market and has information that the national website portal may not provide.

I hope this gives you a better glimpse of what it is like to be a real estate agent. Most real estate professionals do what they do because they love helping people. They are great problem solvers and lifelong learners. Every real estate sale is different, and agents are continually honing their skills. 

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 answer your real estate questions. You can reach me by phone at (718) 253-9500 ext. 1901 or by email at [email protected].

A trusted Brooklyn real estate agent might be the best investment you make in your home buying or selling endeavor. There is a tendency to believe you can do it yourself in a hot real estate market, especially for home sellers. However, having an experienced real estate professional as a partner in the home selling or buying process is a valuable step that can significantly reward you.

A buyer’s agent will genuinely represent the best interests of a homebuyer when they hire a Brooklyn real estate agent to work on their behalf. 

A buyer’s agent will:

1. Watch the market for newly listed homes that meet your criteria.
2. Research local sales prices in your neighborhood of interest.
3. Study the local market for sales trends.
4. Suggest a pricing strategy based on current sales trends.
5. Structure an offer reflective of the buyer’s desire to purchase the home based on market demand and agent knowledge.
6. Negotiate in the buyer’s best interest.
7. Recommend service providers needed in the transaction.
8. Negotiate any issues revealed during the inspections and due diligence period.
9. Coordinate closing timelines with the seller’s agent, lender, title company, and closing attorney.
10. Communicate with the seller’s agent as the buyer’s liaison.

A Brooklyn real estate agent who is working as a seller’s agent represents the best interests of the homeowner. 

A Seller’s agent will:

1. Advise seller on preparations needed before listing the home.
2. Provide a comparable market analysis to price the home correctly.
3. Research local sales statistics in your neighborhood.
4. Study the local market for sales trends.
5. Professionally market the home.
6. Network with fellow real estate agents to promote your home.
7. Evaluate buyer feedback from showings to make necessary adjustments.
8. Review all offers and makes recommendations on counteroffers.
9. Confirm buyer qualifications.
10. Provide guidance in any home inspection and other contingency-related issues.
11. Coordinate closing timelines with buyer’s agent, lender, title company, and closing attorney.
12. Facilitate any necessary communications with the buyer’s agent and buyer.

It makes good sense to work with a Brooklyn real estate agent to achieve your real estate goals. As a matter of fact, many home sellers and home buyers have found that the investment in hiring a professional was well worth it in the savings they realized by gaining more in seller proceeds or saving money on buying mistakes.

What are some ways a real estate agent can save you money?

1. Price your home correctly for a timely sale.
2. Familiarity with staging techniques to make your home appealing to buyers.
3. Recommendations on what repairs and updates will yield you a return before listing.
4. Their network of trusted experts can help you save on inspections, repairs, staging, lending, and legal issues throughout the home buying or selling journey.
5. Negotiation skills and tactics.
6. Streamline the process, saving you time and money.
7. Evaluate realistic listing and sales prices.
8. Position a listing for maximum interest and exposure.

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 or learn about pocket listings, homes that are not yet available to the public. 

Buying and selling a home can become emotional at some point in the process for both buyers and sellers. Having a neutral party in your corner who can evaluate any situation from all sides of the table can provide that big picture view you may be unable to see at the time. However, you need to be prepared for unexpected emotions to creep up on you. 

How can you prepare yourself emotionally?

1. Evaluate if the time is right for you to sell or buy.
2. Research the process to gain a better understanding of the steps involved.
3. Stay involved in the process of working with your agent, lender, title company, and closing attorney.
4. Keep an open mind and be flexible.
5. Create checklists, so you don’t overlook anything.
6. Focus on your end goal.
7. Maintain open communication with your real estate professional and other service providers.

A Brooklyn real estate agent who practices full-time has the expertise and market knowledge that buyers and sellers don’t. As a matter of fact, it is their job to stay on top of the market trends. Their expertise and experience in the local market can be the advantage you need to buy or sell a home.

Marketing a home is another area where a Brooklyn real estate agent can be of value.

They know how to get the exposure for your home needed to get it sold. They not only market to the general public, but they also market to their network of real estate agents who may be representing the buyer of your home. Utilizing professional services like home stagers, photographers, and videographers to present the house in its best light is an essential piece of marketing a home because most buyers begin their home search online.

According to the National Association of Realtors study, 91% of sellers list their homes through the multiple listing service. Your Brooklyn real estate agent has access to the multiple listing service. The multiple listing service is not only where real estate agents learn about the most recent available properties, but they also have access to the most recent home sales statistics. 

Although this database of information may be shared publicly through online portals, not all the detailed information is shared, including price history and sales information. When a property sells, it is recorded in the MLS immediately, but public records may take time to be updated.

The multiple listing service can benefit the buyer by gaining access to the most current information. For example, a real estate agent can set up an email notification system that will alert both the agent and the buyer when a new listing hits the MLS that meets their criteria. In reality, it may take time for this information to appear on online real estate portals. 

From a seller’s standpoint, accessing the MLS allows their property to have the most significant exposure on the market. In fact, 88% of home buyers recently utilized the services of a real estate agent. Buyer’s agents search for homes to show buyers through the MLS.

One of the best reasons to work with a Brooklyn real estate agent is the Realtors® Code of Ethics.

The National Association of Realtors® is the largest trade association in the country. All agents designated as Realtors® must abide by the Code of Ethics and are held accountable to them. 

Under the code of ethics, their duties are to protect their client’s best interest while treating all parties honestly, meet professional standards, implement non-discriminatory practices, and refrain from making false statements against other real estate agents. Duties covered under the code fall into three categories; client and customers, the public, and other Realtors®. 

Disciplinary actions will begin at the local level through the Board of Realtors®. The process of reviewing issues is detailed and accordingly works like many justice systems. 

The code of ethics provides accountability and guidance for real estate agents to conduct their business with integrity.

Hiring a Brooklyn real estate agent provides many benefits to home buyers and home sellers in our area. By all means, you should take the time to interview several agents and check references to be confident you have the right agent in your corner. 

Questions you should ask when interviewing a Brooklyn real estate agent:

1. How long have you been a real estate agent?
2. What is your sales history?
3. What sets you apart from other agents?
4. How will you help me buy or sell a home?
5. Do you require a contract? If so, can you cancel for any reason?
6. What is your marketing plan or buying strategy for me?
7. What is your commission rate?
8. Do you charge any additional fees?
9. How do you communicate with your clients?
10. What haven’t I asked you that I should?

Your Brooklyn real estate agent should be a trusted partner in the buying or selling process. As a result, you can embark on your real estate journey with confidence that you are well represented. A trusted real estate agent is the foundation of your real estate team. Find out about other parties involved in the process in this previous 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 am the trusted partner you are looking to find. I can be reached by phone at (718) 253-9500 ext. 1901 or by email at [email protected].

Can you increase your home’s value with a bathroom renovation? It is well known in the real estate industry that kitchens and baths sell a home. Homebuyers are looking for homes that need little updating to suit their decorating tastes. A bathroom renovation will indeed increase the value of your home. 

Appraisers will consider the condition of the bathrooms when they are valuing the home for the lender. Normal wear and tear is more evident in the bathroom of the home. Moisture is a contributing cause of the wear and tear in the bathroom due to the use of hot water. 

Let’s look at some reasons you may choose to remodel your bathroom.

• Safety is always the number one reason to do any home repair or renovation. For example, if your bathroom has slippery or cracked tiles, water damage, mold, damaged wallboards, or water leaks, you will want to make corrections.
• Updating an outdated bathroom can not only be for aesthetic purposes but also for energy efficiency. The bath may have been a state-of-the-art masterpiece when installed, but modern fixtures and building materials can make a big difference in energy savings.
• Additional storage is another reason to update a bathroom. A pedestal sink may look beautiful, but it does not provide any storage for personal care products. If you live in a small space, you may need to utilize any available space to create storage.
• Changing family needs can be a good reason to invest in a bathroom renovation. For instance, if your family grew over the years, you might need to adjust to accommodate more family members, such as a double vanity instead of a single vanity. If you have aging family members, you may need to update to a walk-in shower, add a bench in an existing shower or upgrade to a comfort height toilet.
• Plumbing issues could also be a cause for a bathroom renovation. Plumbing fixtures and pipes can deteriorate over time and need to be upgraded.
• Your current bathroom may not suit your style. Even if you built the home yourself, your decorating tastes could change over time. If you purchased the house, you inherited someone else’s style. Now could be the time to create the bathroom of your dreams.
• Your bathroom is the most used room in your home. Create a safe and comfortable space for you and your household members to enjoy daily.

What should you consider before remodeling your bathroom?

• Create a realistic budget. Decide how much money you have to spend on your bathroom renovation. Then, determine what you will be able to do with that budget. Don’t forget to factor in the cost of labor you may need to hire.
• Determine how long the project will take. If you are using contractors, understand how much time will be needed to complete the job.
• Create a plan for bathroom use while under construction. Do you have another bathroom you can use in the home? If not, discuss with your contractor what you will and will not be able to use during construction and create a plan for showering and toilet usage.
• Change what wasn’t working in the existing bath. Now is the time to change what wasn’t working for you. Specifically, do you need more storage, a more oversized countertop, etc.?
• Determine the overall look you would like. Then, gather design ideas to create the type of bath you desire. There are plenty of online sites like Houzz where you get ideas for your new bath design.
• Take time to coordinate the fixtures. Whether you will do a budget or a luxury update, coordinating the fixtures will make a significant difference in the finished product.
• Decide on the finishes you’d prefer. Many decisions will need to be made like tile, walls, floors, faucets, towel bars, and more to create a cohesive look.
• The type of lighting. There is a variety of lighting options, from budget to high-end. First, consider the purpose of the lighting. For instance, if you apply your makeup in the bathroom, you will want bright task lighting.

Types of Bathroom Renovations

The remodeling industry breaks down bathroom renovations into categories—mid-range, upscale and universal design.

A mid-range bathroom renovation includes:

• Ceramic tile flooring
• Standard white toilet
• Solid surface vanity
• Medicine cabinet with light
• Tub with ceramic tile shower surround
• Cost approximately $20,000

An upscale bathroom renovation includes:

• In-floor heating
• Heated towel bars
• Recessed shower cubby for products
• Body spray fixtures
• Frameless shower doors
• Freestanding bathtub
• Commode closet
• Cost can be up to 3 times that of a standard remodel

A universal designed bathroom renovation includes:

• Space to accommodate the turning radius of a wheelchair
• Zero step entry shower
• Slip-resistant floors
• Hand-held shower head
• Shower seat
• Grab bars
• Comfort height toilets
• Roll under sinks to accommodate wheelchairs
• Costs can run $30,000 to $40,000

You can always do a budget remodel as well. Be careful that you purchase quality products, however. Subpar products can cost you more in the long run if you have to replace them sooner.

Remodeling Magazine estimates that midrange bathroom remodels in the Middle Atlantic region of the US will generate a 57.4 return on your investment. A universally designed bathroom accommodates the needs of people of any ability, height, or age, whether they are seated, standing, or using a wheelchair. You may recognize a 58.2% return for a universally designed bathroom. And an upscale bathroom remodel will yield a 53% return.

How can you save expenses on your bathroom renovation?

• Don’t move the plumbing. The cost to move a sink, tub, or toilet can get expensive. Relocating these fixtures can cost upwards of $5,000 each.
• Frame a builder-grade wall mirror to update the look. Not replacing that massive wall mirror will save you money, but you can update it with a simple frame. The frame can also hide any wear around the edges that occurs over time.
• Don’t replace all the fixtures. You can make a toilet look better by just replacing the seat and lid. You may consider painting a tub instead of replacing it.
• Check out salvage and resale stores like Habitat For Humanity Restore. They sell new and used items, including building materials. Also, check out Craigslist, Online Marketplaces, and E-bay.
• Utilize materials like board and batten or beadboard instead of tile to save some expense and still achieve a high-end look.
• Use paint to create interest. Utilizing color can bring out aspects of your tile that you have not realized.
• Repurpose cabinetry. A fresh coat of paint or refinishing cabinets can cut down on the expense of your renovation. In addition, you can upgrade the countertops to make an impact.

Whether you are doing a budget renovation or a high-end renovation, you need to plan your budget and allow for a contingency carefully. You never know what you will find when you start tearing things apart. Unexpected expenses can occur even with the most thoroughly thought-through plans.

If you were to over-improve your bathroom, you might not recognize the return on investment you expect. You may be surprised to know it is possible to over-improve your home. Check out this previous blog post to read more about it.

Once your bathroom renovation is complete, you can enjoy the rewards of your efforts. But, of course, enjoying a soak in the tub or a steamy shower will probably be first on your list after all the hard work is complete.

If you are hiring contractors to do the job, check their references before signing a contract. You can also check to see if the contractor is licensed here at the New York State Attorney General’s website.

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 have seen many good and bad bathroom renovations. I’d be happy to discuss your plans to prevent over-improving for your neighborhood.  I can be reached by phone at (718) 253-9500 ext. 1901 or by email at [email protected].

Brooklyn homebuyers will need to obtain a homeowner’s insurance policy when they purchase their new home.

There are two reasons you will need to purchase a policy.

1. To protect your possessions.
2. To satisfy the mortgage lender’s requirements.

If you are financing your home with a mortgage, the lender will require a one-year prepaid homeowner’s policy to be in place before you can close on the house. Most lenders will require the insurance company to list the lender on the policy. In addition, lenders require dwelling and liability coverage on the home at 100% replacement value. This requirement protects the lender from loss should something catastrophic happen to your home.

The coverage required by the lender is not the only insurance you should have on your home. In addition to dwelling and liability coverage, you should also consider:

1. Other structures that are not attached to the home including detached garages, sheds, fences, and guest houses.
2. Personal property coverage will reimburse you for replacing your possessions like furniture, electronics, appliances, and clothing.
3. If you cannot live in your home due to damage, you may receive payment for the cost of living expenses while your home is renovated.
4. In addition to the liability, the insurance company will cover the medical bills of someone hurt on your property.

There are also different types of homeowner’s policies. The kind of policy you need will depend on the type of home you purchase and the level of coverage you desire. Here is a thorough outline of the different policies in this post from Bankrate.

Brooklyn homebuyers will need to choose a deductible.

A deductible is the amount of money you will pay out of pocket before the insurance coverage will take over. A higher deductible usually results in a lower premium. You will pay the deductible on each claim you submit to your insurance company.

Homeowner’s insurance will not cover natural disasters, “Acts of God,” or acts of war. However, you can obtain additional insurance policies like flood insurance, mine subsidence, and windstorm insurance policies. 

Some other additional types of coverage Brooklyn homebuyers choose to add to their homeowner’s policy are drain and sewer line coverage, identity theft, and business property coverage for a home-based business.

You may need a rider policy that extends the coverage of your standard policy. You should check with your insurance agent and review the coverage you have periodically.

Several factors determine the premium you pay. You should shop several different insurance providers because the rates may vary depending on the company. The amount of coverage and various rider policies will also affect your price.

The following factors will affect your total cost:

1. The amount it would take to replace your home is a significant factor. The actual amount it would take to rebuild your home determines the replacement cost. The cost to replace can vary depending on several factors, including the cost of materials and any improvements you have made to the home.
2. If your home is brick or frame can also affect the amount of your premium. Brick homes generally have a lower premium.
3. The proximity to fire hydrants and the fire department may factor into your premium. 
4. The age and condition of the house are also factors to consider. Costs are generally higher the older the home. 
5. A surprising factor to Brooklyn homebuyers is the history of claims from previous homeowners and the history of claims in the area.
6. The type of coverage you choose will affect the amount you pay.
7. The higher the deductible you select will lower the premium price.
8. Many Brooklyn homebuyers do not realize you can reduce your costs if you use the same insurer for your home and auto policies.
9. Some insurers will consider the length of time you have been a policyholder with their company.
10. Your credit score may also affect the cost of your insurance policy.
11. If you have filed claims on previous insurance policies, this may be a factor in pricing your new homeowner’s policy.
12. You may lower the cost of your insurance by having safety features in your home like security devices and sprinkler systems.
13. Another factor that can affect pricing is a wood stove, furnace, or fireplace.
14. Recreational features like a pool, trampoline, or play equipment may also increase your premium due to the potential for injury.
15. The type and breed of pet you have can affect your insurability
16. Operating a business from your home can also increase the costs of your home insurance policy.

Before purchasing a home, you may want to research the home’s history based on the C.L.U.E. report (Comprehensive Loss Underwriting Exchange). This report will show you the record of claims against the property.

Cancellation of a homeowner’s policy or non-renewal by the insurance company can occur for several reasons.

1. Failure to pay your premium. 
2. Fraud or misrepresentation occurred when obtaining the policy.
3. Changes occur in the property that deems it uninsurable.

Brooklyn homebuyers should understand that the number of claims you make on the property can also determine having your insurer renew your policy. Some insurance companies restrict the number of claims you can make in a given period. You will need to check with your insurer to understand their rules. Consider making minor repairs out of pocket and not filing a claim.

What can a homeowner do to reduce the expense of their homeowner’s insurance? 

1. As mentioned before, costs may vary from insurer to insurer. Compare several different companies before deciding on your provider.
2. Choose a higher deductible to lower your premium. A higher deductible will cost you more out of pocket for a claim but will save you on your annual premium.
3. Using the same insurer for your home and auto policy can be a cost saver.
4. Improving your home security can save money. 
5. Maintain a good credit history. You should check your credit score regularly and correct any mistakes you may find.
6. Review your policy annually and adjust for any changes. For example, improvements to the home and the value of your personal possessions may call for adjustments to your policy.
7. Maintain your home. Preventative maintenance on your home can save you in the long run for many reasons, including your homeowner’s insurance claims. 

Don’t confuse your homeowner’s insurance with a home warranty.

A Brooklyn homebuyer may receive a home warranty when they purchase their home. This policy will cover appliances and systems of the house. The home warranty will also have a deductible that the homeowner must pay. A home warranty will not cover you for fire, smoke,  theft, weather damage, or fallen trees. 

If you do need to file a homeowner’s insurance claim, contact your insurance agent. It is important to note that you should make efforts to protect your home from further damage. For instance, you may need to clean up backed-up water or board up the house from damage. A claims adjuster will work with you to evaluate the damage to the property. If you have any issues or questions about your insurance claim, you can contact the New York State Department of Financial Services.

It is essential to understand your coverage under your homeowner’s insurance policy. Consult with your insurance agent to ensure you have the right coverage for your needs at the best cost possible.

It is vital to maintain adequate insurance throughout your ownership of your home. Hopefully, you will never have to make a significant claim, but you will have the peace of mind that comes with knowing you can face any potential issues.

If you are considering becoming a Brooklyn homebuyer, you may want to check out this previous blog post to familiarize yourself with the homebuying process.

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 through the homebuying process. I can be reached by phone at (718) 253-9500 ext. 1901 or by email at [email protected].

Determining the right price to offer a home for sale can be difficult for a Brooklyn homeowner. Yet, even in this unprecedented real estate market we have been experiencing, setting the right sales price is extremely important.

The seller determines the sales price, but the buyer determines the value by what they are willing to pay for a home.

A fallacy that I often hear from Brooklyn homeowners is that they can ask for a higher price and negotiate down if need be. on the contrary, this philosophy may very well backfire. 

As a result of overpricing, the number of buyers who look at the home may drastically reduce. A buyer sets out on their home search with a price range determined by the lender. If your home is priced correctly and in their price range, they will take a look. If your home is priced outside their price range, they are less likely to look. 

Buyers looking in the price range of your overpriced home won’t be interested because other homes listed at the same price offer them much more.

Buyers know that homes are selling quickly in our current market, and negotiating a lower price isn’t likely. Therefore, they will probably eliminate your home because it doesn’t fall into their price range.

An overpriced home will take longer to sell. Statistically, overpriced homes end up selling for less than the amount the house would sell for if it was appropriately priced.

How does a real estate agent evaluate a fair asking price for a home? They use what is known as a comparative market analysis (CMA). Looking at comparable homes that have sold in your neighborhood is the beginning step of creating a CMA.

What makes a home comparable?

1. A similar number of bedrooms.
2. A similar number of bathrooms.
3. Square footage within 200 sq. ft of your home.
4. Within a ¼ mile radius of your home.
5. Same zip code.
6. Same school district.
7. Sold within the past six months.

It may not always be possible to find homes that are an exact match to yours. Using comparables that are most like yours and as close to the parameters as possible is key to determining the best price.

Real estate agents also want to look at other types of comparables in addition to the sold comps.

1. Homes currently for sale – these homes are your current competition.
2. Houses under contract – these homes show what interests buyers.
3. Homes that did not sell – homes for sale that expired also give clues to buyers’ willingness to pay for a home.

Let’s take a look at how a real estate agent creates a comparative market analysis.

1. A real estate agent will gather information about your Brooklyn home. 
   1. Location of your home
   2. Number of bedrooms
   3. Number of bathrooms
   4. Square footage
   5. Age of your home
   6. Lot size
   7. Updates
   8. Special features 
   9. Tax information
2. The agent will look to see the sales history of your home, if available.
3. Comparable property information is researched.
   1. Homes that sold
   2. Houses currently for sale
   3. Homes under contract
4. Now it is time to analyze this information.
   1. Days on the market
   2. Listing price to sales price ratio
   3. High, low, and average sales price
   4. Condition of the subject property
   5. Location of the subject property
   6. Neighborhood amenities
   7. Current competition (home currently for sale)
5. Your agent will create a report showing the Brooklyn homeowner the facts found in the agent’s research for the purpose of determining a suggested price range.

Your real estate professional will present and review this information with you. The next step is for the Brooklyn homeowner to set the price. 

A comparative market analysis is not the same as an appraisal. A comparative market analysis is a real estate professional’s process for establishing a price range to offer a home for sale. An experienced real estate agent tries to follow the guidelines that an appraiser must follow when determining a home’s value.

An appraisal occurs after the buyer and seller have agreed on a sales price. An appraiser is a state-licensed professional. The buyer’s bank will verify that the buyer’s price is equal to or less than the home’s value. Although the mortgage lender orders an appraisal to be done, the appraiser is a neutral party in the process. The appraisal will prevent the bank from lending more money than the home is worth to protect their investment. This article will provide you with some additional information about appraisals.

Three main factors will affect the saleability of your home. 

1. Condition
2. Location
3. Price

The condition of your home is something you may or may not be able to improve. If your home is outdated or in need of repairs, a buyer will not want to pay top dollar for the home. Therefore, it is best to make whatever updates or repairs you can before placing your home on the market. 

The location of your home is not something that will change. Moving your home to sell it is not a practical tactic to take. Neighborhoods change over time. Whether your area is desirable or in a downturn is not within your control.

The price of your home is a factor that you can control. It is natural to want to get the most money for your home. Understanding the details of the homes sold in your neighborhood is an essential factor when determining a sales price. Did your neighbor sell at a higher price? You need to look at the facts. Did they have a larger home and more updates?

Read this blog post to understand the reasons a home may not be selling. 

What are the dangers of overpricing a home? 

1. Your home will sit on the market too long. 

The most activity a home will see is in the first few weeks of hitting the market. After 3 or 4 weeks, the interest will wane. In the current real estate sales environment, buyers tend to think something is wrong with a home if it has been on the market for a while. 

2. Your sales price may be lower than if you priced it correctly.

As I said before, an overpriced home will generally sell for less than what it would have sold for if you start with the correct price.

3. If you do sell, your home may not appraise.

Maybe you were lucky enough to find a buyer willing to pay your high asking price. If the appraisal comes in lower than your contract price, the lender will not loan the money to your buyer. Depending on the type of loan the buyer was obtaining, that appraisal may be valid for some time and affect future buyers.

4. You won’t reach the right buyers.

Buyers and their agents are looking at homes priced within their price range. They may not even realize that your home is available for sale because it is not showing up in their searches. 

5. You give leverage to other homes for sale in your neighborhood.

If your house is overpriced and your neighbors price their home correctly, you make your neighbors home look like a better deal. Price will draw buyers to the home that seems to be a better value. 

Many factors will affect the sale of your home.

Working with a real estate professional can help you avoid some of the pitfalls. An experienced real estate agent studies the local real estate market and has its finger on current trends’ pulse. By all means, work with a local professional to determine the best price for your home.

It is tempting for Brooklyn homeowners to overprice their homes in a seller’s market to see what happens. But, hopefully, you understand now why this strategy isn’t going to be to your advantage.

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 know the local market and understand the best home pricing strategies. I can be reached by phone at (718) 253-9500 ext. 1901 or by email at [email protected].

Finally, you are experiencing Brooklyn Homeownership. You found the perfect home and have settled in comfortably. You may have been surprised by the expenses you had incurred in the buying process. Closing costs, down payment, and moving costs added up to more than you expected.

There is more to the cost of Brooklyn homeownership than those initial costs incurred. Let’s take a look at some of the hidden costs of owning a home.

1. Home maintenance and repair.

Home maintenance and repair may be a significant expense of Brooklyn homeownership, depending on the age and condition of the home you purchased. Some items that fall into this category are:

• Lawn maintenance
• Cleaning
• Gutter maintenance
• Pest prevention
• Weatherproofing
• Exterior maintenance
• Roof maintenance
• HVAC maintenance
• Plumbing maintenance
• Emergency repairs

2. Home Owners Insurance

Home owner’s insurance is an expense you would expect to have during homeownership. Your mortgage lender most likely will require you escrow for your insurance payments. You must understand what your policy will cover, and your deductible amounts should you need to utilize the policy. 

It is also essential to determine if you would need any additional insurance. You may want to consider a personal property rider or a sewer and water line rider. Consult with your insurance agent to determine if you have all the coverage you need.

Review your policy periodically throughout your homeownership to keep it up to date.

3. Property Taxes

When you purchased your home, you were aware of the fact you would be paying property taxes. What you may not be prepared for is an increase in property taxes. If the tax rate increases or your property assessment were to change, the amount of property tax you would owe would increase.

4. Utility Expenses

Total utility expenses can often be surprising to new homeowners. If you were renting before your Brooklyn homeownership, you might not have paid for all your utilities yourself, and the expense may not be what you expected.

Costs can vary from season to season depending on the weather.

I recommend asking the homeowner about their utility expenses when you are considering your home purchase. Although your number of household members may be different, which would affect utility usage, you will have a good basis to budget your monthly expenses.

5. HOA Fees

If you live in a community with a homeowner’s association, you most likely will be paying a monthly, quarterly, or annual fee to the association. These fees vary from community to community based on what they will cover. 

You should investigate what is covered by your association before purchasing a home. I have seen homeowners assume something is covered only to discover when a repair is necessary that it is not and is the owner’s responsibility.

6. Furnishings

If you have more space in your new home, you most likely will want to furnish it. Purchasing new furnishings is where you can break your budget. You may consider waiting until you have made your first mortgage payment before buying anything new.

Create a plan and a budget. Make a list of the furnishing you need and a priority. Then you can estimate the cost for each. Try to avoid the urge to splurge when first moving into your home. After living in the space for a while, you may decide you need different items for the functionality of the rooms.

7. Commuting

Your new home may be further from your old home. Whether you are driving or taking public transportation, you may experience an increased cost in getting to work. If you didn’t own a vehicle and now find you need one to get around or need a second car for your spouse, you will be facing additional expenses.

Now that you know some of the hidden costs of Brooklyn homeownership, you need to create a budget. It is vital to develop a realistic spending plan, so you know you have enough money to cover the things you need along with the things that are important to you.

Start by calculating the costs of owning your home. Things to include are:

• Monthly mortgage payment
• Taxes and insurance if not included in your mortgage payment
• Monthly utility costs
• Maintenance and repairs
• Updating and furnishing
• Homeowner’s Association Fees
• Emergency fund

It is important to save for an emergency fund should something unexpectedly need to be repaired or replaced in the home.

You will then need to include your other monthly expenses such as car payments, commuting expenses, groceries, student loan payments, entertainment, child care, and any additional recurring monthly payments.

After totaling your monthly expenses, compare that to your total monthly income. If your income is higher, you can plan to add to your savings for retirement or your dream vacation. If you need to shave your budget to save money, take a hard look at what adjustments you can make. 

Now that you have a budget set, you need to use it. Tracking your expenses is essential. You can avoid overspending by recording what you have spent each week. By logging your expenditures, you can identify any unnecessary spending in any category. 

Periodically review and adjust your budget as necessary. Consider reviewing your budget every quarter.

Now that you have a handle on the expenses of Brooklyn homeownership, you may want to start looking for ways to save money.

You can save money on home maintenance by:

1. Doing it yourself. 

Not all home maintenance issues require a professional. Lawn care, cleaning, painting, and other regular maintenance issues may be items you can do yourself. There are many available resources to help you learn these routine tasks. Knowing your abilities will determine what you choose to do around the home yourself.

2. Hire quality professionals

When you need something repaired that is beyond your skillset, the lowest-priced professional may not be your best bet. Do your research to know if the professional you are hiring is licensed and insured with a good reputation. You may get some good recommendations from friends and neighbors.

3. Don’t defer maintenance

There are regular maintenance items that need attention throughout your home. This helpful New York Times article breaks down home maintenance by season. Deferring home maintenance can cost you more money in repairs down the line.  For example, a running toilet can double or triple your water costs.

4. Check the insulation of your home

A well-insulated home can save energy costs. If you need to invest in better insulation, doing it early in your homeownership will save you money for years to come.

5. Install a programable thermostat

You can save money on heating and cooling expenses by installing a programable thermostat. You can adjust the temperature for the times you are sleeping or away from home. The thermostat can be programmed to readjust the temperature before waking up or arriving home to your comfort level.

6. Obtain a home warranty

When you purchase a home, the seller may be offering a home warranty. If they are not offering one upfront, you can negotiate with the seller to provide one or purchase one yourself. Be sure to discuss this with your real estate agent before closing. A home warranty can save you thousands of dollars in repair costs.

The home warranty will cover major components of the home and other repairs. They work as an insurance policy. You will be required to pay a service fee (deductible). If you have owned your home for a while, you may still be able to purchase a home warranty policy. Check the coverage carefully because it may vary from company to company.

Understanding the hidden costs of homeownership and budgeting for them is vital to anyone considering Brooklyn homeownership. If you are just starting your home search, check out my previous blog post to learn what to consider when you think you have found the perfect home.

Owning a home of your own is one of the best investments you can make. Proper planning will prevent you from becoming overwhelmed.

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 understand homeownership costs and can help you prepare for them. I can be reached by phone at (718) 253-9500 ext. 1901 or by email at [email protected].

There are many misunderstandings about Brooklyn homeownership that I have heard in my 30+ years of experience. I continue to listen to some of the same myths from homeowners and homebuyers. 

Today I discuss ten misunderstandings that I repeatedly hear about Brooklyn homeownership.

1. Renters don’t have to pay taxes and insurance. 

Although a renter does not directly pay these expenses to the governing bodies and insurance companies, the landlord will consider them in his rent calculation. When a landlord calculates the amount they will charge for rent, they look at several different factors. The home’s current market value is a top consideration. A landlord will also look at what the current local rent is for a similar property. They will also use their expenses as a factor in the calculation. These expenses could include the mortgage payment, taxes, insurance, HOA fees, maintenance costs, and property management costs. 

All renters need to obtain renters insurance. Renters insurance will cover the cost of your belongings should something happen in the home. Getting renters insurance may be a condition in your lease. Read your lease carefully. Protect yourself with renters insurance.

2. You only need a down payment to buy a home.

There are more costs to purchasing a home than just the down payment. You will need to cover expenses such as home inspections, pest inspections, and lender closings costs. Your lender can provide you with an estimate of what the closing costs would add up to when you obtain a pre-approval. Remember, this is just an estimate, and they can vary depending on municipal taxes, homeowners associations, and other factors. 

You must understand all the costs associated with a home purchase before you write an offer on any home.

3. If I have a mortgage pre-approval, I can afford the home.

Investment experts recommend that you do not spend more than 30% of your gross monthly income on a mortgage payment. Your lender may approve you for much more than that when they calculate your current income and expenses. Consider your lifestyle when deciding home much you want to invest monthly in your home. Suppose you like to go on vacations, eat out frequently, or have another big financial investment goal. In that case,l, you should not spend the maximum amount your lender will approve if you have other financial goals in addition to Brooklyn homeownership.

4. You need to put 20% down to purchase a home.

Ideally, you would want to put as large a down payment as possible when you purchase a home. Not only will it lower your monthly mortgage payment, but it will also build your equity quicker. However, many mortgage loan programs do not require a 20% down payment. If you are a veteran, you may qualify for a VA loan with no downpayment requirement. An FHA mortgage downpayment could be as low as 3.5%. Numerous other loan programs offer low down payments. Check with your lender to see what they have available. They can also discuss the advantages of each loan program with you. 

5. You need perfect credit to obtain a loan.

There are many different loan programs, and there are different levels of acceptable credit score per loan program. Credit scores run from 300 – 850. You don’t need a perfect 850 score to obtain a mortgage because there are different loan programs for varying credit score levels. If your credit score is below 580, you may need to work on credit repair before purchasing a home. It doesn’t take as long as you think to improve your credit. Working with a good credit repair professional will help you boost your score and get you into a home of your own sooner than you think possible. A mortgage lender should be able to help you find a reputable credit repair professional.

6. Having a home inspection will guarantee you won’t have problems with your home.

I wish this weren’t a misunderstanding, but it is. A home inspector does the most thorough inspection that they can. However, there are components of the home they can not examine with a typical home inspection. They can not see everything from their visual inspection. Only Superman has x-ray vision. Most home inspectors do a great job evaluating a home, but there may be unforeseen issues they may not be able to detect in a typical home inspection. That doesn’t mean you will have any problems with your home purchase. However, you need to discuss with your real estate agent and home inspector what they can and can not evaluate. If you are purchasing an existing home, you can expect something will arise during your ownership that will require maintenance or repair.

7. A newly constructed home is maintenance-free.

Maintenance requirements for a new home is a misunderstanding that takes many new homeowners by surprise. Owning a home means you will always be required to maintain the house. Unless you have purchased in a co-op where maintenance is part of the package, expect to invest time and money on maintaining your home. Better Homes and Gardens put together this comprehensive home maintenance checklist that is an excellent guide for homeowners. It is important to keep up with regular maintenance to prevent a significant expense for deferred maintenance of your home components.

8. All home improvements add value.

First of all, don’t expect any home improvement to bring back dollar for dollar of the cost. The return on investment varies from region to region. ROI can depend on the local area, weather, and cost of living. You can find many resources to help you calculate what you can expect. Another consideration when deciding on a home improvement is how long you intend to live in the home. Sometimes you just want to add an improvement for your use and enjoyment even if it doesn’t add additional value to the house. Here is a link to a recent blog post on my website addressing the possibility of over-improving your Brooklyn home. You will find some good food for thought as you decide on home improvements.

9. You can do whatever you want on your property when you own a home.

Local municipality regulations, zoning requirements, and homeowner associations can dictate what you can and can not do on your property. Before finalizing the purchase of a home that is part of a homeowner’s association, be sure to get a copy of the governing documents to review. In these documents, you will find their by-laws, rules and regulations, and policies. It is also wise to check the municipality regulations and zoning requirements, particularly if you purchase the property with a specific use in mind. Don’t rely on someone, including your real estate agent, to provide that information to you. Do your due diligence and ask questions. This is not an area where it is better to ask for forgiveness than permission. 

10. Home values always appreciate.

Many factors determine a home’s appreciation. It isn’t easy to predict what will happen in any local real estate market. But you need to know that homes do not always appreciate. One of the main factors is the location of the house. If the home is in a desirable area, you can expect appreciation. If the area is declining, it can have a negative effect. Be wary of buying the most expensive home in any neighborhood, especially when the houses surrounding the home for sale are smaller and less expensive. The economy in the area will also affect the rate of appreciation. If the economy is declining, you probably will not experience an increased appreciation of the home. Also, local development can play a factor in a home’s appreciation. Commercial construction in an area can either be a boost or a detriment to the rate of appreciation.

I hope these explanations clear up a few questions you may have about Brooklyn homeownership. Doing your homework is crucial when you are purchasing a home. And hiring an experienced real estate professional who is working on your behalf is priceless.

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  have helped many home buyers and sellers uncover the answers to their questions.

In the event our office is shut down, we are always committed to your safety during the COVID-19 health crisis in compliance with the State of New York public health policies. I can be reached by phone at (718) 253-9500 ext. 1901 or by email at [email protected].