Most real estate on the market is comprised of homes listed by real estate professionals. In addition, some properties may be available for sale directly by the owner. FSBO is the industry acronym for “For Sale By Owner.” One of the common misconceptions with Columbia SC FSBO properties – or FSBOs – is the myth that because the sale doesn’t involve a real estate agent it will somehow be simpler. This is rarely the case. Let’s examine a few key points to keep in mind if you’re in the market for Columbia SC real estate and come across a home that is advertised as a Columbia SC FSBO.
Most Columbia SC FSBO sellers will still work with your agent.
Typically, savvy home sellers are aware that most buyers they encounter have a close relationship with a buyer’s agent. As such, they will usually make arrangements to ensure the buyer’s agent will be paid for their efforts. Dayton area real estate buyer’s agents are important participants in the home buying process. If you’re interested in taking a closer look at a Columbia SC FSBO, consider calling us to make the initial contact with the seller on your behalf.
A home is a home, regardless of whether it’s a FSBO or not.
Just because a home is listed for sale by the owner doesn’t mean it should be treated any differently than a home listed by a professional real estate firm. The biggest difference between the two is the greater likelihood that you’ll be meeting, talking and negotiating directly with the seller. So be prepared. Because a home sale is often an emotionally challenging experience for some sellers to go through, be ready for some hurdles – and try your best to take them in stride.
If you’re truly interested in a Columbia SC FSBO home, you’ll find a way to work around the drama. Remember, lean on your agent for assistance and expertise. In addition, if you find it necessary to view the home without the owner being there, just ask. While it’s always a little uncomfortable for owners to have prospective buyers “snoop around” by themselves or with their agent, if you’re selling your home as a FSBO it goes with the territory. Try to put yourself in their shoes and understand how you might feel if the roles were reversed. Then, use that to your advantage by assuring the seller that you simply want to take some extra time alone to envision your furniture and your belongings in what may end up being your home. Once the seller understands your insistence and reasoning, they will likely be more open to letting you have all the time you need – especially if it means the difference in making the sale.
The law is the law – and it applies to all homes equally.
Regardless of whether a home is being sold as a FSBO or not, real estate sales laws still apply. Sellers have an obligation to disclose existing issues about the home to the buyers. In addition, the seller could also be bound to have the home inspected and perform certain repairs. Unfortunately, many Columbia SC FSBO sellers are rookies when it comes to selling homes, and they simply aren’t aware of the laws or common industry practices. Again, rely on your agent – and your own instincts – to determine if a seller is shirking his responsibility or making it more difficult to inspect the home than it should be. It could be a tell-tale sign that the seller knows something about his home that he doesn’t want you or your agent to find out about. If that’s even remotely the situation, keep looking. Life is too short to deal with difficult people, and money is too valuable to take a risk on a home that may be trouble in the future.
Anticipate inflated asking prices.
If there’s one factor that tends to remain consistent when owners try to sell their homes directly, it’s overpricing. Not having a knowledgeable professional real estate agent to consult often means sellers price their homes unrealistically. They tend to dismiss the market comparables and any other recent sales data and erroneously assume their home is worth more than the others in the same neighborhood. You'll often hear rationalizations or justifications expressed by owners that go something like this: "Our home is the nicest one in the neighborhood." While it's normal for any homeowner to have pride in their home and want to get top dollar when they sell, the cold hard truth is more like, "Your home is pretty much like all the others in the neighborhood – some are more attractive, some less." It’s not necessarily greed that motivates them to inflate their asking price, it’s more a case of just not knowing the market – and the Columbia SC home selling process. Again, they’re rookies, and just like in the big leagues, rookies make mistakes.
If you really like the home, once again rely on your own agent to assist. By providing comparable sales information of similar homes in the neighborhood maybe your agent can convince the seller to see his price is too high. In addition, if the home has been appraised already – or if you can perhaps negotiate having an appraisal done – you can use that as a closer representation of the home’s value. If either of those ideas fail, keep looking. A stubborn owner isn’t worth the headache, and there are likely other homes on the market that are priced where they should be.
Just keep this in mind: A Columbia SC FSBO home is just a home, it just happens to be listed for sale by the homeowner. Discuss the home with your agent and get his or her thoughts and input. While the negotiation process may be a little different since the sellers are going solo, remember there are still certain obligations incumbent upon the sellers. Don’t be intimidated by the fact that the seller is listing the home directly – as mentioned above, that doesn’t necessarily mean he knows more about Columbia SC real estate than you – and he certainly doesn’t know the process as well as your professional agent.
See more articles pertaining to real estate in the section of articles on Columbia SC Real Estate just below Columbia SC Real Estate Categories in the column to your right. And remember, we also post tips daily on Facebook and Twitter. Check us out there, too.
When you hire a Columbia SC home inspections specialist, there are often problems that even the most knowledgeable and experienced home inspectors can’t always see. While trained professional inspectors can notice wood rot, spot weak places on a home’s roof or locate cracks in a foundation, there are some areas that can go undetected. While a home inspector often can be a super hero, he isn’t Superman. He can’t use x-ray vision to see through walls, between floor joists or inside sewer pipes. In addition, the main purpose of most Columbia SC home inspections is to uncover problems or defects that could adversely impact the value of a house or how safe it is for its occupants. While a home inspection is always a good idea and can certainly help verify the home is a good investment as well as a safe structure, there could be existing problems that may create additional issues at a later date. Let’s take a look at four areas of concern that can go undetected.
HVAC Issues
Issues in the heating, ventilation and air conditioning systems (HVAC) of a home are among the most difficult for home inspection professionals to detect. Since running a unit to test its cooling or heating capabilities can potentially damage it in certain conditions, most inspectors don’t perform such tests. One experienced home inspector explained it this way, “I can tell if a unit isn’t working, but I don’t have time during a home inspection to determine if the system is adequate for the house they’re trying to heat or cool.” The inspector recommends that if you have concerns about the home’s HVAC system, you should have it checked by a licensed HVAC specialist, in addition to your home inspection.
Water Leaks or Damage
A home inspector will, of course, turn on faucets to test pipes, water pressure and other issues. However, if a house has been vacant for any extended length of time, previous evidence of water leaks or damage has likely dried up. It may take several days for the leaks to return. In addition, damage to ceilings or walls could have been covered up with paint or wallpaper, making them nearly impossible to detect.
Furthermore, if the house has a leaky roof, chances are even the most experienced home inspector may miss it. Normally, inspectors make their assessments by visually scanning the room from the ground. Rarely is there time or opportunity to climb on the roofs to further inspect them. In the event an inspector does climb atop the roof, snow, ice, fallen leaves or other debris may prevent him from determining its true condition.
Environmental Toxins
In 1978, the federal government called for a moratorium on the production and use of lead paint and asbestos-based materials used in construction. If the home you plan to purchase was built before 1978 it’s a good idea to pay to have specialized tests conducted for these environmental toxins. In addition, higher than normal radon levels can occur in any home – no matter the age. While lead paint, dangerous asbestos and radon pose potential risks, they’re not included on the list of items most Columbia SC home inspections experts look for. If you know about these environmental toxins prior to the closing of the sale, ask the seller to pay for part of the costs to remove or contain the issues. Keep in mind, the costs of removing or containing these and other toxins can be surprisingly high. For example, according to the Environmental Protection Agency (EPA) the cost to professionally remove lead-based paint can run from $8 top $15 per square foot. On a 2,400 square foot home, that amounts to between $19,200 and $36,000!
Blocked or Damaged Sewer Lines
The sewer line that goes from a house to the city sewer main is the responsibility of the homeowner. It’s important, therefore, to know if there are obstructions or leaks in that sewer line. A clog or breakage could cause major issues – such as raw sewage seeping through the line or creating back ups all the way to the indoor drains.
Columbia SC home inspections usually include the type of drain pipe used in the sewer disposal and an estimate of the pipe’s age. However, it probably will not include an assessment of the structural fitness of the sewer line or its overall condition. If you’re concerned with the sewer line in the home you’re interested in buying, you can have a separate inspection done by a qualified company. They will determine if tree roots or other obstructions have adversely affected the line. A complete video sewer inspection will cost $250-$500 – compared to a total sewer line replacement, which can cost $25,000 or more.
Remember, an experienced, qualified professional home inspector can give you vital information about your home’s condition and potential issues to repair or keep a watchful eye on. However, the unknown factors are the hidden potential problems that lurk “behind the scene” that an inspector cannot see or may not be able to detect. If you’re really interested in a particular home you want to buy, a home inspection is an expense that will likely more than pay for itself – either in actual savings before problems occur, or in the peace of mind in knowing the house is free of major issues. In addition, spending the extra money to have some of the above-mentioned tests and inspections performed may also save money and headaches down the road. Remember the old adage: "An ounce of prevention is worth a pound of cure." That certainly applies to a large purchase like a home. Knowing what issues you may be faced with in the future will save time, money and aggravation – and just may mean the difference in making buying your dream home a living nightmare.
You can find more articles pertaining to Columbia SC home inspections in the Columbia SC Home Inspections section of our site below Columbia SC Real Estate Categories in the column to your right.
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Interest rates recently rose slightly, raising the question of what affect they will have on Columbia SC mortgages. Rates increased for the first time in more than two months, creating a sell-off in the U.S. Treasury bond market. Mortgage interest rates have traditionally been tied loosely to the 10-year Treasury bond yield. While the increase in interest rates was only .125% (1/8th of a percentage point) the uptick was enough to adversely affect stocks in the nation’s homebuilding industry.
Despite the impact the interest rate increase had on Wall Street, its relationship to Columbia SC mortgages is expected to be minimal. Let’s take a look at the various forms the rate rise will likely have throughout the nation. Historically, a slight uptick in interest rates – if anything – has signaled the end of rate drops, causing prospective home purchasers to finally make a move to buy before rates go even higher. When rates are low and could be expected by some to inch even lower, potential homebuyers often wait in the wings for rates to get even better before they decide to buy.
A mortgage industry spokesperson said that when rates move upward – even the slightest amount upward – there is always room for concern. He called the interest rate increase “a serious threat to low, stable mortgage rates until proven otherwise.” Mortgage interest rates have been at near-record lows for most of the summer, so it’s likely that a movement upward has raised more than a few industry eyebrows – especially among those in the business of making Columbia SC mortgages.
Regardless of the amount of the increase, the simple truth is that higher mortgage rates add to the already-expensive cost of home buying. As mentioned, the rate rise could push some homebuyers into action as they scramble to buy before their costs rise. In addition, higher interest rates may startle some sellers into cutting their asking prices in an effort to offset the news. It’s one of the few ways sellers can combat the chance of losing interested buyers.
What it means for homeowners with existing Columbia SC mortgages is this:
It may finally be the time to refinance. Despite interest rates being low for months, experts say there are hundreds of thousands of borrowers who have procrastinated or otherwise not refinanced.
If the Federal Reserve decides to raise its funds rate at their next meeting, mortgage rates still may not move much higher. Remember, when the Fed made its first increase last December, mortgage interest rates only increased slightly and then leveled off just as quickly. Industry insiders familiar with Columbia SC mortgages say the longer-term rates such as 10-year U.S. Treasury yields and mortgage interest rates do tend to move with expectations of Federal Reserve rate increases – not the Fed’s actual decision to hike rates. The experts use December 2015 as their most notable example. The Fed increased their rate slightly and mortgage rates dropped. Why? Because the market had spent much of the preceding period in anticipation of a rate hike by the Federal Reserve. In this scenario, the threat or expectation of an interest rate increase caused less concern than when the actual increase occurred. Therefore, the market adapted ahead of time to whatever interest rate changes were headed its way.
Let’s assume rates on Columbia SC mortgages rise slightly in the expectation of a Fed rate increase. Historically, there has been a remote chance that mortgage rates would move a full point upward. Need more reassurance? Mortgage rates have only increased by .5% (or half a percentage point) 14 times in the past 45 years, according to a report issued by John Burns Real Estate Consulting. The firm further predicts rates will stay below 4% through 2018. Burns had this to say about the effects that interest rate increases on Columbia SC mortgages will have on various segments of housing. “Historically, they have hammered builder stocks, hurt new home sales bad, hurt existing home sales a little, and had very little impact on home prices unless there was a recession too," noted Burns. "My conclusion is that investors are right to punish the stocks, but often punish them too hard.”
In addition, most experts say that even if rates were to make another move upward, the housing market has bigger issues to worry about. Supply is still a major consideration, and the lack of homes for sale continues to move home prices higher and higher, adversely affecting affordability for most Americans – a problem that is more severe than slightly higher mortgage interest rates. While homebuilders work hard to increase production, they are doing so in the face of rising costs for developable land and higher labor costs. Plus, intrusive construction regulations and restrictions have made homebuilding more challenging than ever.
In conclusion, nobody likes to see interest rate increases – especially among Columbia SC mortgages – but the resulting impact will probably only hurt the housing industry minimally, at best. Interest rates have been very low for a long time, and there’s little reason to think that increases – even if they do occur – will be large enough to make a difference in the housing market. The additional principal and interest payment that even a 1% increase would have is less likely to prevent buyers from staying put in their existing homes or for renters to continue to pay rent at ever-increasing rates. Simply put, as is the case with many movements in the marketplace – interest rates among them – the effects vary from situation to situation and market to market. Furthermore, for purchasers who have their eye on moving out or moving up, home prices are far more likely to get their attention than small increases in rates affecting Columbia SC mortgages.
You can find more articles pertaining to Columbia SC mortgages and the overall mortgage market in the Columbia SC Mortgage Info section of our site below Columbia SC Real Estate Categories in the column to your right.
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Even though the Columbia SC tax season has come and gone for most filers, “extension season” is here until October 17th. If you’re a homeowner and you filed an extension back in April, you’ll want to make sure you take advantage of some important Columbia SC tax deductions that can reduce your income tax liability when you file your returns.
Mortgage interest, real estate property taxes and mortgage insurance premiums (if applicable) are all deductible. Added together, these items can amount to a significant savings on your tax bill. Be prepared to include these deductions on your income tax returns. After all, tax advantages are among the major perks of home ownership.
Let’s examine four Columbia SC tax deductions you should definitely take advantage of.
Home mortgage interest
Your monthly mortgage payments include principal and interest. The interest is the amount you can deduct at the end of the year on you income tax returns. Federal regulations allow a homeowner to deduct the interest amount (up to $1 million if you’re filing jointly, or $500,000 if you’re single or married and filing separately) on a primary residence. Since the amount of interest you pay each year on your home mortgage is likely one of the largest deductions you can take on your tax bill, it’s important to know a few “ins and outs.” The mortgage interest deduction is available for interest paid on home purchases, refinances, home equity lines of credit (HELOCs) or second mortgages for any purpose. The amount of interest deductible as a result of home equity debt only applies to loan amounts up to $100,000 ($50,000 if you’re single or married and filing returns separately.) As you can imagine, the interest deduction can total several thousand dollars and can make a big impact on the amount you owe when you file your returns. Remember, it’s important to itemize your deductions accurately. Mortgage lenders are required to send you an annual statement showing how much interest you paid during the year.
Mortgage points
If you paid “points” on your mortgage loan when you obtained financing you may be able to deduct them, as well. Points are percentage points of the loan amount and occur in one of two ways: discount points, which are paid by the borrower to enable him to prepay a portion of the mortgage loan interest to “buy down” the interest rate and the loan origination fee. As the name implies, a point is the equivalent to 1% of the mortgage loan amount. Often, homeowners forget about this all-important deduction. Overlooking points can be an expensive mistake. For example, if you borrowed $350,000 and paid an origination fee of 1%, the deduction of $3,500 could go directly to reducing your tax liability.
Real estate taxes
Another of the Columbia SC tax deductions you’ll want to make sure you include are the property taxes on your home. Real estate taxes are deductible on primary residences and can be deducted in the year in which they are paid. The property assessor’s office in the county where your home is located usually mails a statement that includes the amount of your real estate property taxes due. However, keep this in mind – if you purchased a home during the year the property taxes were likely pro-rated on the closing statement. The sellers were reimbursed for the portion of the taxes they “paid” up until the date of settlement. As the buyer, you can then deduct the entire amount of the real estate taxes – not just the amount you were responsible for in the pro-ration.
Mortgage insurance premium payments
When you purchased your home and obtained mortgage, if you made a down payment of less than 20% – or if your loan-to-value (LTV) ratio was less than 80% – you’re probably paying mortgage insurance to the lender each month as part of your payment. Mortgage insurance is a type of coverage that protects the lender against the borrower defaulting on the mortgage payments. Currently, mortgage insurance premiums are deductible for policies provided by the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), and the Rural Housing Service – in addition to policies provided by private mortgage insurance companies on most conventional home loans.
While the Internal Revenue Service allows you to deduct the insurance premium payments as part of your mortgage interest deduction, there are restrictions for higher-income borrowers. For example, the deduction is not available to homeowners whose adjusted annual gross income is $109,000 or more (or more than $54,500 for single persons or married couples who file separately.)
Non-deductible items
While the list of Columbia SC tax deductions can be quite a tax savings for homeowners, everything related to home ownership isn’t necessarily part of that list. Let’s look at a few items that aren't deductible. Be sure costs for these items don’t make their way onto your personal income tax returns unless you are running a business from your home, in which case, many of the rules change!
• Homeowner’s insurance coverage or title insurance coverage. Remember, mortgage insurance is the only type of insurance that can be deducted for most individuals
• Real estate depreciation
• Utilities expenses (electricity, gas or water)
• Loan closing costs. Points are the only exception.
• Lost or forfeited deposits, down payments or earnest money
• Most home improvements – unless they were financed as part of your home’s equity, or you own a home-based business and claim part of your home on your taxes.
• Homeowners association (HOA) dues, fees or assessments
• Transfer taxes, stamp taxes, or recording fees in the sale of a personal residence
In summary, home ownership has always provided tax advantages. It’s one of the attractive features of buying and owning a home. The deductions are part of a federal government incentive for Americans to own their own homes. Remember this, however, if your list of itemized deductions doesn't exceed the standard allowable deduction for which you’re eligible, then you should claim the standard deduction.
As always, if you have questions about your income taxes, what’s deductible and what’s not – it’s always best to consult a professional tax advisor. Deductions are important, and you certainly want to make sure you take advantage of every opportunity to save money on your taxes.
You can find more articles pertaining to Columbia SC tax deductions in the Taxes section of our site below Columbia SC Real Estate Categories in the column to your right.
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Here are a few Columbia SC home buying tips for renters to consider if you're ready to take the big step toward home ownership. In addition to the basics like saving up for a down payment and deciding on a housing budget, there are other important considerations to address.
Renters have become accustomed to paying a fixed amount of money during their rental term. For the most part that amount rarely changes until it’s time to renew the lease. For homeowners, it can be a slightly different story. There are four major components that comprise a homeowner’s monthly house payment. The monthly payment is made up of principal, interest, taxes and insurance, or PITI. Let’s take a brief look at each.
Grasp the entire cost of owning a home
A mortgage payment is the combination of principal and interest – the principal is the actual dollar amount borrowed from the mortgage lender, and the interest is the cost that’s charged for the money borrowed. On a home mortgage loan, the principal portion of the monthly payment reduces the outstanding balance of the loan. The interest is charged on the amount of principal still owed as the loan is slowly reduced. For a more in-depth look, search online for a mortgage loan calculator for an amortization schedule showing what portion of the monthly payment will be applied to principal and what amount goes toward paying interest.
The taxes in the PITI acronym are real estate property taxes. The property taxes are determined and assessed by the county or municipality in which the home is located. While real estate taxes vary throughout the country, most experts agree the average tax bill equates to between 1%-1.5% of the value of the home. Real estate taxes are payable annually, however, depending on the type, amount and loan-to-value ratio (LTV) of the mortgage lenders may require you to include 1/12 of the estimated property taxes in each monthly payment. When the taxes are due and payable, the lender will pay the taxes out of the escrow fund.
Insurance coverage is a requirement by most every mortgage lender. The lender will require the borrower to have sufficient coverage to repair or rebuild the home – their collateral, or security for the principal they loaned – in the event of a fire or other peril. As is the case with real estate taxes, insurance premiums can also be required by the mortgage lender to be paid monthly into an escrow account.
Lastly, here’s another of our Columbia SC home buying tips designed to help understand the full cost of home ownership. If a prospective purchaser is considering buying a condo, there most likely will be an additional component to the PITI mentioned above: Monthly Homeowners Association (HOA) dues. The HOA fees help pay for those areas of the condo complex that are for the benefit of all the owners or residents. Examples are parking lots, landscaped areas, pools and clubhouses. In addition, the fees collected are designed to pay for routine maintenance such as painting the building’s exterior or replacing the roof. While most HOA fees are for condo complexes, more and more neighborhoods with common areas requiring upkeep and maintenance are forming homeowners associations, which will require dues.
Understand the tax benefits of owning a home
One of the most important Columbia SC home buying tips to be aware of involves your income taxes. Aside from the annual appreciation most homes enjoy, the most popular advantage of homeownership is the tax savings. Mortgage loan interest and real estate property taxes can be deducted from your adjusted gross income on your income tax returns each year. That, of course, reduces your taxable income – and your resulting tax liability.
Know the comparison math
A popularly used relationship – and argument for buying a home versus paying rent – is the cost comparison of what a homeowner pays in PITI and what a tenant pays in monthly rent. While in theory the concept is good, the most accurate comparison is to analyze the after-tax savings of owning a home versus renting. For example, a $300,000 home may cost (after taxes) $1,215 PITI each month. Compare that to an apartment or home that rents for $1,200. On the surface the math may imply purchasing a home is a better investment. However, remember this illustration is based on a down payment of 20%, or $60,000.
Understand mortgage options and programs
Among vital Columbia SC home buying tips is how to best and most affordably finance the purchase of a home. While 20% has traditionally been the amount most Americans assume is needed for a down payment, it’s largely a misconception. There are loan programs available today for borrowers with as little as a 3% down payment. As mentioned above, depending on the type of mortgage loan and the LTV ratio, a borrower will have to pay their property taxes and insurance premiums each month into an escrow. In addition, if the down payment is less than 20% or if the LTV ratio is more than 80%, private mortgage insurance will be required. Mortgage insurance protects the lender against the borrower defaulting on the monthly payments. Annual mortgage insurance premiums cost roughly .85% of the mortgage amount, so that needs to be figured into the monthly payment in addition to PITI.
Using the example of the $300,000 home above, the monthly PITI (and mortgage insurance) would be roughly $1,995 with a 3% down payment with a 30-year fixed rate mortgage based on current interest rates. After taxes and all deductions, the total monthly housing cost would be around $1,600. Best of all, the down payment would only be $9,000 – plus whatever loan closing costs the purchaser would be required to pay.
Know you credit score inside and out
Since credit scores are very important when it comes to qualifying for the lowest interest rates on home mortgages, it’s important for prospective homebuyers to know as much about their credit as possible. If you’re a first time homebuyer and only have a few accounts, consider opening one or two new accounts. Be aware, however, that your credit score may decrease from 10-15 points when you open an additional account. Over time, though, as you demonstrate a good repayment history the score will increase. Just understand, this takes time, it doesn't go up in a week or a month.
Read more about home buying tips in the section of articles on Columbia SC Home Buying Tips just below our Columbia SC Real Estate Categories in the column to your right. Remember, we also post tips daily on Facebook and Twitter. Check us out there, too.