Annette Delivers Real Results - HOME SWEET HOME

HOME SWEET HOME

Annette Deli e Delivers Real Results

Table Of Contents

There’s No Place Like Home

Who A Real Estate Agent Is

Owning vs. Renting

Buyers' Needs and Desires

New Construction Appeal

Searching for the Right Home

Buying a House: Negotiation Dos and Don'ts 43

What to Know About Home Inspections

Shopping for a Home Loan

10. From the Ground Up: The Home Building Process

11. Programs For Home Buyers

12. The Closing Process

13. Organizing Your Move

Why Choose Annette With years of experience in the dynamic Las Vegas real estate market, Annette has honed her skills to provide exceptional service tailored to each client’s unique needs. Building strong relationships is her foundation for success—by truly listening and communicating effectively, Annette has earned a reputation for lasting client connections. Her honesty, even when delivering hard truths, establishes trust and credibility, ensuring clients always make informed decisions. The real estate industry is ever-changing, and Annette stays ahead of the curve by continuously updating her knowledge. From the latest market trends to cutting-edge technologies and best practices, Annette brings current, relevant expertise to every transaction. Her adaptability allows her to navigate unpredictable market conditions effectively, always protecting her clients’ interests. Client satisfaction is Annette’s top priority. She is committed to putting each client’s needs first, even when it means forgoing short-term gains. This dedication has built Annette a strong reputation and led to long-term success through referrals and repeat business. With deep knowledge of the Las Vegas area, Annette offers invaluable insights into neighborhoods, schools, and local market trends. Her expertise guides buyers and sellers to the best opportunities. Annette respects her clients’ time, streamlines each process, and ensures that nothing falls through the cracks, letting clients focus on the excitement of their real estate journey. Choosing Annette means gaining a dedicated partner committed to long-term real estate success.

About Annette Annette is a dynamic Las Vegas real estate professional with specialized certifications and a wealth of experience that ensure exceptional service for every client. As a Military Relocation Professional, VA-Certified Agent, and expert in both listing and buyer representation, she guides military and civilian families through every stage of relocation and real estate transactions with confidence and care. Drawing from a background in sales, management, and executive roles, Annette blends strategic marketing insight with a deep understanding of the Las Vegas market.

Why Partner with Annette

Working with an agent who holds diverse certifications offers a major advantage in today’s competitive market. Annette’s training, experience, and commitment to excellence give clients a distinct edge in achieving their real estate goals.

Annette’s Certifications • CREN: Certified Real Estate Negotiator • CSI: Certified Sales Interrogator • CLP: Certified Listing Professional • CREM: Certified Real Estate Marketer • MRP: Military Relocation Professional • VA: Veterans Certified • CNHP: Certified New Home Professional • CEBA: Certified Expert Buyers Agent Negotiation Expertise

As a Certified Real Estate Negotiator, Annette uses advanced strategies to advocate effectively for buyers and sellers. Her ability to manage competing interests and personalities leads to

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stronger results, smoother closings, and consistently satisfied clients.

Listing and Marketing Proficiency

With her Certified Listing Professional credential, Annette brings expert pricing strategies, negotiation tactics, and market analysis to every listing. Her skill in presenting and marketing homes ensures maximum appeal, faster sales, and higher potential selling prices.

Digital Marketing Edge

Annette’s status as a Certified Real Estate Marketer gives her a powerful advantage in today’s digital landscape. She develops targeted campaigns that highlight each property’s best features across multiple online platforms, using data-driven strategies to attract qualified buyers quickly.

Comprehensive Buyer and Seller Representation

As a Certified Expert Buyers Agent, Annette delivers full-service representation for both sides of the transaction, providing personalized guidance and market insight throughout the process.

Specialized Services

Annette’s Military Relocation Professional and VA certifications reflect her deep understanding of military and veteran housing needs. Her expertise as a Certified New Home Professional further extends to clients exploring builder communities and new construction. Together, these achievements demonstrate her commitment to personalized, high-standard service across all real estate sectors.

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Client Commitment

Ethical service, honesty, and professionalism define Annette’s approach. She builds lasting relationships through attentive listening, thoughtful guidance, and a genuine dedication to client satisfaction. Her detailed knowledge of Las Vegas neighborhoods, schools, and current market trends empowers clients to make informed decisions with confidence.

Efficiency and Personal Passion

Known for her organization and follow-through, Annette ensures no detail is missed and every transaction runs smoothly. She goes above and beyond to create a seamless, rewarding real estate experience. Outside of her career, Annette enjoys time with her fiancé, family, and pets, along with creative pursuits like crafting and cooking. Her passion for animal welfare reflects the same care and integrity that define her professional life. Choosing Annette means partnering with a dedicated advocate who combines skill, experience, and heart to help you succeed in the Las Vegas real estate market.

Testimonials for Annett or Annette Below is a list of just a few people whom Annette has helped buy or sell a home, and what they said about working with her: “Annette is a real estate goddess. Without her help and guidance, I never would’ve got through the process with my sanity. I have never met a real estate agent of her caliber. She is perfection. She is knowledgeable, intelligent, kind, and has such a beautiful personality and sweetness. We had so many laughs together that she made the whole process pleasurable. I don’t normally leave reviews, but in this case, I felt it necessary to sing the praises of Annette. I will not hesitate to use her again if I have the need." • Freda Honig “What more can you ask for in an agent who is patient, compassionate, understanding, responsive, personable, has your best interest, and to top it off, a bubbly-energetic personality that is contagious. This is Annette and she is awesome! I was referred to Annette and I am fortunate to have her as my agent. Buying a house is a big financial decision, especially since we're not familiar with the area. She was very instrumental and informative throughout the process—discussions on locations, loans, inspections, insurance, etc. Without her experience and guidance, we wouldn't have purchased and closed escrow. She truly has the client's best interest as the top priority. I couldn't stress how important this was for me, based on my past experiences with other agents. I was not able to attend a few in-person meetings/inspections, but guess what, Annette was there in person as well as through FaceTime. Her communication and availability are exceptional and I wouldn't feel confident if it wasn't for her. She keeps me informed and her demeanor keeps you at ease to ensure your needs and comfort level are met. I couldn't be more happy and satisfied with the end result. Any agent or buyer could end their

real estate experience/relationship after escrow, but not for me.

Till today, we still keep in touch, and occasionally I will drop a text. She's that personable and easy to get along with. Highly recommend Annette if you need an agent who will go the extra mile. Thanks for all your effort and time throughout this journey. Wouldn't feel as confident without your experience and guidance!!! Looking forward to our next meeting." • Sam Le “You can’t get a better realtor than Annette! I completely recommend!! Quick to respond, very personable, listens to your needs! When we first contacted her, we gave her the timeline of when we needed to move. She contacted us right away when that timeframe came up and got our lists of our wants and needs. She informed us about the current market and we talked about our price range. She never showed us a place that was over our budget! No matter what time of day, she always responded quickly to my questions. If she didn’t know an answer, she immediately found it for us! She made the process so easy and fun for us! I cannot thank her enough for helping us find our new home!" • Taylor Guinn “My husband and I feel so lucky we found Annette! She is a down to earth person who actually listens to her clients wants and needs and does everything in her power to find them. Even when we kept changing our criteria on her, she responded quickly and always had a smile and no worries attitude. She answered all our questions quickly whether it was in person or via phone/text and was with us throughout the whole process of looking for a home, finding a home and purchasing our wonderful forever home. We also had some requests we wanted to make to the seller and Annette went to bat for us and was able to get everything (within reason of course) we wanted and then some. I would definitely recommend Annette to anyone looking to buy or sell a home. She's the best!! Thank you Annette!" xii

• Rodney and Holly “Annette deserves 10 stars not just 5! She is a standout in every respect! Nobody we have ever met is as responsive or committed to serving us as she was. On one occasion we called her on short notice to view a property. Within 30 minutes we were on our way to visit not just one but two properties. She also learned our likes and dislikes very quickly which enabled her to find properties that were contenders. And throughout the sales transaction process, she was extremely thorough and remained our strongest advocate. We cannot say enough good about Annette's personal commitment—the results speak for themselves—we could not be happier with our new home!" • Joe and Kathy Schroedel “Annette is an amazing realtor. We originally had a different realtor and while they did their job it felt more like they were just doing their job. We'd find a house, put in an offer, not get picked, and then moved on. After months of repeating that, one of our relatives recommended we talk to Annette. From the beginning her optimism and energy was night and day with what we were used to. Annette immediately reached out to our lender to come up with a game plan for us. By the time we got to Annette we were pretty desperate to find a house. Here's how I knew she was different. On one of our bids, we got some interest but the seller was asking for quite a few things. She could have told us to accept the asks knowing how desperate we were but she recommended we decline and keep looking. She could have made an easy commission from us but knew it wasn't in our best interest. The house we actually got; we didn't even want to put a bid in but Annette said "you won't know unless you put in an offer." In the end, it was us and two investors, and with all the work that Annette put in for us, the sellers ended up picking us. She's a wizard! Even after we closed, she’s been here to help us with not xiii

just our property but on a personal level as well.

We've even exchanged messages as late as 11pm just chatting about properties and joking around. Her contact will forever be in my phone. If anyone ever asks for a recommendation or if I decide to sell/buy again, she'll be the first person I reach out to. My family and I can't thank her enough for coming through when we were in a tough spot." • Hoai Ly “Annette was awesome! As first time homebuyers she paid attention to all our wants and needs for our new home. We never felt like she was trying to push us towards something that was over our budget or not suited for us just to make a sale. She took her time with us and went to MULTIPLE houses trying to find our “perfect” match. She is a wealth of knowledge and you feel like you’re working with a friend from day one. I would highly recommend Annette for all your real estate needs." • Victoria and Blake Behning “Annette is an absolute pleasure, truly. She is extremely knowledgeable about Las Vegas and guided us through every aspect of home buying with such ease. She made us feel as if we were old friends so the trust came naturally. We have now purchased a lovely home and it's all thanks to Annette, really. Thank you for your professionalism, patience, punctuality, and pretty awesome personality. For any future home buying, look no further." • Oliver D

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The Best for your Home! our Home! Contact me for a FREE, No Obligation, Home-Buying Consultation to discuss your home-buying goals!

When you’re ready to buy your first home or purchase your next one, give me a call so we can go over everything you’re looking for in your dream residence! We’ll discuss your anticipated budget and put together a list of needs and wants in your next home. We’ll talk about:

• How much space you need • What extra amenities you’re looking for • Home designs and features you prefer • Number of bedrooms/bathrooms • What different local neighborhoods offer • And much more!

I take pride in my ability to understand and deliver what my buyers are looking for. When you're ready to move forward, I’ll connect you with a qualified lender who can get you pre- qualified to actually purchase your next home.

Annette Shoemaker-Kohberger S.186932 LLC Annette@VegasPropertyExpert.com www.VegasPropertyExpert.com 702-858-1970

CHAPTER 1 There’s No Place Like Home

Congratulations on your decision to buy a home! Most of the time, buyers know a few things about what they’re looking for, including whether they see themselves living in a charming, historic property or all-new construction. Whether you’re leaning toward building a home from the ground up or buying something already built, I’m here to help. Yes, it’s still a great idea to hire an agent, even in the case of building your own home! Here are just a few of the reasons why:

Agents protect your best interest.

Going through the process of building a home is no easier than purchasing an existing home — in fact, it can be even more complex. A real estate agent can advocate for you in a way that builders will not. Agents are knowledgeable about what makes sense for the market. Don’t get ripped off just because something still smells like fresh paint! Hire an agent to tell you the value of everything in the market — right down to kitchen fixtures and flooring.

Agents can help buyers navigate paperwork and contracts.

Do your eyes cross when you look at pages and pages of complicated contracts? Great news — an agent like me can help you understand what you’re signing and how it affects your financial life and your future. Your agent can also attend meetings with builders and other members of the process. 1

Agents can help manage your expectations.

If you’re building from scratch, working with an agent will help you realize a reasonable timeline, what to expect, and when. In this book, I’ve provided a guide to help you buy a home — whether you want to purchase an existing house or build one of your own. We’ll discuss your needs vs. wants in a new home, go over the search process, negotiations, closing process and everything in between.

CHAPTER 2 Who A Real Estat eal Estate Agent Is e Agent Is

Simply put, a real estate agent is someone licensed to list and sell real estate, including homes, multi-family properties, commercial, and industrial buildings. A Realtor®, however, is somewhat different. A Realtor® is a member of the National Association of Realtors®. While an agent is always a real estate agent, a real estate agent isn’t always a Realtor®. As mentioned, real estate agents who work on behalf of the best interests of the buyer are commonly called buyer’s agents .. All listing agents represent the seller, but other agents who don’t have buyer-agency agreements with prospective buyers — even though they may show homes to those buyers — are working on behalf of the seller and must obtain the best price they can for the seller. In contrast, buyer’s agents work on commission, which is contracted in the listing agreement. When a buyer’s agent brings the buyer, the listing agent must split the contracted commission with the buyer’s agent.

HOW TO CHOOSE THE BEST AGENT FOR YOUR NEEDS UR NEEDS

You might feel the urge to pick the first real estate agent who appeals to or approaches you, but that’s something to avoid. As with any professional, there are degrees of professionalism, dedication, and experience. The “wow factor” will simply wear off. Meet with prospective buyer’s agents in their offices. A good 3

buyer’s agent will want to know whether you’re preapproved for a loan by a financer, what kind, and the terms of the loan you’re getting. They should spend adequate time to discover what you’re looking for in a house. They should listen as much as talk and ask questions. Watch to see if the agent makes notes. If the agent doesn’t broach the topic, ask for an explanation of his understanding of agency relationships and obligations to you. The law requires agents to explain whether they’ll be working for the buyer or the seller whenever they have substantive contact with a customer or prospective client. If the agent doesn’t offer you a buyer’s agency agreement, that agent is representing the seller, not you. . If the agent can’t explain agency concepts to you, then move to the next agent. Be sure that the agent will be showing you all listings or properties on the market that meet your requirements, and not only listings that are handled in-house. Buyer’s agents have the legal duty to put the buyer’s needs ahead of their own. Even when an agent will be paid more for selling an in-house listing, they must inform you about other available, suitable listings and take you to see viable prospects. A good buyer’s agent will provide a home-buying education. The listing agent will point out all the features of a home; a good buyer’s agent will point to the faults — or advise when they can be overlooked. Competent buyer’s agents help their buyers to think clearly as the home-buying process unfolds. For example, if a house is a good buy, a buyer’s agent might suggest looking past the dated bathroom and kitchen and look at the space above the garage that will make the perfect art studio you desire. Likewise, a cute house with all the amenities but with knob-and-tube wiring or a 40-year-old roof might not be worth the asking price. According to the San Francisco Chronicle’s Home Guide, if you decide to

buy with the intention of building an addition, the agent should advise you to check the zoning before making an offer. Agree to sign a buyer’s agency agreement after you have met with an agent. Some people sign an agency agreement after attending a showing given by the agent. Working with a seller’s agent is a mistake, according to an article by Amy Fontinelle of Forbes’ Investopedia. Any information you reveal will become leverage that the seller can use in a purchase negotiation. A buyer’s agent is legally required to maintain your confidentiality, disclose material facts to you, and maintain loyalty to you. These are fiduciary duties.

LOOK FOR PROPER CREDENTIALS

You wouldn’t trust a doctor who didn’t have the proper credentials and licensing. Don’t trust a real estate agent who doesn’t present theirs or doesn’t have them at all. It’s easy to find real estate agents who can take the job, but finding agents with special credentials — those who have gone that extra step to take additional classes in certain specialties of real estate sales — is worth looking into. Here are just a few credentials within real estate that you should be on the lookout for: • Accredited Buyer’s Representative (ABR): Completed additional education during representation of buyers in their transactions. • Certified Residential Specialist (CRS): t (CRS):Completed additional training during the handling of residential real estate, such as houses and apartments. • Seniors Real Estate Specialist (SRES): RES):Completed training for the purpose of helping sellers and buyers 50+ years old. 5

Similarly, if you choose to use a real estate agent who’s also a member of the National Association of REALTORS®, it will be a bonus. However, ensure they have credentials that are relevant to your need(s).

RESEARCH LICENSING

Your state will have a license board for all active Realtors® and agents, which you can easily access. You will also be able to see their contact information, disciplinary actions, complaints, or any other information that you’ll need to help influence your decision — especially since most of the information is now posted online.

GIVE THE “WHAT ELSE” TEST

A good agent will know about all the other properties for sale in the area. Also, a good agent always does their research regarding the events in the current market, and those homes that are out there for the taking. In short, you want an agent who’s an expert of the current market, and someone who always stays on top of things.

RESEARCH THEIR BUSINESS ACTIVITY

Learning the type of market presence that a real estate agent has is the best way to figure them out. Ideally, you’re going to want an agent who specializes in one or two real estate markets, and who understands which types of homes and amenities are available within your price range. You can unearth this information by asking them or by asking the state licensing authority if you’re not comfortable with asking the agent directly. You’re better off with an agent who’s engaged actively in one area and price range — e.g., residential homes around the $200,000 to

$250,000 range or the $400,000 and up range.

GOING THE BUYER'S AGENT ROUTE

So, you’re ready to take the plunge and look for a place to call “home.” To get the most out of it, use a buyer’s agent to avoid a flurry of paperwork, stampedes of buyers competing for the same property, and other challenges. Home buying can be exciting and exhilarating, but it can also be complex and stressful — which is why having a pro by your side can make an enormous difference. As discussed, you’ve probably heard of buyer’s agents, seller’s agents, listing agents, and so on. You’re a buyer, so what’s a buyer’s agent? True to the name, buyer’s agents assist home buyers every step of the way; they can also save you both time and money on the road to homeownership. When you find the right one for you, these real estate agents will work day and night to ensure all your needs and requirements are met when it comes to finding the right home.

WHAT BUYER'S AGENTS DO FOR YOU

Your buyer’s agent will have a vast knowledge of the current real estate market for the area, which will include neighborhood amenities and conditions, the law, zoning issues, price trends, negotiations, taxes, financing, and insurance. Once you meet with the buyer’s agent, they’ll generally help you determine your needs and wants when it comes to finding a home and a neighborhood. The agent will teach you what you can afford, help you set a budget, provide some insight on the current conditions of the market, and explain what you should expect while shopping for a home. During the shopping period, you’ll meet with your agent for tours of homes in which you might be interested

They will give your insight into the floor plans, the home’s pertinent selling points, and the overall crime rate of that neighborhood. They will also give you the rundown for local activities, restaurants, shopping centers, and schools nearby. Your agent is responsible for ensuring inspections of the homes are complete, as well as the disclosures therein. They’re also in charge of ensuring coordination and completion is done through the roof inspector, attorneys, lenders, and all other professionals involved with the purchase of the home. If bargains need to be made over the price, you won’t have to negotiate yourself. Your buyer’s agent will do that for you, along with signing the final closing documents. They will be present whenever there are documents to go through and sign.

DUAL AGENCY: THE BASICS

A “dual agency” relationship occurs when a buyer is being represented by a brokerage firm that controls the listing. Once an agent represents both the seller and the buyer within the same transaction, the situation is known as “dual agency.” In multiple states, this is illegal because of the conflicts of interest that can arise regarding the broker. All agents hold the same responsibility, which is to inform their clients of all potential risks that could arise due to conflicts of interest. Legally, agents are not allowed to work on both sides of any transaction without consent from the clients. If you’re selling your home and you don’t want your agent to also work with the buyer of your home, it’s your right to say so in the listing agreement. This is also true for buyers. A buyer can get out of an agreement with an agent if they are interested in purchasing

a home their agent is listing.

When it comes to dual agency, there are definite advantages for the seller. • Trust has already been gained with your listing agent, so representation for the buyer has been established. • Your agent brought you the buyer knowing that you’re selling, even if your property has not yet hit the market. • Your listing agent will have already covered and researched your neighborhood’s market to gain buyer inquiries, which means your agent will be working from all sides of the deal to sell your house faster, and with more incentive. • Your agent works together with corporate relocation buyers who need to find a house quickly, and they will ensure it’s your house that’s bought. There are also cons for the seller when it comes to dual agency, and they are: • You can’t be advised by your agent as thoroughly when they must act as a dual agent because impartial facilitation is required. • Your listing agent is not allowed to negotiate the best or highest price for you if also negotiating both the best and lowest terms for the buyer. • Earning a full commission, if the opportunity arises, may tempt the agent to coerce a deal that you might not accept otherwise. • Your agent may inhibit all access to your listing through buyers with agents.

To avoid surprises or missteps in a dual agency sale, always ensure you have clarified important details with your agent ahead of time. You can do this by using an exclusive buyer agency agreement or a listing agreement.

HOW REAL ESTATE AGENTS ARE PAID

The National Association of Realtors® 2017 Profile of Home Buyers and Sellers states approximately 8% of homeowners opted to put their homes up for sale in 2017 without using a real estate agent or Realtor®. A handful of For Sale By Owner (FSBO) transactions dealt with sellers and buyers who previously knew each other or were directly related; 87% of buyers chose to work with a real estate agent or Realtor®, on the buyer’s side. Real estate agents and Realtors® — unlike professionals in different categories who bill by hourly rates or earn a salary — get paid through a transaction (commission) at the end of each sale. For example, if an agent has worked with a seller or a buyer for months, they don’t get paid for the time spent if there is no transaction during that period. Agents receive a commission once the transaction goes through to settlement (closes) based on the selling price of the home. At that point, the commission is earned. The commission itself is negotiated — in most cases, between the seller and the agent. Typically, an agent will earn a commission of 6% from the sale price, but some brokerages have commission discounts for the sellers with whom they work.

Essentially, the listing agent and the buyer’s agent will split the

commission. That can bring forth some issues. For example, sometimes the split might not be negotiated evenly. A seller could have agreed to pay a commission of 5.5% that, if further divided, the buyer’s agent would receive 2.5% while the listing agent receives 3% of the commission. Even though some agents are associate brokers, or brokers in general, all commission payments are instructed to go through to the broker who’s managing the brokerage where the agent is working. From there, the commission is then split to the agent and the broker, according to the agreement that’s been made. The split will vary; sometimes, newer agents will earn a small portion of the commission compared to the experienced or successful agents who generally sell more expensive properties or homes.

PAYING THE COMMISSION ITSELF

The overall commission is paid for at the settlement period by the seller. The fee is taken from the proceeds of the sale of the home or the property. However, the buyers pay the commission because they’re literally paying to purchase the house, while the sellers take the commission for the agent into account during the process of determining the price for the listing. From there, the commission is then divided during the settlement process between the buyer’s agent brokerage and the listing agent’s brokerage. Afterward, the agents who made the real estate sale are further paid by their brokers.

CHAPTER 3 Owning vs. Renting

Owning your own home might be one of the defining qualities of the “American Dream:” the set of ideals that includes opportunity for prosperity and success and an upward social mobility for the family and children, achieved through hard work. Home ownership is surely ingrained as one of the strongest representations of that vision — 66% of Americans own their own home, and more hope they will or wish they did. Something about home ownership plucks a strong chord with Americans. Financial security, permanency, status, and pride are values many of us seek. Lifestyle plays a big role in the decision to own versus rent. Home buying is most often driven by household formation, such as marriage and growing a family. Less than 40% of people under 35 years old own homes, 60% of people over 35 years old own homes, and more than 80% of people 65 years old or over own homes. Interestingly, for the millennial generation, the primary reason for buying a home? Owning a dog. The U.S. homeownership rate has fluctuated between 62% and 70% since the 1950s. Most young people begin their independent lives renting an apartment, maximizing lifestyle flexibility and minimizing the hefty upfront costs associated with purchasing a home. As they build careers, save money, and start families, many choose to buy a home, recognizing that home ownership, as opposed to rental living, is more appropriate to their growing family needs. At the other end of the age spectrum are homeowners nearing 13

retirement who may desire to sell their homes, downsize, avoid the maintenance and other obligations, and go back to renting.

WHICH IS BEST?

Is it better to rent or buy a home? Most adults ask themselves this at some point as they form their goals and plan for the years ahead. Before you answer the question, here are some things to ask yourself. Owning and renting each have their advantages, but what’s best for you depends on your circumstances. What will be the duration of your stay in the home? Each market is different, but whether the time you plan to spend in the house warrants its purchase is possible to predict. In general terms, it takes four to seven years to break even on a home (i.e., where there has been enough appreciation to pay back the cost of the transaction and cost of ownership). If you’re thinking about buying a home and selling it in two years, buying is very unlikely to be cheaper than renting. Do you think of or need your house as an investment in your retirement plan? Americans are used to their homes being a store for wealth to liquidate in retirement when downsizing their lifestyle. In 2015, Gallup reported that for the second straight year, more Americans named real estate than stocks, gold, savings accounts/CDs, or bonds as the best long-term investment. Real estate leads, with 31% of Americans choosing it, followed by stocks/mutual funds at 25%. A cautionary note though — although home prices have recovered their pre-2006 market slump and continue to rise, the value of your home can fall, as well as rise. Are you financially ready? Owning a home is a financial commitment that requires planning how home ownership fits into where your life is headed. Ask yourself what your budget is and if either buying or renting would require you to stretch

your finances. Crunch all the numbers. A frequent mistake of first-time home buyers is comparing a month’s rent to a month’s mortgage payment. Many people don’t have all the numbers. There are many additional fees necessary to include to make a fair comparison: principal interest, property taxes, property insurance, homeowners’ association (HOA) fees, and ongoing maintenance. Are you prepared for the down payment? This is the lump sum payment that funds your equity in the property (how much of the property you actually own). Down payments vary; 20% is preferred and gets the best rates. There are some loans that allow down payments as low as 3%. Sometimes relatives help with the down payment. If you have a choice, take a gift rather than a loan because lenders will add the loan debt to other monthly obligations and potential mortgage payments to determine your debt-to-income ratio, which generally can’t top 43% to qualify for a home loan. Can you afford the monthly mortgage and its components? Generally, a mortgage includes loan principal and interest (both amortized over the life of the loan) plus homeowner’s insurance and property taxes (prorated). These items can affect the monthly loan-only payment by several hundred dollars. Are you emotionally ready? Can you handle the stress? A big factor to consider when buying a home is stress. The Holmes and Rahe Stress Scale, a landmark stress study, ranks many events that go along with buying a home in the top 43 most stressful circumstances in life. Four events are specifically home-related: change in financial state (No. 16), large mortgage or loan (No. 20), change in living conditions (No. 28), and change in residence (No. 32). If someone has recently made other life changes, such as marriage (No. 7), switching careers (No. 18), or having a child (No. 14), it might be wise to postpone buying a home. Stress overload can lead to missed payments, which can result in

destroyed credit or even losing the home. It’s better to rent if your life is in flux and then buy when your stress levels are lower. Are you ready for commitment? Are you ready to make lots of decisions, from picking a real estate agent to picking paint colors? Are you confident enough to choose a neighborhood where you believe home values will continue to appreciate and that will serve your needs (i.e., proximity to schools, shopping, recreation, etc.)? Are you ready for devoting the time and attention to maintaining a home (i.e., leaf-raking, grass-cutting, appliance maintenance and repair, etc.)? Taking care of your biggest investment can be gratifying, but only if you’re ready.

ADVANTAGES OF BUYING YOUR HOME

Control over housing expense. By selecting a fixed-rate 15-, 20-, 25-, or 30-year mortgage, the homeowner has assurance that housing costs won’t increase over the period, and, in fact, will be eliminated at the end of the term (subject to refinancing). You build equity. Some of each monthly mortgage payment goes toward the loan’s interest. Other portions may go to homeowner’s insurance and county taxes. The remainder pays down the loan principal. Every dollar put toward your loan’s principal represents a dollar of equity — actual ownership of the property. Further, the property should appreciate in value each year, further adding to equity (what the house could be sold for versus what is owed on it). Discounting certain blip periods, such as the 2006 housing bubble burst, home prices in the U.S. appreciate nationally at an average annual rate between 3% and 5%. Remember, though, home value appreciation in different metro areas can appreciate at markedly different rates than the national average. Improvements increase your home’s value. A homeowner can also increase a home’s value through home improvements, thus

both making your home more comfortable and enjoyable while growing its loan-to-value (LTV) ratio. For instance, adding a bathroom or finishing a basement substantially increases the property’s functionality and appeal, while potentially boosting its value. Tax advantages of home ownership. There are significant tax benefits associated with buying a house, both at the time of purchase and for the duration of time you own the home: • Homestead exemption. Many states exempt owner- occupied homes (homesteads) from a portion of the property tax amount that would normally accrue. For instance, Louisiana exempts the first $75,000 of a home’s value from property tax assessments, so a $200,000 home in New Orleans is taxed as if it were worth $125,000. • Federal tax deductions. When you’re looking to purchase a home, it’s important to understand what can be deducted on your tax return and what can’t. Property taxes and interest paid on your mortgage can be deducted if you itemize your federal income taxes, which can reduce your income tax burden. Many home buyers, unfortunately, overlook the effect of mortgage interest on their federal income tax payments. Mortgage interest can be a powerful financial planning tool. Calculate the amount of mortgage interest deductions you are eligible for, and include that in your annual financial planning. Then, make a point of checking Internal Revenue Service (IRS) Form 1098, which you’ll receive from your lender at the end of the year. This form shows the amount of mortgage interest that you’ve paid. The Tax Cuts and Jobs Act (TCJA) applies from 2018 to 2025 and limits the

aggregate deduction for state and local real estate property taxes; state and local personal property taxes; state, local, and foreign income, war profits, and excess profits taxes; and general sales taxes (if elected) for any tax year, up to $10,000 ($5,000 for marrieds filing separately). This limit does not apply if those taxes are paid or accrued in carrying on a trade or business, or in an activity engaged in for the production of income. In other words, if you are just living in your home, you can only claim up to $10,000 in tax deductions on your property, but if you are earning income directly from your home in some way, the limit might be waived. Current mortgage rates are relatively low. Interest rates vary through the years. Several years ago, interest rates were higher, and it was more expensive to obtain a mortgage. Since these costs have been reduced, it’s now easier and less expensive to own a house. Ownership rights and creative freedom. Your decorating and home-improvement choices are just that — yours, provided they don’t break building codes or violate homeowners’ association rules. You can paint walls any which way, add fixtures, update or finish your basement, or build a patio or deck. Changing your environment to suit whims is a freeing aspect of homeownership. A sense of belonging to the community. Homeowners tend to stay in homes for longer than renters and are more likely to grow roots. They might join a neighborhood association, volunteer at a nearby community center, join a school group, or align with a business improvement district. Renters might not do any of those things, particularly if they know their lease is up in a year and they might move. There’s an intangible pleasant feeling attached to owning your own house — a sense of freedom and

independence. The home you live in belongs to you , and you can do what you want with it. You aren’t daunted about increases in rent or losing the lease. You’re free to make improvements and changes. Also, owning your home gives your children the guarantee of attending the schools in the area on a more permanent basis; you never need to worry about a notice from the landlord to vacate your rented house or apartment for a variety of reasons over which you have no control.

ADVANTAGES OF RENTING

It seems a shorter list, but one man’s pro is another man’s con, and there certainly are advantages to renting to factor into your buy- or-rent decision. No responsibility for maintenance. Admittedly, this is a big one. As a renter, you’re not responsible for home maintenance or repair costs. If a toilet backs up, a pipe bursts, or an appliance stops working, you don’t have to call an expensive repair person — you just call your landlord or superintendent. Renters in condos, townhouses, or apartments also don’t have lawn and grounds care obligations. Relocating is easier. When renting, relocating for work is easier. Though a sudden move may require you to break your lease, you can partially offset the cost by subletting your apartment or talking with your landlord. On the other hand, selling a home takes time and effort. If you have a short timeline to sell your home, you may be forced to accept a lower price and lose some of your investment. No real estate market exposure. Home values fluctuate and can decline over time. If you’re a renter, that’s not your problem. If you’re an owner trying to sell — it is.

DISADVANTAGES OF OWNING

Maintenance. The renter’s largest advantage might just be the homeowner’s major disadvantage. While insurance might be available to protect against expense from major catastrophe, usual maintenance items are on the homeowners’ dime. Maintenance and repair can be as simple as repainting the baseboards and can also be as extensive and expensive as replacing a HVAC system or sewer pipe. The expense will vary from year-to-year; however, you can expect to pay about 1% of the value of your home annually toward these expenses. If you live in a $200,000 home for 10 years, that’s $20,000 over the period, and perhaps more if you must replace a costly, long- lived mechanical item, such as a furnace. Keep in mind the usual homeowner’s chores of lawn care, snow removal, gutter cleaning, and other regular home maintenance needs. Upfront and closing costs. Buying a home entails numerous upfront costs. Some are paid out-of-pocket after the seller accepts your purchase offer, while others are paid at closing. These include earnest money, down payment (typically ranging from 3.5% for FHA [Federal Housing Administration] loans to more than 20% of the purchase price), home appraisal, home inspection, property taxes, and first year’s homeowner’s insurance. Loss of relocation flexibility. It’s much easier to break a lease and move out of town than to arrange for the sale of a residence. Selling the home from out of town involves special logistics and financial matters, such dealing with the mortgage while the home is on the market. Financial loss potential. Homeownership builds equity over time; however, equity doesn’t equate to profit. If home values in your area go down or remain stagnant during your time as a homeowner, the appraised value of your home could decrease, putting you at risk of a financial loss when you sell.

DISADVANTAGES OF RENTING

No equity building. The monthly rent you pay goes to the landlord. It represents the fee you pay for using the property. You gain no ownership in the property, no matter how long you live there. No tax benefits. While homeowners can deduct property taxes and mortgage interest on their tax returns, renters aren’t eligible for housing-related federal tax credits or deductions. Home improvements go to the landlord. Any structural and decorative home improvements that renters make belong to the building owner and will have to stay behind when you move to a different place. Additionally, approval for desired major redecoration will be necessary. After all is said and done, the decision to buy or rent depends on the prospective home buyer’s circumstances. There’s no denying, though, that a home of your own is a good financial and a great emotional investment. An investment in a home can also mean an investment in your future. There is much to consider when you want to buy a home. Switching from renting to homeownership is highly challenging, but an exciting and amazing decision to make.

CHAPTER 4 Buyers' Needs and Desires

After you’ve decided to buy a home, what sort of home it will be is your next decision point. It’s a better approach to have a concrete vision in mind of what type, features, and amenities you want in your home, rather than a “shotgun look” at every listing that’s out there in your price range. Imagine your dream house. It fulfills both your needs and desires. It fits the need for a good roof over your head, a sturdy structure, modern fixtures and appliances, living space (i.e., bedrooms, living room), and functional rooms (i.e., kitchen, bathroom[s]). Your needs fulfilled, you turn to your desires. Perhaps you envision a home on the beach or in the woods, a gourmet kitchen, a wood-paneled den, a crystal chandelier over a banquet table in the manor-sized dining room or an Olympic-sized swimming pool with a hot tub and sauna. Your priority in any home purchase should be ensuring all of your needs are met. Sometimes, you won’t find everything you desire in a home and if you do, you may not be able to afford it. It’s important to prioritize the things you want in a home by how important they are in your search.

Decide your needs vs your desires.

• Would you like a swimming pool? Enough that a home without one will not be looked at? • In what areas or neighborhoods might the home be located? Where do you want to live? Where might you have to live for work commute or home price reasons? 23

• What features would make it special? • What can you afford and what is out of your budget?

Budget usually constrains us most in selecting a home. While some things are necessary for any home (as mentioned, a good roof and working appliances), others will just stay on the list of desires for now (like the sauna).

MAKE A LIST; CHECK IT T ; CHECK IT TWICE

You may have an impression of what you want in your new home. Putting that to paper and having a complete checklist can prove useful. Before starting your hunt for a new home, it’s advisable to make a list of all your basic needs and desires, then prioritize the desires, figuring that all needs must be met in any house under consideration. This will make the search easier and help weed out the ones that don’t meet the basics. Realize, however, that it’s nearly impossible to find a home that meets all requirements. Compromises will be necessary. It’s a good idea to work from outside-the-house factors to inside- the-house. For example, location is perhaps the primary concern and both “needs” factors and “desires” factors might be involved. A “need” would be “must be within 25 miles of work.” A desire might be, “would like Westwood” (a favored neighborhood), while a need might be “on the west side of the city” (because work, family, friends, and recreation activities are all located there). Location needs may include proximity to schools, frequently used recreation facilities, or mode of transportation (bus or suburban rail access). Whether an item is a need or a desire depends on circumstance.

Closeness to family might be a need for a couple with young children or elderly parents to care for —or a desire if those factors aren’t involved. It’s items like these that make a checklist most helpful. After location needs and desires are compiled, housing factors can be considered. Needs include having all essential house structures and systems in good working order. Accepting a house with need for a new roof because the owner is willing to knock $7,000 off the listing price — but it will cost $10,000 to replace the roof in two years — is not a sensible deal. Needs might include a minimum number of bedrooms and bathrooms, no steps, fenced yard , perhaps a first-floor laundry facility, and any feature the prospective buyers have decided they cannot accept a home without. Desires are features that make the home more attractive or enjoyable — an upgraded kitchen, walk- in closets, a master bedroom suite. Of course, one buyer’s need is another buyer’s desire. The point is to know your own needs and desires so you can easily assess potential properties and make the process smoother. Regardless, buying a house is not a simple process. Much of the planning should be done well before contacting a real estate agent or looking at homes. Work the costs as well as your budget. Choose a general location. Contact lenders well ahead of home shopping, so that your offers aren’t tied up in getting financial approval. Having the image of your dream home is reality married with imagination. In fact, you may find that some aspects of the house you intend to buy are different. It’s not the same as what your dreams told you. Different people have different requirements. It depends on your thought processes, as well as personality.

We understand important things and potential compromises

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