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Whether you’re in the heart of Orlando, Florida, or the sprawling landscape of Oklahoma City, the dream of renovating or updating your property is nearly universal. And a project like building a detached garage combines practicality with creativity, providing space for your vehicles, storage, and hobbies. However, beginning this project requires careful planning and execution to ensure that your detached garage not only meets your needs but also adheres to local regulations and stands the test of time. 

In this Redfin article, we’ll take you through each step of the process and what to expect, from researching and planning to adding the finishing touches. Whether you’re aiming for a small workshop or a spacious multi-bay garage, this guide will serve as your roadmap to success.

1. Research and planning

Local building codes and zoning regulations: Research your local municipality’s building codes and zoning regulations. These guidelines will dictate aspects such as setback requirements (how far the garage must be from property lines), maximum height, size restrictions, and any necessary permits. For example, some areas might require a minimum distance of five feet from property lines.

Permits: Obtain the necessary permits before beginning construction. Common permits might include building permits, zoning permits, and possibly environmental permits if your area has specific regulations regarding construction on the land.

Design considerations: Think about the purpose of your garage. Will it simply be for parking vehicles, or will you need additional space for storage, a workshop, or other uses? Consider the number of bays, ceiling height, and any unique features you’d like to incorporate.

2. Design and budget

Layout and dimensions: Sketch out the layout of your garage, including the placement of doors, windows, and potential interior walls. Decide on the dimensions based on the space available and your needs. For example, a two-car garage typically measures around 20 feet by 20 feet, but you might need more space if you plan to include a workspace.

Roofing and siding choices: Choose roofing materials and siding options that complement your home’s design and suit your climate. Asphalt shingles, metal roofing, and cedar shakes are some common roofing choices, while options for siding include vinyl, wood, and fiber cement.

Cost estimates: Research the cost of construction materials, labor, permits, and other potential expenses. Obtain quotes from contractors for the work if you plan to hire professionals. Be prepared for unexpected costs that might arise during construction.

3. Site preparation

Choosing the location: Select a location on your property that is both practical and adheres to local regulations. Consider factors such as ease of access, distance from the main house, and terrain. For example, if your property has a slope, you might need to consider leveling the area before construction.

Clearing the area: Remove any vegetation, debris, or obstacles from the chosen construction site. This might involve clearing shrubs, trees, rocks, or other objects that could impede construction equipment or foundation work.

Excavation and grading: If your chosen site isn’t level, you’ll need to excavate and grade the area to create a flat and stable foundation. This might involve moving soil, adding fill dirt, and compacting the ground to ensure a solid base for construction.

Utilities and drainage: Check the location of underground utilities (water, gas, electrical lines) before digging. Ensure proper drainage by grading the area away from the garage site to prevent water accumulation around the structure.

4. Foundation and footings

Foundation Type: Choose the appropriate foundation type based on your garage’s design, local climate, and soil conditions. Common options include:

  • Slab-on-grade: A concrete slab poured directly on the ground surface. It’s cost-effective but lacks a crawl space or basement.
  • Crawl space: Elevating the garage slightly with a crawl space underneath for ventilation and access to utilities.
  • Full basement: Providing additional space and potential for utilities but is more complex and expensive.
  • Excavation and footings: Excavate the area according to the foundation type chosen. Pour concrete footings that will support the weight of the garage walls and distribute it evenly across the ground.
  • Concrete slab: If opting for a slab foundation, pour and finish the concrete to create a level surface. Ensure proper curing to prevent cracking.

5. Framing and structural work

Wall framing: Use the appropriate framing materials (wood or steel) to build the garage’s walls. Follow building codes and engineering specifications to ensure structural integrity. Place framing members at the correct intervals to provide stability and support.

Roof trusses or rafters: Depending on your design, install roof trusses or rafters to form the roof’s framework. These components should be accurately positioned and securely fastened.

Sheathing: Apply sheathing (plywood or OSB panels) to the exterior walls and roof to create a solid surface for siding and roofing materials. This also contributes to structural stability.

Bracing and reinforcements: Install diagonal bracing and reinforcements as needed to prevent sway or structural weaknesses. This is particularly important in areas prone to high winds or seismic activity.

6. Roofing and siding

Roofing material: Install the chosen roofing material, considering factors such as durability, aesthetics, and weather resistance. Common options include asphalt shingles, metal panels, clay tiles, or wooden shingles.

Weatherproofing: Ensure that the roofing material is properly installed, and all seams and edges are sealed to prevent leaks. Install appropriate underlayment, flashings, and ventilation to promote moisture control and prevent condensation buildup.

Siding installation: Apply the selected siding material to the exterior walls. Follow manufacturer instructions for installation and maintain proper clearances to avoid moisture-related issues. Different materials may require specific installation techniques, such as nailing patterns and overlapping.

Insulation: While not part of the traditional roofing and siding process, this is a good time to consider adding insulation to the walls and roof if it wasn’t addressed during framing. Proper insulation helps regulate temperature and improve energy efficiency.

By carefully executing these steps, you’ll create the foundational structure of your detached garage and establish the exterior shell. These steps are crucial for ensuring the stability, weather resistance, and overall functionality of your garage.

7. Electrical and plumbing

Electrical planning: Determine the garage’s electrical needs based on its intended use. Plan the placement of outlets, switches, and lighting fixtures. Decide if you’ll need dedicated circuits for power tools or other equipment.

Wiring installation: Install electrical wiring according to local electrical codes. This involves running wires through walls and ceilings, connecting them to outlets and switches, and ensuring proper grounding. Hiring a licensed electrician is recommended for safety and compliance.

Electrical fixtures: Install light fixtures, outlets, and switches as per your electrical plan. Consider energy-efficient lighting options for both interior and exterior spaces.

Plumbing (if applicable): If your garage requires plumbing for a sink, bathroom, or other utilities, this is the stage to install the necessary plumbing lines, fixtures, and drainage systems.

8. Doors and windows

Garage doors: Install the garage doors based on your design. Choose from single or double doors, sectional doors, or roll-up doors. Ensure proper installation and mechanisms for smooth operation.

Windows: Install windows to allow natural light into the garage. Choose window sizes and placements that enhance both aesthetics and functionality. Properly seal and weatherproof around windows to prevent leaks.

9. Interior finishing

Insulation (if not done earlier): If insulation wasn’t installed during framing, add it now. Proper insulation helps maintain a comfortable interior temperature and reduces noise transfer.

Drywall or paneling: Cover interior walls and ceilings with drywall or paneling, depending on your design preference. Proper installation and finishing techniques are crucial for a polished appearance.

Painting and finishing: Paint the interior surfaces to enhance the space’s aesthetics. Choose paint colors that complement the overall design and lighting of the garage.

Flooring: Choose and install the appropriate flooring material for your garage. Options include concrete, epoxy coatings, rubber mats, or even tiles. Consider durability and maintenance when making your choice.

10. Final inspections and touch-ups

Inspections: Schedule final inspections with local authorities to ensure that your garage complies with building codes and regulations. This may include structural, electrical, plumbing, and fire safety inspections.

Addressing inspection feedback: If inspectors identify any issues during the final inspection, address them promptly to ensure compliance. This might involve making corrections, adjustments, or improvements.

Landscaping and exterior: Complete any exterior work, such as landscaping, driveway installation, and exterior lighting. This enhances the overall look of your property and provides a welcoming environment.

Final touch-ups: Take care of any remaining cosmetic touch-ups, such as paint touch-ups, caulking, and garage cleaning. This ensures that your detached garage is ready for use and visually appealing.

By following these final steps, you’ll complete the construction of your detached garage and transform it from a construction site into a functional and aesthetically pleasing addition to your property.

Source: redfin.com

Apache is functioning normally

A home for sale by owner opens the door for you to buy the property without a middleman—though you may choose to use your own real estate agent to facilitate the transaction.

Here’s a look at how the homebuying process with a for-sale-by-owner deal can differ from a typical real estate transaction.

For Sale by Owner: Good for Buyers?

When homeowners choose the FSBO (“fizz-bo”) route, they take on all of the responsibilities real estate agents would typically shoulder, from listing the house and showing it to negotiating and closing the deal.

The main motivation for doing so is often cash. Sellers who go it alone can save money on the commission that real estate agents would normally earn. If neither side uses an agent, the deal sidesteps the typical 5% to 6% for agent commissions.

On the buyer’s side there can be a number of benefits of buying a house for sale by owner. First of all, the lack of a listing agent means you have more direct contact with the seller, which might give you more negotiating power.

The seller will also likely have detailed knowledge of the house and neighborhood, which can be a bonus as you decide whether or not you want the property.

However, you may run into some pitfalls with FSBO properties. A seller may love her home and overprice it, potentially complicating matters when you get an appraisal.

Recommended: How to Buy a House Without a Realtor

Using a Buyer’s Agent

Just because a home’s seller doesn’t want to use a listing agent doesn’t mean you can’t engage the services of a buyer’s agent.

You may already be working with an agent who can contact a FSBO seller for you. Or you may need to look for an agent who is willing to take on the job.

In some cases, buyer’s agents may be hesitant to work on a FSBO property. They may be wary of taking on extra liability, or extra work for which they will not necessarily be compensated.

That said, a buyer’s agent can negotiate the sale on your behalf and walk you through the complicated paperwork. If the seller is putting the contract together, your agent can also check the work to make sure you don’t run into any problems.

Sellers typically pay the agent commission. Just be sure the seller agrees to pay the buyer’s agent commission in the purchase agreement.

Here’s what to expect in the buying process when using a buyer’s agent.

Shopping for a Mortgage

Before making an offer on a home, it’s a good idea to shop for a mortgage to get an idea of the terms different lenders offer and how much you are likely to pay each month.

A mortgage calculator can help you understand how down payments of various sizes will affect the numbers. And you may consider getting preapproved for a mortgage to see exactly how much you can afford to spend.

In an FSBO situation, homeowners may have no experience with the home financing process, and getting prequalified or preapproved for a home loan may remove some roadblocks on your path to making a purchase.

Viewing the Home

Your agent can contact the seller and set up an appointment to view the home.

Be on the lookout for sagging floors or cracks in walls that might indicate structural issues. Test windows. Look for water damage on ceilings or walls that may indicate a leaky roof.

Since the seller will most likely be showing the house, take this opportunity to get as much detail about the home’s history as possible. What repairs have been made recently, and which ones haven’t been made in a while? It’s smart to ask about any warranties, and to be sure they will remain after a sale.

Recommended: What to Look for When Buying a House

Getting an Inspection

When buying a home for sale by owner, it’s not in your best interests to skip an inspection. Home inspectors go over the house with a fine-toothed comb, looking at structure, plumbing, electricity, and appliances to see whether they need repair now or in the near future.

If the inspector finds any problems, you can ask the seller to fix them, credit you the cost of repairs, or reduce the sales price. If you’ve already signed a purchase agreement, severe problems found during an inspection can be a reason to pull out of the contract.

Recommended: The Ultimate Home Inspection Checklist

Negotiating a Sale Yourself

If you decide not to use a buyer’s agent, you and the seller will have to negotiate the sale and write up the purchase contract yourself.

You may also choose to hire a transactional agent or attorney who can help you write the contract and ensure it is done legally and in a way that protects your rights.

If you do decide to go it alone, there are a few things to keep in mind.

Recommended: Guide to Buying, Selling, and Updating Your Home

Making an Offer

Before making an offer on a house, check comparable properties in the neighborhood and see if the listing price is reasonable. Doing so can help you pin down what a reasonable offer is.

Consider offering less than the listing price. The seller may ask you to come up in price, but if you start too high, it’s difficult to negotiate down again. You can use the neighborhood comps you’ve researched as a negotiating tool.

Including Contingencies

Contingencies are certain conditions that must be met in order to close the deal. Some common contingencies are a satisfactory home inspection and appraisal.

If a home is appraised at less than the agreed-upon price, a lender may be unwilling to loan the buyer the money. In that case, the appraisal contingency can be an opportunity to negotiate the sales price.

A clear title is another common contingency. The title is a document that shows who has owned and now owns the home. The title company will make sure there are no liens or disputes associated with the property. If there are unresolvable issues, the clear-title contingency gives the buyer a way out of the contract.

Negotiating Fees

It can’t hurt to ask for seller concessions, closing costs that the seller agrees to pay. A seller may agree to help pay for property taxes, attorney fees, appraisal inspections, and the like.

Even in a seller’s market, if the property has been sitting, possibly because the price was too high, a seller may offer a financial incentive to move the home.

Putting Earnest Money in Escrow

Your earnest money deposit is the money you submit with your offer to demonstrate your serious intent to buy.

The listing agent would usually put this money into escrow. But if you’re going it alone, it’s a good idea to engage a title company or escrow company to hold the money for you until the sale goes through.

If you give the money directly to the seller, they may refuse to give it back to you if a contingency causes the deal to fall through, which could mean suing to retrieve your cash.

Determining When You’ll Get Possession

It’s a good idea to be sure your purchase agreement specifies when you will take possession of the new house and receive the keys. Possession may take place immediately after closing, or the contract may give the seller time to move.

The Takeaway

Buying a house for sale by owner can come with challenges and opportunities. It may make sense to engage a professional to help you negotiate, safeguard your interests, and deal with the documents.

If you’re in the market for a mortgage, check out SoFi’s line of fixed-rate mortgage loans that may allow you to put less than 10% down.

SoFi also offers investment property loans.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Source: sofi.com

Apache is functioning normally

Owning and managing vacation rentals is a dynamic endeavor, one that balances profit, experience, and community impact. Regardless of whether you’re managing a house in Oklahoma City or a condo in San Marcos, CA, you’ll encounter unique challenges specific to different markets. These are hurdles nearly all vacation rental managers have faced, especially in the early days.

However, navigating this terrain requires a careful avoidance of potential pitfalls that can hinder your success. From maintaining a balanced objectivity to perfecting market strategies, ensuring effective communication to building strong relationships with neighbors,

This Redfin article presents a comprehensive list of vital vacation rental issues to sidestep. Drawing on the expertise of industry leaders, you’ll gain valuable insights into these potential roadblocks and learn how to proactively avoid them. You can move onto orchestrating a thriving five-star vacation rental venture, as these experts illuminate the path to smoother operations, satisfied guests, and prosperous outcomes. Learn from their experiences to safeguard your investment, maximize your earnings, and cultivate a positive impact on the hospitality landscape.

1. Unbalanced objectivity and emotion

“It’s crucial to remember that your vacation rental is not merely a personal space, but a business asset designed to generate revenue,” recommends Matt Barbuzzi from Park Place Property Management  “While striving to host only the best guests is important, you must be prepared for the occasional mishap, as they’re inevitable in this line of business. Do not allow personal sentiments to cloud your judgment or emotional resilience. This is particularly crucial if your property carries sentimental significance or serves as a family space. Unless you’re renting it to close friends or relatives, we strongly advise against utilizing such properties for short-term rentals due to potential emotional distress.”

2. Neglecting proper screening

“Screening vacation guests presents unique challenges compared to screening conventional yearly renters, as you have limitations on the information you can request, such as contacting and verifying employment history and previous landlords. Nevertheless, implement various techniques to ensure the security of our properties,” shares Maximilian Kostyashkin and Carlos Pena from MAK Realty Group. “These techniques include:

  • Utilizing advanced guest screening software such as Autohost, Chekin, Superego, or Authenticate. These platforms conduct credit checks, background checks, official ID verification, and require damage deposits. Additionally, they provide comprehensive short-term rental agreements for guests to sign.
  • Implementing a minimum stay requirement: During peak seasons, we request a minimum stay of three days. This measure helps prevent individuals from renting your property for a one-time event or party.
  • Noting the usage of noise monitoring technology, which effectively deters party-oriented renters.
  • Employing device monitoring software: All of our properties are equipped with software that tracks the number of devices in use. A sudden spike in device count, such as reaching 20, is often indicative of a potential party being hosted by your guests.”

3. Underpaying housekeeping

“Don’t settle for the lowest cost – invest in your cleaners, and your guests will undoubtedly notice the difference in the quality of your vacation rental,” stresses Realty Street.

“I can’t stress enough how crucial it is to pay cleaners. By offering fair compensation, you not only maintain a high standard of cleanliness but also enhance their motivation and dedication to delivering exceptional service. Skilled cleaners are attracted to good pay, and this directly impacts the guest experience, contributing to a positive reputation, and ensuring a comfortable and welcoming environment for your guests.”

4. Overcomplicating your guest’s experience 

“Don’t impose excessive check-out procedures on guests. Tasks such as initiating a load of towels, disposing of kitchen trash, and running the dishwasher are optimal. It’s essential to communicate to guests that these chores contribute to minimizing cleaning fees and encouraging early check-ins,” says HAVEN Property Management.

“Offer instructional videos for any intricate features in your vacation rental. Videos that guide guests through operating the hot tub, using smart devices, or navigating other complex equipment can be conveniently provided in video format.”

5. Setting bad pricing

“Many hosts lack market knowledge about rates and set their prices based on their emotional attachment to the specific property. This often leads to rates that are excessively high for the market, resulting in a lack of bookings,” shares Oliver Albrecht from Valibera. “Then after a while, they significantly reduce the rates, leading to more bookings, but these rates may only cover the house’s costs without generating any profit for the homeowners. This cycle continues for a while until they eventually give up, having to either rent the house on a long-term basis or even sell it due to their inability to meet the mortgage payments.”

6. Communication problems

“The foremost error in vacation rental management is failing to communicate with property owners. Their investment properties, often among their most valuable assets, rely on generating income or covering their costs,” says Port Aransas Airbnb Vacation Rental Property Management by Grand Welcome. 

“Entrusting management to others necessitates trust, and trust thrives on communication. Without it, owners concoct narratives, eroding trust, leading to misunderstandings and unfulfilled expectations. Communication is the bedrock of vacation rental partnerships, ensuring both parties thrive. A proactive approach, balancing issues and successes, fosters deeper trust. Regular, strategic personal calls build trust, deepen partnerships, and facilitate owner-to-owner referrals that surpass marketing efforts in expanding business.”

7. Having a bad relationship with your neighbors 

“Some owners become concerned about potentially upsetting neighbors with their short-term rental (STR) properties, and rightfully so—no one wants to create adversaries,” recommends Long Beach Airbnb Vacation Rental Property Management by Grand Welcome.

“Provide owners with the following anti-nuisance tactics:

  • Communicate with the neighbors before launching your short term rental (STR) and provide them with a contact number to call if any issues arise.
  • Be available 24/7 for communication or property visits to ensure a peaceful environment.
  • Communicate with guests—through the listing, pre-arrival emails, and arrival-day texts—that events and parties are prohibited, and violating this rule will result in eviction. Be polite but firm.
  • Consider only renting to guests who stay for more than two nights (three or more nights are even better). One-night stays tend to attract “party” people.

Here is an example from a standard email I send to my STR guests:

I wanted to let you know that there is a long-term tenant living above the garage (separate building) and neighbors on both sides in close proximity, which means the back patio closes at 11pm sharp. The Belmont Heights Retreat is the perfect place for peace and serenity.  

If you have any issues during business hours – my contact information can be found below, and we have a Guest Services line available 24/7 at 888.XXX.XXXX”

8. Neglecting feedback 

“Feedback is the lifeblood of your vacation rental. How do you know what guests do or don’t like, or where you’re missing the mark on certain things? Without actively seeking, tracking, and implementing feedback, you’re vulnerable to operational blind spots that will impact your bottom line,” suggests Michael Skinner from Savvy VRM. “If guests don’t leave a review, nudge them by politely asking for one. Or send them a text asking if they’d be open to discussing their experience with you on a quick phone call.”

9. Poor market strategy

“At Grand Welcome Nashville, we don’t just rely on traditional platforms. We amplify our reach by promoting on over 120+ websites, social media marketing campaigns, and our community ensuring our homeowners get unparalleled exposure and guests taste authentic Nashville,” suggests Nashville Airbnb Rental Property Management by Grand Welcome.

“Nashville is more than just a city; it’s an experience, a melody that lingers long after the song ends. I think that capturing this essence in your marketing is crucial. Highlighting local attractions, events, and the unique Nashville vibe can magnetize guests, drawing them into the city’s embrace.”

10. Skimping on professional photos

“I believe the top mistake to avoid is not hiring a professional photographer to take listing photos. This can differentiate you from your competition and make you stand out instantly, as first impressions are incredibly important,” recommends Gabe Chase from Brentwood Property Group.

11. “Set it and forget it” pricing

“One of the most common mistakes is adopting the ‘set it and forget it’ approach to pricing. Each day holds its distinct market value, and overlooking this fact can result in either foregoing potential income or struggling to secure bookings,” says Garret Ham from Weekender Management. “While using pricing tools like Wheelhouse and PriceLabs is a positive step, they are not a universal solution. These tools still rely on the property manager’s insights and knowledge, and should be complemented by your own market research.”

12. Unclear check-in, check-out times

“It’s good to remind the guest in a friendly way what time check-out is, especially the day before to check-out. Also, place it in a visible space in the house and in a friendly ‘hope you liked your trip’ text,” suggests Michael B. Emerick, Co-Founder of Oversee. “If the guest gets a little spacey and leaves late, it can cause a poor experience for the next guest by pushing back their check-in time. Be as hospitable as possible, but don’t let a guest infringe upon another guest’s vacation.”

13. Lack of adequate property insurance

“Not having property insurance leaves vacation rental owners vulnerable to potential financial losses and liabilities in the event of accidents, damages, or unforeseen circumstances,” warns  Nomadness Rentals. “Proper insurance coverage, such as vacation rental insurance, is crucial to safeguarding your investment and protecting against risks associated with short-term rentals.”

14. Not setting house rules and policies for guests

“Whether it’s a chic apartment in the heart of Austin or a secluded cabin in Hill Country, clarity is key. Clearly defined house rules, from pet policies to quiet hours, ensure guests know what’s expected,” recommends Alexander Buchanan, owner of Austin Airbnb Rental Property Management by Grand Welcome. “A comprehensive guest manual, with guidelines on appliance usage, emergency contacts, and local tips, ensures a hassle-free stay. This proactive approach minimizes misunderstandings and ensures guests can fully relax, knowing they’re in good hands.”

15. Incapable of juggling roles and meeting demands

“As vacation rental managers, we wear many hats, skillfully handling both property owners and their assets – encompassing furnishing, maintenance, upkeep, updates, pricing, marketing/advertising, accounting, and more,” says Blue Pacific Vacation Rentals

“We also navigate the world of guests – marketing/advertising to secure bookings, administering paperwork/contracts for owner and guest protection, overseeing maintenance, managing access/technology/information, arranging cleaning/maintenance, and meticulously curating guest experiences to foster repeat patronage, among other responsibilities. This multifaceted role underscores the distinct and demanding nature of vacation rental management, far exceeding the misconception that it merely involves posting property images on Airbnb.”

“There are myriad mistakes one can make while managing a short-term rental venture. Drawing from my experience in the current market, the most prevalent errors involve not assigning sufficient importance to gaining a competitive edge. This entails investing in elements such as furnishing, decorations, high-quality linens, bedding, and amenities, all of which are essential in an already saturated market. 

16. Not differentiating yourself

“It’s imperative to set yourself apart amidst this crowded landscape,” suggests Tampa Airbnb Vacation Rental Property Management by Grand Welcome. “Furthermore, the significance of a well-planned pricing strategy, maintaining cleanliness, and ensuring effective communication and responsiveness in guest services cannot be overlooked in terms of common mistakes. 

Make sure to differentiate yourself. With numerous short-term rentals available, standing out is crucial. Highlight what makes your property unique, whether it’s a specific theme, design, or location. Don’t ignore offering local insights. As a host, you can provide valuable insights about the local area. Recommendations for nearby attractions, restaurants, and services can enhance the guest experience.”

17. Skipping local laws and regulations

“Begin by thoroughly studying the local laws and regulations that pertain to STRs,” recommends MyTripify. “Ensure you grasp all the pertinent regulations, or enlist the expertise of a property manager who does. Non-compliance, such as violating HOA restrictions or listing an STR with an occupancy exceeding septic tank limits, can lead to hefty fines. The potential consequences far outweigh any initial gains.

That being said, don’t underestimate the importance of insurance coverage for STR hosts. Investing in insurance products is a cost-effective means of mitigating the risk of property damage. By securing insurance, you regain control over potential damages and maintain your property’s excellent condition, all the while upholding high levels of guest satisfaction.”

18. Forgetting systems and setting expectations as you grow your business

One of the biggest mistakes vacation rental managers make that’s costing you time and money is hiring additional people on your team without systems,” warns Pink Cash Cow Property Management. “As your business grows, you can’t do everything yourself, so you hire someone to help you with tasks at the property or remotely. However, the person may not do it right, not getting the results you’re looking for, or you’re getting negative reviews and guest complaints. 

You end up doing the work again yourself or spending time trying to find someone else. The best way to efficiently operate and grow your business without taking more time or effort is creating systems and processes that people can follow for consistent results, like getting five-star reviews without you doing the work. Have a process and system for maintenance, cleaning, staging, linens, etc.”

19. Not being persistent enough 

“One of the most, if not the most, important steps in ensuring successful vacation management for your home or business is to ensure that you are overly communicative with your guests, both before and during their stay,” shares Emily Bishop, Communications Manager for Brightwild. “Lay out check-in instructions clearly, while also making sure that any preemptive questions guests may have are already answered. It seems overly simplistic, but you’d be surprised to know that this isn’t always a priority for some vacation management companies.”

20. Not learning and resolving problems quickly

“One observation I make regarding most vacation rentals is the absence of established, repeatable systems geared towards success. This translates to encountering hard challenges, even if these issues were addressed just six months prior. Consequently, the team finds itself retracing steps to unearth solutions for guests or risk leaving them discontented,” says Cody Wood from STR Accommodations.

“Similarly, another prevailing issue frequently encountered in the vacation rental industry pertains to the swiftness with which guest concerns are tackled. At times, these concerns revolve around maintenance matters, indicating a deficiency in the property’s upkeep schedule, or worse, its nonexistence. 

Alternatively, the problems might stem from malfunctioning amenities or depleted supplies due to a lack of efficient restocking systems on the part of the owner or manager. The remedy for both aforementioned concerns involves implementing a quarterly or monthly maintenance regimen supplemented by a 24/7 emergency helpline dedicated to property support. Diligent tracking of inventory levels post each turnover clean at the property level is essential. Speed assumes paramount importance in the realm of vacation rentals, as our physical absence from the property necessitates possessing a clear grasp of effective troubleshooting procedures. This approach not only facilitates swift responses but also leaves guests content with the prompt resolution of their issues.”

21. Keeping up with maintenance needs

“One common mistake is underestimating the ongoing maintenance needs of a vacation rental property. Failing to address maintenance issues promptly can lead to negative reviews and dissatisfied guests,” Bend Airbnb Vacation Rental Property Management by Grand Welcome advises. “To avoid this, we recommend creating a thorough maintenance schedule, conduct regular inspections, and request that the homeowner set aside a portion of their rental income for unforeseen repairs.

Sameway, using poor-quality or outdated photos for your vacation rental property can deter potential guests. Ignoring the importance of professional photography can lead to decreased bookings and interest. We highly recommend investing in high-quality, well-lit photos that accurately showcase the property’s best features. Always hire a professional photographer who specializes in real estate to capture the property’s appeal.”

Source: redfin.com

Apache is functioning normally

Ever dreamed of buying an investment property for short-term vacation rentals? Whether you’re setting up shop in Columbia, SC, or in a Rochester, NY, apartment, we found experts to share their stories and offer valuable lessons they’ve learned along the way to help newcomers troubleshoot short term rental problems with practical solutions. Read on to learn how to turn your property into a five-star rental.

1. Expanding your network in the STR landscape

“I have been a realtor since 2009, primarily specializing in selling investment properties used as short-term rentals,” shares Danny Margagliano from Destin Property Expert. “Recently, my wife and I purchased our first condo, which we are self-managing as a short-term rental property. One of the most significant challenges we encountered at the outset was selecting a Property Management Software (PMS). With numerous companies available online, the decision can be overwhelming. A valuable piece of advice I can offer is to join larger Facebook groups dedicated to short-term rental properties, Airbnb, or VRBO. These groups provide access to experienced hosts who are more than willing to offer assistance.”

2. Navigating a competitive market with trifecta-like customer service

“Having worked for a decade in a fiercely competitive vacation rental market like San Diego – first as a property manager and now as a business owner – I’ve pinpointed three pivotal aspects that spell success for your enterprise,” shares Jeff Nisuis, owner of Titan Beach Rentals

  • “Firstly, customer service must reign supreme for both your guests and owners. We prioritize responding to guest messages and calls within an hour, while also ensuring monthly reviews or updates for owners. 
  • Secondly, a well-rounded tech stack is indispensable for achieving this feat. This begins with implementing a property management system such as Guesty to streamline and automate your company’s workflow and communication. 
  • Lastly, the cornerstone of it all is accurate pricing. Employing a dynamic pricing tool to automate nightly rates and monitor market trends and demands not only saves time but also enhances pricing precision, revenue, and occupancy rates.”

Courtesy of Titan Beach Rentals

3. Offering virtual guides and demonstration videos 

“Every home in our program is unique, and it’s impossible to keep track of every quirk in each home without a system. One of our secrets to successfully addressing guest questions is dedicating time to create a virtual guide for each property,” recommends Hilton Head Rentals. “Most guest queries can be resolved using our virtual guide. Even if guests don’t use the guide, we rely on it to swiftly and accurately respond to their questions. 

We also produce a series of ‘quick and dirty’ videos demonstrating how to operate certain unique features in the homes, such as turning on the oven hood, adjusting the thermostat, or activating spa jets. It’s somewhat amusing to revisit our own videos months later to remind ourselves how things work in specific houses. This approach reduces the need for dispatching personnel, saving us money, and enables us to promptly enhance the guest experience by promptly addressing their inquiries.”

Courtesy of Hilton Head Rentals

4. Turning a million-dollar setback into success with rapid recovery and communication

“’I’m not going to lie, we are really freaking out over here’, the owner confessed to me two weeks after I signed her property – my first valued over one-million dollars. Unbeknownst to all of us, their previous management company canceled all bookings in June and July upon switching, resulting in the loss of nearly 30-thousand dollars in expected revenue,” shares Joel Harris from Port Aransas Airbnb Vacation Rental Property Management by Grand Welcome.

“The lessons I learned along the way are one, when confronting challenges, formulate a plan using the tools at your disposal and relentlessly execute it. Within 24 hours, our ads were up and running. I maintained constant communication with the owners, updating them about our progress, actions, and results two to three times daily. As our ads gained momentum, I shared our analytics daily and later on a weekly basis. After three days, we secured our first booking. Another followed just two days after. Gradually, the pressure eased as reservations steadily flowed in.

Second, maintain frequent and transparent communication, substantiated with real data and examples. In the absence of information, our minds concoct stories. To counter this, we provided our owners with detailed and factual information about the issue at hand. We outlined the steps we were taking to resolve it, employing regular and effective communication. And behold, despite starting from scratch this summer, the property that had us ‘freaking out’ became one of our top earners.”

5. Crafting unique spaces and thoughtfully designed rooms

“At Urban Sands we strive to curate a unique experience at each one of the properties we manage. We spend a lot of time with our interior designer, Theresa Danna at Designed to a T. Together we are able to create inviting spaces that help maximize booking revenues for our clients. Finding the most reliable vendors, cleaners, and admin in our area has really helped us overcome any challenges that are thrown at us,” suggests Chloe and Bryce Mayer, Owners of Urban Sands Vacation Rentals.

Courtesy of Urban Sands Vacation Rentals

6. Embracing technology for extra booking and revenue growth

“As a vacation rental property manager, the biggest challenges I experienced were two-fold – homeowners and guests. The most common issues several of my homeowners had in the past were related to bookings and revenue generation,” shares Kristian Lewis from New Braunfels Airbnb Rental Property Management by Grand Welcome.

“At Grand Welcome we ensure our properties are being highlighted and getting exposure on over 40 national and international travel websites to provide homeowners with consistent marketing growth. Additionally, we use dynamic pricing algorithms to establish optimal pricing based on seasonality, demand, and market trends within our region. For guests, we want to provide high-level boutique service during every phase of their visit from booking to check-out, so we have dedicated guest service teams who are available 24/7 to assist with any questions, issues, and concerns almost immediately. 

Each of our properties is equipped with an in-home concierge tablet that includes a welcome guide with detailed self-check-in instructions, local recommendations, and contact information for our local team. The implementation of comprehensive software, at all levels, not only improved guest and owner satisfaction but also increased efficiency, revenue, and retention. Embracing technology while creating personalized touch points has been pivotal in elevating our brand and the overall experiences of owners and guests who utilize our vacation rental management services.”

7. Focusing on local expertise in vacation rental management

“As a vacation rental property manager, we are constantly working to improve the entire experience of the guests we host, as well as the owners that we partner with. As we look to stay ahead of the ever-evolving industry, we are focused on differentiation by being experts in our market,” suggests Compass Vacation Properties. 

“We focus on local recommendations, things to do, behind-the-scenes activities and hidden treasures in our communities. This solution not only improves guest satisfaction but also drives interest in, and business to many of our fellow local small business owners. Embracing the impact of the community has been instrumental in enhancing our guests’ experiences and improving our vacation rental management operation.”

8. Automating and integrating processes for success

“At Landlord Studio, we believe that embracing technology isn’t just about convenience – it’s about transforming the way you think about your rentals,” suggests Charles Chan, CEO of Landlord Studio. “Integrating solutions into your property management not only creates new efficiencies but is also a key step in developing your portfolio into a scalable and profitable business. Therefore, whether you have one or a hundred units, it’s essential that you possess the right tools – tools designed for you – to help you stay on top of everything from income and expense tracking to managing cleaning and maintenance.” 

9. Maximizing value in challenging times with consistent occupancy 

“During challenging times, it’s often the core and simplest strategies that produce the most consistent value and return to homeowners. While a small percentage of all homes can hold the same rates year-over-year, or even increase them, that’s not the case for a majority of homes,” says Portoro.

“Every home in the short-term rental market is its own product line with 365 opportunities to generate a sale. That means that occupancy is the primary driver of revenue, and not nightly rates. Smart property management means having the operational infrastructure to successfully produce a full calendar even at lower daily rates.

This helps the property manager and homeowner achieve the following:

  • Total revenue generated close to or at year-over-year expectations 
  • Ability to maintain the property as an STR under portfolio (avoid long term rental (LTR) discussion)
  • Steady stream of income to maintain operations, housekeeping, and vendor relations”

10. Streamlining rental management processes through online platforms

“Embracing technology is a critical stride towards achieving success in the vacation rental industry. As technology providers, we are dedicated to helping hosts and vacation rental businesses regain valuable time and boost their bottom line. Often, property operators find themselves consumed by tasks like addressing guest queries, managing calendars, pre-arrival guest communication, and coordinating cleaning services,” says Fred Bassili, Marketing Manager at Hostfully.

“However, the implementation of suitable technology can drastically reduce or even eliminate these laborious duties. The impact is profound – we’ve witnessed business owners trimming over 100 hours of weekly work to just a few hours, or attaining consistent five-star reviews by bolstering efficiency and preventing errors. When seeking technology solutions, it’s essential to define your specific challenges, attend multiple demos, and ask pertinent questions during these sessions. Since vacation rental software is not one-size-fits-all (each has strengths and weaknesses), finding the best fit for your business is paramount”

11. Setting a price strategy

“The short-term rental market has become extremely competitive and saturated with an increase of supply following the pandemic. The increase in vacation rental rental supply has created an environment where nationwide occupancy has decreased year-over-year compared to prior years. As a result many owners and operators have decreased their nightly rates to try to increase their bookings,” says Sean Bakhtiari, Founder of Seacoast Vacation Rentals.

“We have a different strategy. First, we’ve invested in new amenities and design features to make our properties standout from the crowd and create better guest experiences. Secondly, although our portfolio occupancy rate dropped slightly (four percent year-over-year), our overall revenue grew seven percent thanks to “Average Nightly Rates,” increasing by 11 percent. When many owners and operators have been reducing their nightly rates, we’ve increased them and simultaneously reduced our minimum nightly stay requirements. This flexibility has been extremely beneficial for all our properties, in this more competitive environment.”

12. Maximizing revenue and guest satisfaction

Master Vacation Homes focuses on reducing maintenance costs for owners and maximizing rental income. We are one of largest property management companies in Orlando with over 500 properties boasting the highest returns in the industry.

Here’s a few reasons we are able to bring above average returns to our clients:

  • Revenue management: We have a team responsible for pricing the homes that follow a strategic methodology that focuses on high occupancy X high daily rates.
  • Superior home care: Currently we have 16 Property Managers caring for 30-40 homes each. They are responsible for the inspection of each check-in, dealing with all things related to the care of their homes and the investors that own each property.
  • Operations and guest support: Our logistics operations are unmatched by the competition. We have designated field teams for each city area limited by a certain amount of homes so they are not overwhelmed. Our guests have support just minutes away if an emergency occurs.
  • Setting a target market: Over time we learned one of the most important lessons so far. We needed to say no to clients that were not aligned with the way we operated and with our philosophy. Firing clients is counter intuitive, because as a business, you always want as many clients as possible. But in this industry, every owner wants to impose their wishes and demands on how they think their home should be managed. It turns out, it is impossible to manage multiple homes differently. After a few years of experience and seeing what works best, we slowly transitioned to work solely with investors rather than the traditional owner of vacation homes. This solidified our identity as a Management Company and allowed us to focus in the areas we excel. 

Courtesy of Master Vacation Homes 

13. Researching markets before you enter

“We cannot stress enough how important it is to do your research first before you start your vacation rental business,” recommends Mashvisor. “The industry is more competitive than ever, so you need data, and not just observations or hearsay, to help you in making decisions. Many users of our platform end up being surprised to find out that their first choice of location might not be as lucrative as they thought. So they’re glad to have used a real estate analytics website to not just confirm or deny their initial hypothesis but to also help them find another vacation rental market to invest in.”

14. Prioritizing customer service and resolving problems quickly

“While being the owner of MATCH Property Managers, we have experienced many challenges in the vacation rental side of the business, but have worked diligently as a team to overcome the challenges associated with renting vacation properties. Guests sometimes have maintenance issues while on vacation, and we have found that top-notch customer service can easily derail any problematic issues that could create a bad review for your rental company,” suggests MATCH Property Managers

“The key advice for vacation rental managers is to maintain 24/7 availability for guests in case of issues. Utilize answering services for prompt communication. Always respond with appreciation, conveying that guest satisfaction is a top priority. Actively listen to guests, gather necessary details for repairs, and apologize for any inconvenience. Keeping $25.00 gift certificates on hand showcases care for guest experience. Avoid showing inconvenience at guest calls, as respect can be lost. Post-issue resolution, follow up with guests to ensure their comfort. Ultimately, prioritize creating a memorable and enjoyable vacation experience.”

Courtesy of MATCH Property Managers

15. Hiring local property managers for out of state STR owners

“After working in the short-term rental industry for over 13 years now, we have discovered that the most successful vacation rental properties have engaged owners. To help owners who live in another town or state from their rental property take advantage of this, we developed a hybrid property management system,” shares Scott Westfall, Owner of CGP Real Estate.

“This provides responsive on-site management through a local team, while the owner manages their online presence and booking preferences. Giving owners a way to be hands-on while operating long-distance has helped them increase bookings, revenue, and guest satisfaction by providing the personal marketing touch guests are looking for – without sacrificing quick and professional response to on-site management and guest needs.”

16. Adapting to changing market conditions

“As a vacation rental property manager, a common challenge we face in Panama City is trying to compete for occupancy during off-season. Coming out of COVID restrictions in 2021, Panama City Beach finds itself in a very saturated market regarding Vacation Rentals. Occupancy has taken a hit and as new rentals continue entering the market, everyone’s peak season seems to be getting shorter,” says Panama City Beach Airbnb Rental Property Management by Grand Welcome.

“Our approach was to implement a hybrid system of renting short-term during the summer, and mid-term during the late fall and winter. To do this we not only appeal to the Snowbird crowd, but also to the overlooked traveling professional industry. This has helped keep business on the books when otherwise we may have faced vacancies.”

17. Fostering repeat visits

“We established Vacation Rentals of North Myrtle Beach due to local companies lacking urgency and professionalism. With a modest start, we now manage 130+ properties in 13 years. Our focus is on collaborating with property owners, acting as partners to nurture their business,”  Barefoot Resort Vacations suggests. 

“As hands-on owners, we and our dedicated team strive for exceptional guest experiences, aiming for repeat visits. Any issues during stays are promptly communicated, demonstrating our commitment to swift solutions. Challenges arise, but we face them with an open mind and humor. Our motto for owners: everything is fixable, repairable, and paintable – we’re determined to deliver a sense of urgency and professional results.”

Courtesy of Barefoot Resort Vacations

18. Increasing bookings with The Big Three

“After more than $100 million in guest bookings over the course of my career in vacation property management, we’ve discovered a combination of property features which maximize guest interest, boost rental rates, and extend occupancy in nearly every market. Internally known as ‘The Big Three,’ the combination of ‘pets, water, fire’ is the insider secret,” suggests Wes Walker, CEO of Popersum. 

“Pet friendly properties routinely generate 20% (and sometimes more) than non pet properties. A water feature, such as a hot tub or modern pool, natural water view, or even an elaborate fountain also captures online attention and generates higher bookings and rates. Finally, fire as in a photographic fireplace or a fire feature near seating, extends most seasonality and produces higher interest. By combining The Big Three, competing with the traditional ‘location, location, location’ properties is not only possible, but often an outperforming combination.”

19. Forecasting a conducting thorough inspections 

“Effective vacation rental management encompasses more than just maintaining the property. We’ve embraced a forward-thinking approach, consistently conducting inspections to preemptively tackle any looming issues. Coupled with technological tools, such as predictive analytics, we’ve been able to forecast high-demand periods, ensuring optimal occupancy and unwavering quality. This comprehensive strategy has solidified our reputation as a reliable choice in Austin,” recommends STR Management.

20. Nurturing a versatile team

“As is true with any business, your employees are critical to your success. We are a relatively small vacation rental management company so when hiring our reservationists and managers, we look for people who are willing and able to be a jack-of-all-trades and exhibit the flexibility and smarts to jump in on whatever is needed and to expect the unexpected,” recommends Beach-N-Bay Getaways.

21. Adopting a software management platform when you expand

“The primary focus for property managers should be on delivering excellent experiences for guests and homeowners. However, the complexities of managing monthly statements, booking inquiries, and pricing strategies can often divert attention from this vital role. As portfolios grow, pursuing excellence becomes even more challenging, and guest reviews may slip,” shares Gather Vacation Rentals.

“At Gather, we’ve confronted these challenges firsthand. Our solution extends beyond a mere set of tools; it’s a comprehensive partnership designed to streamline various facets of property management. This includes simplifying financial reporting through an integrated accounting system, efficiently handling inquiries, creating optimal pricing strategies backed by real-time data, and enhancing marketing efforts through targeted campaigns. Moreover, we offer risk and portfolio management insights, provide business development resources to fuel growth, and support a robust tech stack that aligns with the evolving needs of the industry.”

Source: redfin.com

Apache is functioning normally

Short sales have a reputation for being, well, kind of a pain in the keister.

It’s not uncommon to run across horror stories of the short sale process and timeline stretching out over seven months or more. With that kind of timeline, many buyers shy away from short sales, in spite of the great deals out there.

If you’ve got your heart set on buying one anyway, strap in. We’ll go over everything you need to know about how a short sale works.

What’s a short sale? Why buy one?

First, let’s go over the difference between a short sale and a standard sale.

If a homeowner is having financial difficulties, or if the home is underwater, the bank that owns their loan might allow them to sell the property for less than the outstanding mortgage in order to avoid foreclosure. This is a short sale. Though it doesn’t sound very complicated on its face, there is a pretty significant amount of red tape involved, courtesy of the bank.

If this is starting to sound kind of ominous, don’t worry. There are plenty of reasons why buying a short sale works.

Though this isn’t a hard and fast rule, short sales are more likely to be on sale for below market prices, and with a keen eye and some careful research, you can save a pretty penny. The one caveat? Since the owners have been strapped for cash, short sales are also more likely to need a little TLC. This makes them a great choice for real estate investors and weekend warriors.

Of course, there’s another reason a buyer might choose a short sale: sometimes, they just really like the property.

Why does the short sale process take so long?

When you purchase a house through a normal sale, there are just three main players: you, the seller, and your lender. A short sale, however, throws another party into the mix to gum things up—the seller’s bank, who is now trying to recover as much of their money as possible.

As to the specifics of the delays you might face, they could be caused by any number of things. Your most likely suspects include:

The original bank is dragging its feet

When you, the buyer, enter the picture, the bank holding the loan has already gone through the seller’s financials and determined that, yes, a short sale is their best shot at getting the most money back.

However, that doesn’t mean they’re as eager to get the whole thing over with as you (or the seller). Their main goal is to get as much of their money back as they can, and they’re not above drawing the process out if they think they’ll have better options later down the line.

Total Mortgage Processing Coordinator Jake Healy has seen his share of short sales and experienced this first hand.

In one instance, “the short sale approval process took so long that the real estate market improved and the bank increased the price they were willing to accept for the house, even though the borrower’s offer had already been accepted.”

There’s not much you can do to speed this part of the process up, so either stick it out or decide on a time limit in advance so you know when to walk away.

The original mortgage gets sold to another servicer

Most of the time, the bank or lender who originally finances a mortgage doesn’t hold on to it. Instead, they package it with other loans and sell it to another company, who will then service the loan and collect payments and interest. This can happen at any point in the term of the loan.

Of course, that also means it can happen during your negotiations, forcing you and the seller to start from scratch with the new bank.

Jake has run into this issue, too. “The debt was sold from one bank to another bank during short sale process on an unoccupied home,” he told us, “which delayed closing because the buyer needed to make repairs prior to closing to meet FHA guidelines, but no one could get in contact with the new bank to get permission to have the work done.”

The short seller has more than one mortgage on the property

If the seller has run into money troubles, they might have taken out a second mortgage on the property via a home equity line of credit or home equity loan. To complicate things even further, it’s likely that the second loan is held is now held by a different servicer than the original loan.

If that sounds like the recipe for a headache, you’d be right. Both will need to approve the seller for a short sale and then consider and approve buyer’s offer. They’ll have different timelines and processes for each step, and may not be great at communicating with each other.

There are title issues

Every lien or unpaid debt that shows up on the title must be negotiated and settled before the sale can proceed. This can, understandably, take some time.

Marc Laudicina, a managing loan officer here at Total Mortgage, has plenty of experience with short sales. In addition to dealing with them at work, he’s also just closed on one himself. He wasn’t immune to title troubles, though.

“The seller had an old mortgage from 1987 by a defunct lender that was never cleared off the title,” he said, “so my attorney and the seller’s attorney had to work with the FDIC (since the bank didn’t exist anymore) to confirm it was paid. This took a while.”

The loan you chose is complicating things

Since short sales tend to be distressed properties, they’re usually good candidates for renovation loan programs like an FHA 203k or Fannie Mae’s HomeStyle. These allow you to finance the renovation of your new property along with the original loan. Since they require so much documentation in terms of contractor quotes and plans, though, they can take a lot longer to close.

The property itself is causing delays

In order to qualify for certain government loans, you’ll need to pass an inspection. Given that some short sale properties are in less than optimal condition, though, what you have is a chicken-egg scenario—the bank won’t pay for renovations and the buyer can’t renovate until they own it. In this situation, the only option is generally to switch loan types or pay cash.

In northern parts of the country, you might also run into a special variation on this problem. If the house has been vacant and winterized, some lenders will need it to be de-winterized before the inspection can be completed. In this situation, the buyer typically has to cough up the cash.

Your own lender is holding things up

Mortgages are complex processes that involve a lot of paperwork. Sometimes even a standard mortgage can take a while. This can be thanks to the lender’s mistakes or your own, but the end result is still the same: your wait is longer.

The short sale timeline

The basic shape of the short sale process and timeline isn’t very different from your typical sale. However, there are some quirks along the way that you might want to keep in mind.

Quick note before we get started: the timeline laid out here is very general. Your timeline—and even the order in which you hit these milestones—could be very different.

Find the listing and visit the property: 1 week

While on the hunt, keep in mind that the list price may not reflect what the seller’s bank will accept. Generally, the seller sets the list price with the help of their realtor—the bank doesn’t get much input. The only exceptions? Listings that have been pre-approved by the bank. These are less common, but they are out there and are typically quicker to close.

Make an offer and sign sales contract: 1-2 weeks

Assuming you’ve made a reasonable offer and have minimal competetion, the seller has little reason to turn you down, since they make nothing on the transaction regardless of the sale price. This part of the process will go fairly quickly, but remember that a sales agreement with the seller doesn’t guarantee a deal with their bank.

Get approved for a mortgage: 1-2 months

Unless you’re buying cash, you’ll need to get your own lender involved. Depending on your loan type, you might be able to close in as little as 30 days, though renovation loans and some government loans will take longer.

Send your short sale packet to the lender and wait for approval:  1 week–12 months

While you’re getting your mortgage in order, you should also be filling out the right paperwork and making your offer to the seller’s bank. Then you negotiate with them and wait on approval. As we’ve already mentioned, this is the part of the process that can really hold things up. Though the seller might be willing to accept lowball offers, the bank probably won’t.

Get the property inspected: 1 day

Depending on your loan type, an inspection may be required for approval. Even if it isn’t, it’s still a good idea to know exactly what you’re buying. If an inspection isn’t required, though, you might want to wait until after you have bank approval to spend money on an inspection.

Debbie Drummond, an experienced realtor who runs her own real estate agency in Las Vegas says that this isn’t realistic for everyone.

“Many sellers require buyers to complete their inspections within a traditional due diligence period,” she says. “The buyer risks losing the money spent on inspections if the bank doesn’t approve.  Doing the inspection will let the buyer know if there are any issues.”

Get the property appraised:  1 week

Your lender will require an appraisal, though it could do you some good, too. If it comes in lower than your offer, you stand a decent chance of negotiating the bank down. If it comes in higher than your offer, don’t worry about the results affecting their approval. The seller’s bank won’t get a copy. Because there’s research involved, expect to wait around a week for your results.

Get approval and close: 1 week–1 month

Once you have approval, the rest of the process is downhill. Depending on your situation, your may have extra steps like a survey or additional paperwork. Expect to have a fairly normal closing process.

Tips for making a short sale offer

Ultimately, there’s not a whole lot you can do to speed up a short sale. However, you can be smart about how you make your offer. The more the bank likes it, the quicker they’ll approve it.

Keep your offer as fair as possible. Since you have no way of knowing exactly what price the bank is willing to accept, lowballing for the heck of it may not get you very far. Instead, take into account the market and state of the property when choosing your offering price.

Be wary of making an offer soon after a large price drop. Most sellers will drop the price by smaller increments to make sure that they get the maximum potential offer. Occasionally though, you’ll run across a very large reduction intended to generate interest. Hold off on offering right away. Because the bank has no proof that the home could not have sold for a smaller increment, they’ll try to counter with a higher approval price, increasing your wait.

Don’t count on using the inspection results to haggle. Most short sales are as-is. Though there are some situations where the bank is willing to make repairs, it’s best to assume you won’t have that option going in.

Don’t expect the bank’s decisions to always make sense. Because there are so many factors at play for the bank approving the short sale, from an outsider’s point of view their actions can look a little, well, stupid. If nothing else, keeping this in mind can save you some sanity.

Is the short sale process worth it?

The answer to this question is entirely dependent on the specifics of your situation. “Short sales can be a great deal, but they’re only for a buyer with time and patience,” Debbie told us.

Broadly, it’s a safe bet to say that a short sale isn’t going to work for you if:

  • You’re relocating for a job
  • You’re not willing to take on a fixer-upper
  • You need to get into a home quickly
  • You can’t separate yourself emotionally from the house
  • You’re generally impatient
  • You’re a first-time buyer and unfamiliar with the basics of homeownership

For those who can afford to wait, can power through the uncertainty, and don’t mind dealing with a project when they finally get the keys, a short sale might be worth it. There’s a reason they’re popular targets for real estate investors, after all—the prices can be great.

Source: totalmortgage.com

Apache is functioning normally

Ask Brian is a weekly column by Real Estate Expert Brian Kline. If you have questions on real estate investing, DIY, home buying/selling, or other housing inquiries please email your questions to [email protected].

Q1. Cheryl from Bend, Oregon writes: Greetings Brian, I’m hoping you can clear something up for me. A little over two years ago I decided to start looking into buying a house but I didn’t know much about how to do this. When I first talked to a couple of agents, I quickly figured out that I needed to save a much bigger chunk of cash for a down payment than I thought at first. Two years later, I’m close to having the money for a down payment and closing costs. During that time, I did a little more research and learned about home inspections, appraisals, and a few other things. I also kept hearing that it’s a seller’s market and the sooner I could make the purchase, the less I’d have to pay. Now, when I’m close to making an offer, I’m hearing that it’s switching to a buyer’s market. I’d like to know what that means to me today? I’ve asked a couple of agents but got different answers. How do you explain it?

A1. Hello Cheryl, the difference between a seller’s market and a buyer’s market is a question that a lot of people should be asking right about now. It’s been a strong seller’s market for several years but there are clear signs the market is shifting to favor buyers. But as always, real estate depends on the local market and even local neighborhoods. Although there is a general shift towards a buyer’s market, it is happening by different degrees in different locations and you can be certain there are some locations bucking the trend.

At first thought, quite a few people think a buyer’s market means prices are coming down and low-ball offers will be accepted. Probably not at most locations. For instance, in a hot market like Seattle, it means that prices are no longer going up as fast as they have been for many years. It also means that neighborhoods that a few months ago saw bidding wars as soon a s a house went on the market are no longer seeing bidding wars or at least not as many multiple offers and not for significantly more than the asking price. However, due to a pent up demand, sellers in hot markets can still expect to quickly find a buyer at a fair market price.

The best way to understand how significant the shift from a seller’s to a buyer’s market is for your location is by understanding the key drivers:

  • A booming local economy. The national high employment for the past several years was an important factor driving the overall national seller’s real estate market. However, this is still a local issue depending on prevailing local wages. When most new local jobs pay minimum wage, there will be a bigger surge in the rental market compared to the seller’s market. There will be spill over from the rental market that can drive some prices up slightly but mostly, a once slow sales market only begins seeing more active buyers. As we’ve already seen, high wage markets such as technology have much more affect driving rapid price increases supported by bidding wars. But there are exceptions. For instance, a few years ago North Dakota had an explosive wave of temporary high wage jobs in the oil exploration and drilling industry. Home prices sky rocketed 5X, 10X, 15X, and even higher compared to previous prices. With the oil boom gone, home prices in North Dakota are already declining (according to Zillow).
  • Interest rates trending downward or upward have a big impact real estate markets. Interest rates determine the size of a buyer’s monthly mortgage payment and therefore how big of a loan they can qualify for. The lower the interest rate, the more buyers that can qualify for a loan. Buyers can offset this somewhat with a higher down payment which means a small loan but higher down payments mean few buyers. The way sellers counter higher interest rate is first by stabilizing prices and eventually by lowering prices to attract buyers (hence a buyer’s market). Many markets are currently becoming stable as rising interest rates push buyers out of the market.
  • Short term changes in interest rates have short term impacts on real estate markets. Interest rates are expected to mostly remain stable for the next several months, which should mean most real estate markets will be stable. Interest rates change daily and weekly. There is still a pent up demand to buy houses. People who can qualify and lock in a mortgage during a temporary rate drop can jump back into the market to keep it stable. However, the interest rate is generally trending higher which means fewer and fewer buyers will be in the market. This will create more and of a buyer’s market over time.
  • Inventory is the other big driver. Real estate is very much about supply and demand. As the economy has grown, there has been much more demand for houses than there has been supply. Locally, a new housing development brings more supply onto the market. In today’s markets, new homes coming onto the market are also having a stabilizing effect. A stable market is a balanced market that favors neither the buyer nor the seller. A significant amount of inventory coming onto the market can create a buyer’s market. To forecast your local trend over the next nine months to a year, research how many new building permits have been applied for and how many new homes are currently under construction.
  • Sellers of existing homes also impact inventory. There are sellers that have been on the sideline waiting to see how much their home will become worth before putting it up for sale. With prices stabilizing, these people are more likely to jump into the market. Often these people time the market wrong. If too many come on the market, inventory will grow and it will lead to a buyer’s market.

Cheryl, the economy, interest rates, and inventory all work in tandem. In all probability we have already passed the top of the sales peak. The U.S. economy is fully employed. There may be some wage growth and people shifting to higher paying jobs but very few additional people will become employed (stable or decreasing buyer demand). Full employment greatly increases consumer demand for credit cards, cars, and homes. The increased demand to borrow money will continue to increase interest rates. Higher interest rates put the brakes on increasing home prices which have now reached the maximum affordable price. Inventory of houses for sale will increase. Having passed the top of the sales peak, the trend should be towards a buyer’s market over the next 3, 6, and 9 months. For the most part, buyers can expect listing prices to remain stable, no more bidding wars, and negotiating the final sales prices, terms, and conditions will once again become normal.

Our weekly Ask Brian column welcomes questions from readers of all experience levels with residential real estate. Please email your questions or inquiries to [email protected].

Please leave your comments about this Q&A or send us your own.

Author bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for 12 years. He also draws upon 30 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest. With the Pacific Ocean a couple of miles in the opposite direction.

Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years with articles listed on Yahoo Finance, Benzinga, and uRBN. Brian is a regular contributor at Realty Biz News

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Source: realtybiznews.com

Apache is functioning normally

Are you looking to create a tranquil escape right in your own backyard? In this Redfin article, we will explore the world of privacy fences and offer expert tips to help you build the perfect enclosure for your outdoor sanctuary. Whether you’re in Raleigh, NC, or Sarasota, Florida, we’ve got privacy fence ideas that can suit no matter where you live. Building a privacy fence can be the perfect solution to achieve serenity and seclusion. 

Let’s explore the world of privacy fences, from the practicalities of cost and construction to the creative ideas that will turn your backyard into a personal sanctuary. 

Is building a fence for privacy a good idea?

Building a fence for privacy can be a great idea, depending on your specific needs and preferences. Privacy fences offer numerous benefits, such as creating a secluded outdoor space where you can relax, entertain, or engage in activities without feeling exposed to neighbors or passersby. They also enhance security, providing a physical barrier and helps keep pets and loved ones safely contained within your property. Additionally, privacy fences can add value to your home and improve curb appeal, making it an appealing option for potential buyers.

How much does it cost to build a privacy fence?

Building a privacy fence cost can vary based on several factors, including the fence’s material, height, length, and labor costs. On average, the cost of building a privacy fence can range from $15 to $30 per linear foot. For instance, a standard wood privacy fence typically costs around $20 to $30 per linear foot, while vinyl or composite privacy fences can range from $25 to $50 per linear foot. Additionally, factors like the terrain, site accessibility, and any extra features, such as gates or decorative elements, can influence the total cost.

For example, let’s consider a 100 linear feet privacy fence made of wood. If the average cost is around $25 per linear foot, the total cost would be approximately $2,500 (100 ft x $25/ft). However, if you opt for a more durable material like vinyl, which costs around $40 per linear foot, the same 100 linear feet fence would cost $4,000 (100 ft x $40/ft). 

These figures exclude any additional expenses like permits, removal of existing fences, or landscaping adjustments. Keep in mind that the labor costs for fence installation can also vary depending on your location and the complexity of the project. It’s essential to obtain detailed quotes from reputable contractors to get a more accurate estimation for your specific privacy fence project.

Privacy fence ideas

You might be wondering what type of fence you should get to add privacy and beauty to your outdoor space. We’ve compiled a variety of privacy fence ideas to suit your preferences, whether you’re aiming for a classic look, a modern design, or a touch of greenery. 

1. Board-on-board wood fence

A classic and popular choice for privacy, the board-on-board wood fence features overlapping vertical boards on both sides of the fence, creating a seamless look with no gaps between the boards. This design provides maximum privacy and a clean, attractive appearance.

2. Vinyl privacy fence with lattice top

Vinyl fences offer low maintenance and durability. Adding a lattice top to a vinyl privacy fence not only increases height and privacy but also adds an elegant touch. The lattice allows some sunlight and air to pass through while maintaining a sense of seclusion.

3. Bamboo privacy fence

For a natural and eco-friendly option, consider a bamboo privacy fence. Bamboo panels are sustainable, aesthetically pleasing, and provide an exotic touch to your outdoor space. They can be installed as standalone panels or attached to an existing fence structure.

4. Metal privacy screens

Metal privacy screens are a modern and stylish alternative to traditional fences. Available in various patterns and designs, metal screens can add a contemporary touch to your outdoor area while still providing privacy.

5. Living green privacy wall

Create a living privacy fence with lush greenery by using climbing plants or creating a green wall. Options like ivy, climbing roses, or tall shrubs can soften the appearance of your fence and add a natural, inviting ambiance to your yard.

How to build a privacy fence

1. Check local regulations

Before starting on your privacy fence project, it’s crucial to research and understand the local regulations, building codes, zoning ordinances, and any guidelines set forth by your homeowner association. These rules can vary significantly from one area to another and may dictate the maximum height, setback requirements, permitted materials, and other restrictions related to fence installation. Ignoring these regulations could lead to costly fines or having to tear down non-compliant fences. You can contact your local building department or visit their website to obtain the necessary information.

2. Determine the fence’s location and layout

Careful planning of the fence’s location and layout is essential to ensure you get the most out of your privacy fence. Start by marking the fence line using stakes and strings. Double-check the measurements to avoid any encroachment onto neighboring properties. Consider factors such as property lines, existing structures, trees, and landscaping that may influence the fence’s placement. Think about how the fence will affect the flow of your outdoor space, where the main entrances will be, and how it will provide the desired privacy. Taking time to plan the layout will save you from potential complications during the construction phase.

3. Gather the required materials and tools

Once you have the fence layout planned out, it’s time to gather all the necessary materials and tools. Start by choosing the right fence materials that align with your budget and aesthetic preferences. Popular privacy fence options include wood, vinyl, aluminum, and composite materials. Depending on your choice, purchase fence panels, posts, gate hardware, screws, and other required accessories. 

Additionally, ensure you have the appropriate tools to complete the project efficiently and accurately. Common tools for building a privacy fence include a post hole digger, shovel, level, tape measure, saw, drill, and a hammer. Quality materials and proper tools will ensure a sturdy and long-lasting privacy fence that withstands the elements and provides the desired level of privacy.

4. Prepare the ground

Before commencing the actual fence installation, you must prepare the ground along the fence line. Clear the area of any vegetation, debris, or obstacles that could hinder the fence’s construction. If your area experiences heavy rain or has poor yard drainage, consider grading the ground to ensure proper water runoff. Once the area is clear, begin digging the post holes. The depth of the holes should be at least one-third of the length of the fence posts to provide stability. 

Use a post hole digger or an auger to dig the holes uniformly, and ensure they are straight and level. Installing the fence on uneven ground can lead to an uneven appearance and structural issues, so take your time to achieve a level and solid foundation.

5. Install fence posts

After digging the post holes, it’s time to install the fence posts. Place the posts into the holes and fill the bottom with a few inches of gravel. The gravel helps with drainage and prevents water from pooling around the base of the posts, which can lead to rot over time. Use a level to ensure each post is plumb and straight before proceeding. Once the posts are correctly positioned, it’s time to set them in concrete. 

Follow the manufacturer’s instructions for mixing and pouring the concrete, making sure it reaches the desired strength. Allow the concrete to cure completely before moving on to the next steps. Properly installed and secured posts are the backbone of a sturdy privacy fence, providing stability and support for the entire structure.

6. Attach fence panels

With the fence posts set in concrete, it’s time to attach the fence panels to complete your privacy fence. Begin by aligning the first fence panel with the first two posts and attach it using screws or brackets. Ensure the panel is level and plumb before moving on to the next section. Repeat this process for each panel, ensuring uniform spacing between them for a consistent and professional appearance. 

If you have chosen pre-built fence panels, it will make the installation process smoother. However, if you are using individual pickets, take extra care to align and attach them evenly. Additionally, if you have any gates in your fence design, make sure to follow the manufacturer’s instructions to install them securely and smoothly.

Remember to follow safety precautions while digging and working with heavy materials and tools. Double-check all measurements and levels throughout the process to ensure accuracy and alignment. 

7. Add finishing touches

After the fence panels are securely attached, it’s time to add some finishing touches to enhance the overall appearance and functionality of your privacy fence. If you opted for wooden fencing, consider trimming the tops of the fence posts for a more polished and cohesive look. You can choose from various decorative post cap designs that complement your property’s style. Post caps not only add an aesthetic appeal but also protect the fence posts from moisture and potential rot. 

Additionally, if your fence design includes a gate, install latches and handles that match the overall style of the fence. Ensure the gate operates smoothly and securely, and consider adding a self-closing mechanism for added convenience and safety.

8. Double-check stability

Before completing the fence installation, thoroughly inspect the entire fence for stability and structural integrity. Ensure that all fence panels are securely attached to the posts and that the posts are firmly set in the concrete footings. Wiggle the fence panels and gates to check for any loose connections. Use a level to ensure the fence panels are still straight and aligned correctly. Address any issues you find promptly to avoid future problems. 

9. Test the privacy

After completing the fence installation, take the time to test the privacy it provides. Stand at various points around your property to assess if the fence effectively shields your outdoor space from eyes. Make any necessary adjustments, such as adding more privacy-enhancing elements like lattice panels or planters with climbing vines. Depending on your property’s layout and the surrounding environment, you may discover specific areas where additional privacy measures are needed. 

10. Maintain your fence

To prolong the life and appearance of your privacy fence, regular maintenance is essential. Perform routine inspections to check for any loose screws, damaged panels, or signs of wear. Clean the fence periodically to remove dirt, debris, and mold growth, especially in damp environments. Depending on the fence material, you may need to apply protective coatings or treatments to shield it from the elements. Wooden fences may require staining or sealing every few years to prevent rot and decay. 

The dos and don’ts to building privacy fences

To ensure a successful and satisfying project, it’s essential to consider both the dos and don’ts of fence construction. 

Do’s for building a privacy fence

1. Do consult your neighbors

Before starting your privacy fence project, communicate with your neighbors about your plans. Inform them about the fence’s design, height, and location to avoid any potential disputes or surprises. While you might have the legal right to build the fence within your property boundaries, maintaining a good relationship with your neighbors fosters a sense of community and reduces the likelihood of conflicts arising in the future.

2. Do consider wind resistance

If you live in an area prone to strong winds or storms, consider the wind resistance of your privacy fence. Tall and solid fences can act as a wind barrier and create pressure on the fence panels and posts. To mitigate this, opt for fence designs that allow wind to pass through, such as lattice or picket fences. Alternatively, create small gaps between the panels or use fence materials with spaces, which reduces the wind load and minimizes the risk of damage during storms.

3. Do call utility companies before digging

Before digging the fence post holes, call your local utility companies to mark any buried utility lines on your property. Striking underground utilities can lead to dangerous situations and costly repairs. Utility companies usually offer this service for free, and marking the lines will ensure you avoid any accidental damage during the fence installation process.

Don’ts for building a pivacy fence

1. Don’t forget about gate access

When designing your privacy fence, don’t overlook the importance of gate access. Ensure your fence has appropriately sized gates to accommodate easy movement of people, equipment, and furniture in and out of your property. Consider installing a wider gate for vehicle access if required. Choose gate hardware, such as hinges and latches, that are durable and designed to support the weight of the gates to prevent sagging or misalignment.

2. Don’t ignore the quality of materials

While budget considerations are essential, don’t compromise on the quality of materials for your privacy fence. Choosing durable and weather-resistant materials will ensure your fence stands the test of time and requires less maintenance. Investing in high-quality materials upfront can save you money on frequent repairs and replacements in the long run.

3. Don’t disregard drainage considerations

When installing your fence, don’t overlook the importance of proper drainage. Improperly planned fences can impede water flow, leading to water pooling around the fence posts or panels. Over time, this can cause rot and weaken the fence’s foundation. To avoid this issue, ensure the ground slopes away from the fence or incorporate drainage solutions like French drains to divert water away from the fence line.

Source: redfin.com

Apache is functioning normally

At the beginning of 2020, no one expected the United States would be in the position it is in today, including me. With social distancing the new normal, many people are still hoping to buy a home; now they’re stuck wondering if they should purchase a home right now or wait out the pandemic. 

As with most financial questions, the answer depends on many factors. You have control over some of these things. Other aspects are out of your hands. People that consciously examine their current position and the risks can make a somewhat educated decision.

My wife and I started the process of buying our current home and selling our old home in December 2019 before the pandemic was on anyone’s radar. By the time we ended up closing on both homes at the end of February 2020, COVID-19 had just started spooking the United States markets. 

I’ve included our experiences and personal thoughts to help you get a feel for what real buyers and sellers are going through.

What’s Ahead:

What are the pros of buying a home during the pandemic?

  • There is lower competition for homes due to fewer people actively shopping and buying homes right now.
  • Mortgage interest rates may be near all-time lows resulting in lower monthly mortgage payments.
  • You have the potential to get a better deal on a home’s price than a few months ago if a seller needs to sell or wants to put a house behind them.

What are the cons of buying a home during the pandemic?

  • You risk contracting COVID-19 every time you leave your current home.
  • Housing inventory may be lower as some sellers wait until this passes to list their homes or they don’t want people coming through their house. 
  • You may not be able to move through the home buying and mortgage process smoothly.
  • Housing prices may decrease in the near future.
  • Mortgage lenders may have stricter lending guidelines that disqualify you when you may have qualified for a mortgage prior to the pandemic.
  • You may have a harder time finding top-notch home inspectors, appraisers, and other professionals during the pandemic.
  • Moving may be more difficult as friends and family probably won’t volunteer to help due to social distancing guidelines.

Mortgage lenders to consider if you do decide to buy a home during the COVID-19 pandemic

For well-prepared individuals with a strong financial position, now may be the perfect time to buy the home of your dreams. You’ll have to hope the right home comes on the market and you can get a good deal on it. If everything comes together, it is still possible to buy a home during the pandemic in most cases.

When you’re ready to start mortgage shopping, make sure you check out Credible to help figure out if you’re getting a good deal.

Credible helps you shop multiple mortgage rates at once. It only takes three minutes to enter some basic information and get pre-approved for a loan. You’ll then see personalized rate quotes from a variety of lenders.

Credible doesn’t do a hard pull of your credit score to qualify you. That means you won’t have to worry about your score dropping while you’re preparing to buy a house. Credible also doesn’t provide your information to lenders, so the pre-qualification process is between you and Credible.

Credible Operations, Inc. NMLS# 1681276, “Credible.” Not available in all states. www.nmlsconsumeraccess.org.”

Credible Credit Disclosure – Requesting prequalified rates on Credible is free and doesn’t affect your credit score. However, applying for or closing a loan will involve a hard credit pull that impacts your credit score and closing a loan will result in costs to you.

Why some people are concerned about buying a home during the pandemic 

People have good reason to be concerned about buying a home during the COVID-19 pandemic. This disease has drastically changed how the United States works. 

The buying process increases the risk of COVID-19 transmission

If you fear for your health, buying a home may not be a good idea right now. The process of buying a home typically involves many in-person interactions. 

While you may be able to mitigate some of these interactions with social distancing, being careful, and washing your hands, it may not be enough. The more you leave your home and interact with others, the higher your chance of catching the virus is.

In particular, you usually meet with a real estate agent in person. You tour many homes you’re interested in, most of which have people that live in them. 

You may want to attend any home or pest inspections in person to understand exactly what you’re buying and to see any potential problems firsthand. Once everything with the sale is wrapped up and ready to sign, you have to go to a closing and sign paperwork with a closing agent.

There are other steps in between that could also expose you to the virus, but these are the most essential. You could take virtual home tours and some states may allow for virtual closings. Even so, very few people would buy a home without setting foot in it first. I don’t blame them.

The mortgage lending process is facing challenging times

Getting a mortgage is usually a predictable process. You apply for a mortgage and give the lender the requested paperwork. This paperwork helps the lender feel confident you can afford the mortgage. Things aren’t as simple today as they once were, though.

Mortgage rates are all over the place

Lenders tend to offer fairly competitive rates in a stable environment. Some lenders may offer better rates than others, but the difference between lenders is normally relatively small.

Our original mortgage process was straightforward without any problems. After we closed on our home, mortgage rates dropped fast. We decided to refinance our mortgage right after closing on our home. 

For the refinance, finding a lender with a great rate was a bit harder than we thought it would be. We had to do a lot of shopping around to find the best rates as some lenders had rates that were much higher than others were offering. 

Rate quotes were as much as 2% different between lenders over the course of a couple of weeks. This is insane in a stable mortgage market.

Some mortgage processes have become more strict

Underwriters review the information you’ve submitted to see if you qualify for the loan. They look to see if they need any additional information and eventually approve your loan for closing. Usually, this is straightforward and borrowers know what to expect. Today, requirements may be changing.

Mortgage companies have started altering their requirements to take out a mortgage. Chase stated back in April that buyers of certain home loan programs will have to have a credit score of 700 and a 20% down payment to get certain types of mortgages. And many lenders have followed their lead.

We could tell the process was getting stricter when we refinanced in March, as well. To our surprise, one lender would have required us to sign an affidavit saying we hadn’t lost our jobs and our income situation hadn’t changed at closing. 

I didn’t have to sign this paperwork when we originally closed on our purchase loan. Lenders seemed like they were taking a more in-depth look at the mortgages they had in process, and this was in mid-March. As this crisis continues to drag on, lenders may get even more stringent.

Slower processes could challenge your closing timeline

Unfortunately, coronavirus has made the mortgage process more difficult. Due to the virus, interest rates on mortgages have generally dropped. This is great news for your monthly payment, but it also means mortgage lenders are much busier than usual processing refinance requests.

This can slow down the mortgage approval process because lenders don’t necessarily have enough staff to handle the higher refinance demand. To make matters worse, COVID-19 has forced many employees to work from home. At home, the employees may be less efficient and not have the tools they need to complete their jobs as quickly.

The lender usually orders an appraisal to make sure the home isn’t worth less than you’re paying for it, too. This requires an appraiser to visit the home and complete an appraisal report. The virus has posed challenges for these appraisers.

Many home sellers may not want to let a stranger enter their home to assess its value. There is no telling if the appraiser has the virus or not. Even if you can get an appraiser, they may have to take extra precautions which could slow down the process.

If a mortgage lender can’t complete the entire mortgage process in time, it could delay your closing on your home. This could result in penalties or your contract falling through altogether.

So, should you buy a home during the pandemic?

Buying a home during the pandemic could work out in your favor. If you have your finances in great shape, you could take advantage of the down market during these tough times. 

Get a good deal on houses that must sell

Some people absolutely must sell their homes right now. They may have already bought another home elsewhere and can’t afford to make two mortgage payments for long. Others may have had to relocate for work and don’t want to wait to see if COVID-19 drags their old house’s value down.

In these cases, you can test the willingness of the sellers to wait out the COVID-19 pandemic. Some sellers may not be willing to budge on price. Other sellers may drastically reduce their selling price to sell and avoid future uncertainty. If you’re not picky about getting a particular house, you could get a great deal.

If our prior house didn’t sell before the pandemic took hold, this very well could have been our family. It could have resulted in us getting a much lower price than we ended up selling our home for, or us holding on to our home for a much longer period to get the price we wanted. Either way, it would have cost us money.

Avoid homes you won’t own for long

Be careful about what type of home you buy during the pandemic. Now is not the time for most people to buy starter homes that they plan to move out of in a few quick years. If housing prices drop, you may be stuck in the home.

Buying long-term or forever homes may work out fine

Buyers purchasing a home they plan to spend a significant amount of time in, such as a decade or more, should hopefully be able to weather any negative short term impacts the housing market faces. Nothing is guaranteed, though.

Why shouldn’t you buy a home during the pandemic?

Buying a home during the pandemic isn’t a good move for everyone. In fact, you may be better off waiting to buy.

Limited housing supply

As a home seller, we’re delighted we sold when we did. If we still had our home on the market after the COVID-19 pandemic took hold and we still lived there, we would not have been comfortable with others coming through our home to view it.

If we hadn’t put our house on the market already, chances are we would have waited until after the pandemic was over to list our home. It would have put our mind at ease that we wouldn’t have to find another place to live while the world is in lockdown should we be lucky enough to sell.

Other potential sellers are facing similar dilemmas. This could result in fewer houses being put on the market, resulting in a tighter home supply during a typically busy spring market.

Housing prices could decline

No one knows how the housing market will end up on the other side of this pandemic. It could result in lower housing prices in the future. This result could be temporary or it could last for years.

Even if you think you’re getting a deal today, prices may decrease even more before the pandemic is over. Without a sizable down payment and equity in your home, you may end up underwater and be unable to sell it or move.

As a home buyer, we’re happy with our purchase. Even so, part of me wonders if we’ve now bought at a peak in prices. We are very aware we might see housing prices decrease in the future. 

This doesn’t worry us as much as it may bother others. We plan to live in this house for at least 10 years. It has plenty of space and is in a great neighborhood with good schools. If this was a starter home, we would be very concerned about our ability to resell it for a profit in a few years.

You could lose the income you use to pay your mortgage

Another reason to avoid buying a home right now is uncertainty about your job. Those that need a paycheck every two weeks to make their mortgage payment could end up getting foreclosed on if they get furloughed or laid off. 

Unless you have substantial financial reserves that could help make mortgage payments until you find a new job, buying a home right now probably isn’t a good idea. Instead, you may be better off focusing on building reserves.

Buying a home would exhaust your cash reserves

Most people save for years to be able to afford a down payment for a home. When they close on their home, some people use almost all of their available cash to do so. This leaves them with no emergency fund to speak of.

If this is you, don’t buy a home right now. If anything bad happens after you purchase your home, it could put you in financial ruin. Losing a job could result in foreclosure. A large home maintenance item that suddenly needs to be taken care of, such as a damaged sewer line, could put you into debt.

Instead, wait until you have enough money for a down payment while still keeping a cash reserve after you close on your home. Something unexpected always pops up. 

When we bought our first home, we quickly found out our air conditioner needed to be replaced. That was an unexpected $3,000 expense on a $79,000 home, but it could have been much more if we needed a new roof.

You may not be able to sell your current home

If you would have to sell your current home to afford your next home, now isn’t a great time to buy. Whether you want to move to a different area or move up to a nicer home, there is no guarantee your current home will sell in time. 

If it doesn’t sell and your contract to buy falls apart, you may lose your earnest money and any other fees you paid throughout the process. The other potential issue could be selling your home for much less than you’d otherwise get if you weren’t crunched for time. Either way, you could lose out substantially if things don’t work out as anticipated.

Summary

Buying a home could be a good move for you if your finances are in order, you’re buying a home for the long haul and the right house comes along. 

However, those with an uncertain future or just enough funds to barely make a down payment on a house would likely be better off waiting until there is more certainty before buying. You may not get as good of a deal, though.

Read more:

Source: moneyunder30.com

Apache is functioning normally

[Note from the editor: Originally published on Thomvest’s Blog]

Today we’re pleased to release an updated version of the real estate technology market map we originally published in 2018. A high-resolution version of the map can be accessed here, and the full list of companies is available here.

This market map includes 180 real estate technology companies operating across every phase of the home purchase value chain. These companies have collectively raised more than $20B in venture capital, and range from seed stage businesses to public companies. If you’d like to suggest a company to be added to this market map, please submit them using this form.

You’ll notice that several companies are included in more than one section — this is due to the fact that many of these businesses have expanded their product areas to capture multiple phases of the transaction process. For instance, while Blend’s original product focused specifically on the mortgage point-of-sale, the company has since expanded to offer home insurance and digital closings. As such, we’ve included the Blend logo in those areas.

At Thomvest, we’ve been actively studying how technology is being utilized in real estate. We view technology as both a means of lowering transaction costs and an enabler of new transactions by better matching demand and supply. Software is also being adopted across some of the more labor-intensive areas of real estate — for instance, in property management and home improvement — as a means of improving efficiency and productivity.

Personally, I’ve been impressed by the quality of entrepreneurs building technology companies in residential real estate. Founders here are passionate about creating better experiences for consumers. Many have experienced their own frustrations when buying or selling a property, and aspire to rebuild the experience from the ground up. Others are seasoned operators within real estate and see technology as a competitive advantage in an otherwise analog asset class.

Impacts of COVID-19 on technology adoption

Every constituency within the real estate sector — including agents, lenders, title companies, and attorneys — are scrambling to adjust to life under lockdown. In my last post on the housing market, I touched on the dramatic impact COVID-19 has had on transaction volume and home showings. In many ways, the pandemic has accelerated existing trends around digitization of the home buying process. There are a few areas in particular where technology is being utilized:

1. Deepened reliance on “home shopping” apps
Shelter-in-place is created new behaviors around the home shopping experience. Rather than spending a half day touring open homes, prospective buyers are relying on apps like Zillow and Realtor.com to “tour” properties in lieu of an in-person visit. Zillow created 525% more 3D home tours in April compared to February, and CEO Rich Barton recently remarked that “the virtual tools home shoppers need for safety today will become their expectations for convenience tomorrow.”

2. Rapid adoption of digital tools for real estate transactions
Many of the processes associated with closing a real estate transaction are traditionally completed in-person. These include appraisals, inspections, notarizations and local government filings. Fortunately, startups are here to help. Companies like Blend, Modus, Side and Snapdocs offer products that enable digital closings. 46 states now let notaries do their jobs using a combination of video and online document sharing, up from 23 prior to the pandemic. Additionally, large mortgage buyers like Fannie Mae and Freddie Mac are increasingly relying on automated home valuations in lieu of in-person appraisals. We believe these new methods are here to stay, which will be a strong tailwind for startups building digital home buying experiences.

3. More tools for homeowners to manage their largest asset
Startups in the real estate vertical must take advantage of their agility relative to incumbent banks, and design products and services that reflect today’s changing consumer needs. This can take the form of better credit products (for example, smart loans powered by LoanSnap or HELOCs offered by Figure), or novel home equity products like Unison. We’re also seeing a number of interesting businesses that help homeowners maintain and improve their property, including Pro.com and Made Renovation. These startups help automate much of home renovation process, including design, planning & construction.

Source: geekestateblog.com

Apache is functioning normally

[Note from editor: The “Mastermind Showcase” highlights companies and news from members of the Geek Estate Mastermind. Today’s showcase: Majordomo.]

Majordomo’s Domoscore app is designed to help buyers, sellers, and agents quickly and easily assess the overall condition of a home, resulting in a single number (the Domoscore). The score identifies the factors that went into producing the number – information that can give both sellers and buyers a jump on determining and prioritizing issues that might need attention with a house.

Getting a home’s Domoscore takes about 10 minutes. The app asks a few simple questions about the house and specific items in it. (For example, the app asks about the state of the kitchen counters and what year the water heater was installed. It also offers tips so that users can easily find that information.) The user walks through the house, like on a scavenger hunt, to answer the questions.

The app is an asset on both sides of the transaction. Sellers can gain perspective on the home’s true condition and thus assist to set a realistic range for an asking price. In turn, buyers and their agents can easily use the free app while visiting the house during a tour.

Download the iPhone app, Android app.

Learn More

Source: geekestateblog.com