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Gina McKinley

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Deductible Dilemma

by Gina McKinley

Phoenix area homeowners have experienced a fair share of insurance claims with the seasonal monsoons and haboobs.  Making sure we have the right amount of coverage balanced with the deductible is more math than I care to do in a month. But to be well protected one needs to do that analysis. Many folks across the country today are finding that their insurance simply does not cover the losses they are facing. Double check of your coverage with your agent, and remember…

The purpose of insurance is to shift the risk of loss to a company in exchange for a premium. Most policies have a deductible which reduces the amount of the claim that is paid by having the insured share in the first part of the loss.38973594-250.jpg

In the process of managing insurance premiums, policy holders often consider higher deductibles to lower the premium. Lower deductibles mean less money out of pocket if a loss occurs but also results in higher premiums. Higher deductibles result in lower premiums but require that the insured bear a larger part of the loss.

A small fire in a $300,000 home that resulted in $2,500 of damage might not be covered if the policy holder has a 1% deductible. If the homeowner can afford to handle the cost of repairs in exchange for cheaper premiums, it might be worth it. On the other hand, if that loss would be difficult for the homeowner, a change in the deductible could be considered.

Homes in high-risk flood areas with mortgages from federally regulated or insured lenders require additional flood insurance. However, each homeowner needs to assess the risk of being able to financially sustain a flood loss on their home when flood insurance is not required. The recent events in south Texas and Louisiana are evidence that the unexpected can happen.

It is important to review your deductible and discuss risks with your property insurance agent so that you’re familiar with the amount and make any changes that would be appropriate before a claim is made.  The FEMA website has information and frequently asked questions about flood insurance.

As always give us a call (480-355-8645) or send us an email (Info@LocateArizonaHomes.com) if you need any assistance with this or need a referral for a good insurance agent to help you walk through this process.

How to Deal with Closing Delays

by Gina McKinley

Have you ever had a closing delay threaten to kill a deal or strain a relationship with a client?

If you’re like most agents, it’s happened to you more than once.

Here are three steps you can take to prevent closing delays from ruining a transaction or a relationship.

Step 1: Prepare Your Clients

Dealing with closing delays starts with preparing your clients for them to happen.  The best time to do this is when you are writing an offer with your buyers or reviewing an offer with your sellers.

Start by explaining closing dates aren’t set in stone and may be delayed for a variety of reasons.  Then ask this question:

What would happen if this closing date needed to be pushed back?

Your clients’ answers will tell you if a potential disaster is looming.  The best option is always to negotiate a closing date that leaves flexibility on both sides, but you’ll still want your clients mentally prepared for the worst-case scenario.

Step 2: Create Contingency Plans

Once a contract is executed, buyers and sellers begin to make moving plans.  Unfortunately, they rarely plan for delays.

If you completed step 1 and asked what would happen if the closing was pushed back, you should be aware of any potential issues.  Now is the time to help your clients create contingency plans to address those issues should the need arise.

Are they able to extend their lease?  Do they have relatives or friends they could stay with temporarily?  Is the moving company’s pickup date flexible?

Your clients should have answers to these types of questions well before the closing date so chaos at the last-minute is avoided.

Step 3: Address Emotion the Right Way

Moving is stressful and no amount of preparation or planning can prevent emotions from boiling over when a closing is delayed.  Handle the situation the wrong way and the work you’ve done in steps one and two above won’t matter.

The single biggest mistake you can make when emotional clients call you is to try to offer explanations or solutions.  Emotion cannot be overcome by logic.

Let the clients vent.  Listen and acknowledge their feelings without expressing your own frustration with the delay.

Only when the clients have moved past the emotion is it time to discuss solutions and remind them of the contingency plans they have in place.

P.S. - Did you know the best time to ask for referrals is immediately after you’ve solved a problem for a client?

Following the steps above will not only help you deal with closing delays, it’ll also put you in a strong position to receive referrals.

P.P.S. - We are a top team in the South East Valley as ranked by Top Agents Magazine and RealTrends. We are currently hiring. The ideal Realtor® candidate is serious, motivated, and integrity driven. Please call us today!

Your Home's Equity Could Be the Answer - 8/31/2017

by Gina McKinley

When I got into real estate years ago, one of the first things I realized was there were months with nothing and others with plenty. Home sales were high and low, so I needed a way way to fill in the gaps, valleys and smooth the road. A Home equity line did the trick. Here is somemore…

 

A home equity line of credit, HELOC, is a mortgage loan made to homeowners to be used on an as-needed basis. A lender, such as a bank, will approve a borrower for a specified amount based on the equity in their home and all the necessary paperwork is signed to authorize the loan.43355754-250.jpg

The line of credit amount is available to the borrower and no interest is due until some or all the money is used. When the money is paid back, the line of credit is again available in full to the borrower.

The specifics of the repayment will depend on the HELOC lender. It may require interest only or it may require amortized payments of principal and interest.

The proceeds from a HELOC can be used to make improvements on the home or anything else such as medical expenses, college tuition or unexpected expenses or other liquidity issues.

Unlike personal credit card interest, the interest on a HELOC may be tax deductible. Your tax advisor will be able to let you know about your situation.

Rates and fees can vary widely on HELOC loans. Borrowers should shop around, compare and get recommendations before deciding on a lender.

The truth is that sometimes folks use HELOCs for other purposes. One purpose might be to buy an investment property or a college condo; or a kitchen update, or even add on to the house. One thing you cannot do is get a HELOC when your house is on the market for sale. SO make sure you reach out before so we can talk through your plans. Give me a call 480-355-8645 or send me an email (Info@LocateArizonaHomes.com) and let me know how I can help.

Which Value Do You Want?

by Gina McKinley

Often, when asked to help someone sell their home, or to just sit and visit about the value of their home, the true value of the conversation ends up being staying in the East Valley, versus moving elsewhere in the state or to another state. Your decision may be based upon the estimated value that I can provide you (and that may even suffice for an estate!). Should you be thinking it might be time to move, a conversation about real estate might be the best way to determine what the plans really are. But read on, there’s more…

What your home is worth depends on why you ask the question. It could be one value based on a purchase or sale and an entirely different value for insurance purposes.Values-250.png

Fair market value is the price a buyer and seller can agree upon assuming both are knowledgeable, willing and unpressured by extraordinary events. This value is generally indicated by a comparable market analysis done by real estate professionals.

Insured value is determined for insurance coverage. Homeowner policies typically have replacement clauses in them and the cost of demolition, new construction and the added complexities of matching existing construction could exceed the cost of new construction.

Investment value is based on the income it can generate during its useful life. This value is dependent on what kind of yield an investor requires to capitalize the value over time. The formula for this is to divide net operating income by the capitalization rate required by the investor.

The assessed value of a home is used to determine the property taxes the owner must pay. This value is determined by the responsible state government agency.

Homeowners are generally more familiar with their home’s market value. Since it can be lower than the replacement cost, owners should review the insured value with their property insurance agent periodically.

There can be a surprising difference in each of these separate values. It is important to know the purpose that it is going to be used for the value.

With my  experience ( since 1998) I am often asked to establish a value for a home here in the East Valley that is being managed by an estate or a trust, and they need to liquidate. A divorce can be another reason to get a value for a home as can the blending of 2 families, or the expansion of another.  Life as a Realtor here in Chandler / Gilbert area can be very diverse. So Let’s Have a conversation about real estate.  Contact me for any information on the value of your home. CALL (480-355-8645) OR EMAIL (info@locatearizonahomes.com).

The 3 Questions You Must Ask Every Buyer

by Gina McKinley

You’ve heard the old cliché that buyers are liars, right?  It’s so well-known it was #1 on Inman News’ list of the top 50 real estate one-liners, and for good reason.

There are few things in real estate more frustrating than showing buyers multiple properties only to have them make lowball offers, decide to continue renting, or buy a home through another Realtor.  If you’ve had any of those experiences, you might be tempted to agree that buyers can’t be trusted.

But what if there was a way to weed out many of the seemingly untrustworthy buyers just by asking three simple questions?

The right questions asked the right way will give you all of the information you need to decide whether or not a buyer is worth your time.  Here are the three questions you must ask before putting prospects into your car:

Question #1: What do you know about the local real estate market?

This innocent-sounding question will get you more information than you might think.  First, the buyers’ answers will tell you if they’re realistic about the market.  If not and they’ve been misled by the news or a “helpful” friend, it’s better to set them straight upfront than it is when they’re ready to make an offer well below list price.

Second, when answering this question buyers will often tell you how much research they’ve done, whether or not they’ve already viewed homes, and if they’ve spoken with other agents.  A buyer who understands the market but hasn’t spoken with other agents is a far better prospect than a buyer who has already seen five homes with four different agents.

Question #2: What would happen if you didn’t buy?

It’s common to ask, “Why do you want to buy?” and, “How soon do you need to buy?” when first interviewing buyers.  The answers to those questions tell you whether you need to put the buyers in the car today or add them to your drip email campaign and follow up in a few weeks.

Unfortunately, those questions don’t give you the whole story.  Maybe you’ve had the experience of working with seemingly hot buyers only to have them tell you they’ll “rent for another year” or “stay with family” when they weren’t able to find a home they liked.

Asking buyers what would happen if they didn’t buy tells you how many options they have.  All else being equal, the more alternatives prospects have to buying, the more likely it is you’ll lose them if the going gets tough.

Question #3: How can I best help you?

Many of the misunderstandings between agents and buyers can be traced to conflicting expectations.  The buyers only wanted to use the agent to see one house; the agent thought she’d picked them up as customers.  The agent thought the buyers would want to speak with her mortgage person; the clients felt pressured and decided to work with someone else.

By asking how you can best help the buyers, you are inviting them to share their initial expectations of you.  First and foremost, this allows you to make an educated choice of whether or not to work with the buyers.  Second, it prevents the kind of misunderstandings that drive buyers into the arms of another agent.

Buyers typically aren’t liars.  However, they also don’t always share the complete truth unless you ask the right questions.  Add the three questions above into your buyer interview, whether in-person or on the phone, and save yourself from working with prospects who are likely to waste your time.

P.S. – There’s one more question you might consider adding: “How do you plan to search for homes?”  It’s best to know upfront if the buyers plan on driving through neighborhoods or searching online in addition to viewing the listings you send them.  That way, you can gently coach the buyers to call you first with any questions instead of contacting the listing agent.

P.P.S. - We are a top team in the South East Valley as ranked by Top Agents Magazine and RealTrends. We are currently hiring. The ideal Realtor® candidate is serious, motivated, and integrity driven. Please call us today!‚Äč

Home Safe Home - 8/10/2017

by Gina McKinley

My assistant was just talking about of when her family moved to Arizona in 1972.  Neighborhoods were an open and safe community for friends, family, and children to roam the neighborhood.  Children would walk to school, then coming home to the back door being left unlocked for easy entry if mom was not home.  Things have changed with time and the neighborhood Block Watch was set up to have a designated neighbor who was the "eye" on the block.  Times continue to change and a safe neighborhood and community is not as common as it was in the good old days.

Home is a place you should feel safe and secure. Sometimes, we take it for granted and unfortunately, we do need to remain vigilant about things we do that could compromise our safety. Here are a few tips to consider:Home Safe Home.png

  • Everyone loves an inviting home including burglars. Make sure it looks occupied and is difficult to break in.
    • Always lock outside doors and windows even if you’re only gone for a brief time.
    • Lock gates and fences.
    • Leave lights on when you leave; consider timers to automatically control the lights.
    • Keep your garage door closed even when you’re home; don’t tempt thieves with what you have in your garage.
    • Suspend your mail and newspaper delivery when you’re out of town or get a neighbor to pick it up for you.
  • Posting that you’re out of town or away from home on social networks is like advertising your home is unprotected.
  • Equally dangerous could be allowing certain social network sites to track your location.
  • Don’t leave keys under doormats, in flowerpots or the plastic rocks; thieves know about those hiding places and even more than you can think.
  • Trim the shrubs from around your home; don’t give criminals a place to hide.
  • Use exterior motion detectors and yard lighting.
  • Have an alarm system and use it when you leave home and go to bed.
  • Put 3 ½” deck screws in door plates and door hinges.
  • Have good deadbolts on all exterior doors.
  • Exterior doors should be solid core.

Considering a move to a safer home/neighborhood? Let’s chat about your needs. You can contact me at 480-355-8645 or Info@LocateArizonaHomes.com

3 Ways to Instantly Improve Your Marketing

by Gina McKinley

Want your marketing to attract more buyers and sellers?

Regardless of whether you market yourself online, by email, in print, or anywhere else, there are three ways you can instantly improve the effectiveness of your campaigns.

#1 – Focus on Benefits, Not Features

A feature is a factual statement about a product or service.  Typical examples of features used in real estate marketing include:

  • #1 Agent in X area
  • Top-producer/winner of the X award
  • Neighborhood/local expert
  • CRS, GRI, etc. (any list of designations or certifications)

But people don’t hire agents based on features.  They hire agents based on benefits.  And a benefit answers the question, “What does this feature do for me?”

For example, let’s say you market yourself to homeowners as a neighborhood expert.  The question you must ask to turn that feature into a benefit is, “What does being a neighborhood expert do for potential sellers?”

Does it mean you’re intimately familiar with the comps and can ensure the highest possible price?  Does it mean you have buyers waiting for listings in the neighborhood and you can therefore save sellers the hassle of tons of showings?

Whenever you create a new marketing piece, ask yourself if it clearly shows the benefits of working with you.

#2 – Include Social Proof

Have you ever used Yelp to get restaurant recommendations?  Or, have you ever asked a friend or neighbor for the name of a contractor to repair something in your house?

If so, you’ve experienced the power of social proof.  In real estate marketing, using social proof means showing potential buyers and sellers that your past clients had positive experiences.

One way to do that is to share testimonials and success stories.  Another way is to display your ratings from sites like Zillow, Trulia, and Realtor.com.

The more compelling your social proof, the more likely buyers and sellers are to contact you.

#3 – Have One Clear Call to Action

Every piece of marketing you use must have a clear call to action (CTA).  A CTA is a statement designed to prompt an immediate response.

Here are a few examples of typical real estate CTAs:

  • Call to receive a free neighborhood newsletter/update
  • Visit this website to get a free, instant evaluation of your home’s value
  • RSVP to this email address to attend a free seminar for first-time buyers

The mistake many agents make is including several calls to action in a single piece of marketing.  Doing so only confuses people.  And when marketing confuses people, they don’t respond to it.

P.S. – Be sure to track the results of your marketing materials.  Something as simple as a Google doc or spreadsheet will ensure you know what’s working and what isn’t.

P.P.S. - We are a top team in the South East Valley as ranked by Top Agents Magazine and RealTrends. We are currently hiring. The ideal Realtor® candidate is serious, motivated, and has integrity and drive. Please call us today!

Other People's Money for College - 7/28/2017

by Gina McKinley

Chandler PARENTS of 1 to 5 year olds: If you have great credit and some down payment (equity in your house) why not buy a rental that will be mostly paid off in 15 years? And the rents or a 2nd or even a re-finance, or sale might pay for ALL of the kids college costs! Read on as there is some great info here…

Consider the goal of funding a child’s college education in the future. If “other people’s money” in the form of a scholarship is not a possibility, there still may be another way to use some “other people’s money.”26458431-250.jpg

A $25,000 investment into a mutual fund paying 5% would earn $1,250 in the first year. Alternatively, the $25,000 as a 20% down payment to purchase a $125,000 rental home appreciating 3% a year would have gone up by $3,750 or three times that of the mutual fund in the first year.

The mutual fund’s growth depends on the value of the money invested. Rental real estate benefits because a 20% down payment controls a much larger asset because you’re using “other people’s money.” Leverage allows the investor to profit not only from the amount of cash invested but from the value of the investment.

With a 20% down payment and current interest rates, a typical rental would have a positive cash flow. In ten years, the equity could be $75,000. On the other hand, the $25,000 initial investment in a mutual fund earning 5% annually would only grow to about $40,000 in the same 10 years. It would require an additional $2,700 each year to reach the same $75,000 value.

Leverage is just one of the many benefits that make rental real estate the IDEAL investment. Whether you are saving for higher education, retirement or wealth accumulation, consider rental real estate. Using single-family homes as investments are attractive because homeowners have a better understanding than many other investments and self-management is a possibility.

In my team's years of recommending this a number of clients have gone through the learning curve of being a landlord and paid for their children’s college education…then sell the home once graduation is past. There may be a refinance to get cash out for certain years or even using the rent payments for the tuition bills. Buy one for each child. But do it early in their life!

If you would like some ideas on financing such a purchase and/or property management please contact me at 480-355-8645 or Info@LocateArizonaHomes.com

How to Avoid Showing Buyers an Endless Number of Homes

by Gina McKinley

When was the last time you showed buyers what felt like an endless number of homes?  Showing property after property to indecisive buyers consumes a huge amount of time and energy.

The key to avoiding this nightmare scenario is helping buyers pinpoint exactly what they want before showing them homes.  Here’s a four-step process for doing just that.

Step #1: Set Expectations

Many buyers don’t understand the buying process.  They might feel they’re supposed to see as many homes as possible.  Or, they might not understand seeing tons of homes makes choosing one more difficult.

When you first meet with your buyers, set expectations about the buying process.  Explain how your job is to help them narrow their criteria so they don’t waste time viewing homes that won’t work for them.

Step #2: Ask What They Don’t Want

Buyers are often terrible at knowing what they want (especially first-timers).  But, they’re excellent at knowing what they don’t want.

After you’ve had the expectations conversation from step #1, ask your buyers what they don’t want in the neighborhood, home, lot, etc.  Take detailed notes and ask follow-up questions as necessary.

You’ll be surprised how much you learn about your buyers’ preferences when they tell you everything they don’t want.

Step #3: Review Listings With Them

Most agents send listings via email and never take the time to review those listings with the buyers either in-person or by phone.

Once you run your initial MLS search, schedule time with the buyers to talk through the listings.  Ask them the things they like and don’t like about what they see in the pictures, comments, and property details.

This step is critical because it either confirms or denies the information you gathered in step #2.  Only when buyers are looking at actual listings do you get the full picture of their preferences.

Step #4: Invest 5 Minutes

One of the reasons agents get stuck showing too many properties is they don’t invest five minutes to eyeball listings before scheduling showings.

In step #3, you reviewed the initial MLS search results with your buyers.  But, if you run a new search or set up an automated search, you might not have the chance to review the listings before your buyers receive them.

The problem is, no MLS search can capture every buyer preference.  And, few buyers look at all the details of a listing before deciding whether to see it.

That’s why you want to invest five minutes eyeballing each listing your buyers want to see before setting up the showing.  In many cases, homes that appear perfect for the buyers at first blush will end up rejected upon closer inspection of the details and remarks.

P.S. – If the four steps above seem like a lot of work, consider how much time they could save you.  A showing on a home that doesn’t meet your buyers’ criteria wastes at least an hour of your time and frustrates your buyers.

P.P.S. - We are a top team in the South East Valley as ranked by Top Agents Magazine and RealTrends. We are currently hiring. The ideal Realtor® candidate is serious, motivated, and has integrity and drive. Please call us today!

Assumptions are an Alternative - 7/21/2017

by Gina McKinley

 

FHA VA Assumption.png

OH do I have a story about a non-qualifying assumption from the mid 1980’s that was done in Chandler! Then the City of Chandler experienced exponential growth, ranking among the fastest-growing municipalities in the country And it was one of the reasons that…

In the late 80’s, both FHA and VA began requiring buyers to qualify to assume their mortgages. The main reason there haven’t been many assumptions in the past 25 years is that interest rates have been steadily going down and if a person has to qualify, they might as well do it on a new loan and get a lower interest rate.

Based on projections by Fannie Mae, Freddie Mac, the MBA and NAR, rates for the second half of 2017 and 2018 are expected to be higher. When interest rates on new mortgages are higher than the rates of assumable FHA and VA mortgages in the recent past, it becomes more advantageous to assume the existing mortgages.

FHA and VA loans originated with lower than current interest rates have great advantages for buyers and sellers.

  1. Interest rate won't change for the qualified buyer
  2. Lower interest rate means lower payments
  3. Lower closing costs than originating a new mortgage
  4. Easier to qualify for an assumption than a new loan
  5. Lower interest rate loans amortize faster than higher ones
  6. Equity grows faster because loan is further along the amortization schedule
  7. Assumable mortgage could make the home more marketable

An Assumption Comparison can help determine the savings and financial benefits of an assumable mortgage with a lower rate.

The process of assuming a loan is similar to getting a mortgage. One has to substitute your credit and liability to the lender for the original borrower and they are released from future liability on the loan. Given the rapid appreciation we have had here in the Phoenix area, often a 2nd mortgage or a HELOC might be needed to fill the equity difference. As a buyer you still need to qualify for both loans, yet if you have a large down payment and a home with a 2013-2016 era FHA loan fits the bill, it may be a possibility. And a great question to ask. It would be my pleasure to help you find a good loan officer to assist you. Just reach out to me at 480-355-8645 or Info@LocateArizonaHomes.com

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Photo of Gina McKinley Real Estate
Gina McKinley
RE/MAX Masters
2390 W. Ray Road, Suite 4
Chandler AZ 85224
480-355-8645
Cell: 1-480-779-9420
Fax: 480-355-8912

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