Home Closing Costs: The “Hidden” Fees That Surprise Buyers

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You’re ready to buy a home. You’ve saved for a down payment. You’re about to close when WHAM — you’re shocked to learn that you owe several more thousand dollars than you expected.

Closing costs have struck another unsuspecting buyer yet again. Most first-time home buyers think of the house price as the only thing they have to account for. Some might take sales tax into account, but many don’t realize that home closing costs are going to take a chunk out of your wallet.

What are closing costs?

Many people and entities are involved when a home closing transaction takes place. The title company and appraisal company are just some of the involved parties that render payment for their services.

Here are just some of the things that closing costs cover:

  • Escrow fee (goes to the title or escrow company for managing the closing)
  • Attorney fee
  • Courier fee (the cost to transport documents)
  • HOA transfer fee (paid for by the seller)
  • Homeowner’s insurance
  • Title insurance

Again, these are only some of the main costs — talk to your real estate agent or closing attorney so you know what to expect.

What are average closing costs?

Closing costs depend on the state, but you can expect to pay anywhere between 2 and 5 percent on the house purchase price. For a $200k home, your costs could range from $4,000 to $10,000.

One thing to note: that 2-5% range is for the buyers to pay. Factor this is when looking at house prices, and plan on paying for it upfront!

Are closing costs covered by the buyer or the seller?

Both parties will have some share of closing costs to cover. For example, if you’re buying a house with an HOA, the seller has to prove that they’re up-to-date on their dues and transfer things over to you. The seller has to pay for this transaction. 

Other fees, such as the home inspection, are covered by the buyer. Sellers and buyers can negotiate over who pays for what.

Do you have to pay closing costs in cash?

Sellers will often have their fees deducted from their profits. Buyers will most likely have to pay in cash or with a check. However, there are some no-closing cost mortgages where buyers don’t have to pay when closing.

That being said, a no-closing mortgage could come back to bite you. You might receive a higher interest rate, or the lender might add the closing costs to your mortgage (which means you’re now paying closing fees, but with interest). Either way, it’s much better to pay your portion on closing day.

When do you find out how much you owe?

Your lender will give you a Closing Disclosure statement at least 3 business days prior to closing. This statement goes over each of the closing costs.

Zillow recommends that buyers “compare [the Closing Disclosure statement] to your Loan Estimate and ask the lender to explain what each line item on your closing costs is and why it is needed.” The last thing you want is to walk into closing day and come across some unsettling or unknown surprises.

Is there anything buyers can do to lower closing fees?

You can negotiate with the seller, but this isn’t a guarantee. One thing that can help is to find an agent through Cashifyd. This RealtyHive program allows you to choose an agent and come closing time, you’ll get cash back that can be used towards the closing costs — solely from working with Cashifyd.

Using the cashback as a form of a credit acts as a rebate that goes directly to your closing costs. For buyers, this lowers the amount you need to pay; for sellers, this increases the amount you walk away with! Avoid those “hidden” closing fees — learn more about Cashifyd and see how you can save.

What’s the Difference Between a Lease & Leasehold Property?

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The United States loves to pride itself on freedom, and owning property is no exception. Nearly every property in the US is a freehold property, in which you own a place or land, free and clear.

But in many other places around the world, leasehold properties are more common. It’s important to know the distinction between freehold vs. leasehold, as well as leasing vs. leasehold, especially if you ever want to buy property abroad.

What is a leasehold property?

A leasehold property is where you lease, or, rent, the property, but don’t own it. In some countries, leasehold properties are common, if not the exclusive way to live in a house. In Vietnam, for example, no resident can own a house outright.

In many other countries, residents can own freehold properties but foreigners cannot.

How is a leasehold property different from a lease?

Even though we don’t call them “leasehold properties,” we still have leases in the US, right? Aren’t they the same thing?

Duration of Lease

One of the biggest differences with a leasehold property and a traditional lease that we think of here in the states is the length of the lease. The concept of leasing is the same, but leasehold titles last for much longer — anywhere from 25 to 99 years — whereas leases are for 6 months, a year, month-by-month, etc. 

Corporate vs. Residential

The US almost exclusively deals with freehold properties, but not always with commercial properties. Foundations, companies, and nonprofits will allow for leasehold properties — but again, even in this instance we still refer to this as a lease.

“Lease” vs. Title

Leasehold properties still provide residents with a title to prove “ownership.” As most of us who have ever rented know, tenants sign and get a copy of the lease, but it’s all temporary. There are also restrictions that renters often have to deal with that leasehold property “owners” don’t. Painting the walls, hanging certain things up, and smoking in the property are just a few examples.

Is a leasehold property my only option for owning internationally?

Not necessarily. If you’re hellbent on owning a freehold property, there are two ways to make this happen:

  1. Find a country where foreigners are allowed to own property (Belize is one of the most popular countries where US residents buy).
  2. Own a condo or apartment. This works in some instances because you’re not technically owning the land.

Keep in mind, however, that other countries’ rules and customs should be respected, not treated as something that you’re exempt from. If you think another country’s way of doing things is “wrong” or “backwards,” you probably shouldn’t be buying there.

Now comes the fun part: finding an international property! RealtyHive has a mix of freehold and leasehold properties around the globe. Look through our listings and find your ideal vacation abode, rental, or home away from home.

Everything You Need to Know About Selling an Inherited House

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While inheriting a house is a blessing to some, it’s a curse to others. Maybe not a curse in the horror movie/haunted house sense (at least, we’d hope not), but it can be emotionally draining and a time-consuming hassle to deal with. 

No matter your reasons, if you’ve inherited a house and want to sell it, you’ve come to the right place.

Is selling an inherited house the same as selling a regular house?

Simply put, no — there are different things to handle and deal with. Here are some important questions to consider before we dive in:

  • Does the house have an existing mortgage?
  • Are you the sole inheritor or was it left to multiple people?
  • Have you lived in the house?

Does the house have an existing mortgage?

Finding out if there’s a mortgage or reverse mortgage right away. Do not pass go until you do! Whether or not there’s a mortgage determines your timeline, as well as the price you need to get for the house.

Are you the sole inheritor or was it left to multiple people?

Regardless of your answer, you’ll likely want to hire a real estate agent (use Cashifyd for cashback at closing). They’ll have the best understanding of how selling an inherited house works, especially if multiple people are involved. Plus, as of May 2020 we’re in the midst of a really hot market — agents often are able to ask for (and get more) for properties.

Not to mention, an agent takes so much responsibility out of your hands. Especially for those who are grieving the loss of a loved one, trying to sell a house ends up being just another burden. Agents can also navigate the family dynamics that can sometimes boil over when the will gets read.

In addition to an agent, hiring a lawyer might also be a good move. If your family/other inheritors can work out the kinks on your own, you’re probably fine. But lawyers are overall useful for changing over titles, establishing real estate trusts, and other complex legal components of home selling.

Have you lived in the house?

If you have, you’ll likely need to fill out a condition report that states the defects of the home. If you haven’t, you won’t need to fill this form out but you will have to sign some paperwork that says you never lived there.

There is some benefit to living in the house before selling, particularly if you qualify for the Home Sale Tax Exclusion. When you inherit a home, you won’t be eligible for this exclusion unless you live in the property for at least two years. After that, you might qualify and have the first $250k-$500k of a home sale be tax free.

Another thing to note: The value of the house is calculated on the day the original homeowner dies. But if you sell your inherited property at that value, you won’t have to pay taxes. However, if you sell this property above fair market value, you’ll have to pay taxes on the difference (i.e. a $700k home that goes for $710k would mean you’d be taxed on just that extra $10k)

When is selling an inherited house a good idea?

To be clear, if you want to keep the house in the family, we’re not here to push you. We just know that there are some major benefits to selling an inherited home, both financially and sometimes emotionally. It makes sense to sell if:

  • The house is a source of grief
  • You don’t have the time to deal with the property
  • You live far away from the property
  • Selling would provide you more immediate financial relief

If you decide to sell, you’ll probably want things to go as fast as possible (while still getting your money’s worth). Use RealtyHive as a resource. Our time-limited events connect motivated sellers with motivated buyers, and you could even get some additional cash back in the process. Learn more about the benefits of selling — we hope that whatever happens with your inherited house ends up being the right move for you.

What Is an ADU?

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While folks in LA or the Bay Area might be familiar with the term “ADU,” it’s still pretty uncommon. We predict, however, that this form of housing will grow in both understanding and popularity over the next several years. As the population grows, it might become more of a necessity (and a great rental property investment option for those wanting to get ahead of trends).

What is an ADU?

ADUs are accessory dwelling units; in other words, a secondary residence that’s on the same property as a primary residence. Examples include:

  • A guest house
  • A detached garage or shed that’s been remodeled to a livable space
  • A completely new building

ADUs have to have their own entrance that’s separate from the house, a kitchen, living area, bathroom, and all the other components you’d expect to find in a house.

Why do ADUs exist?

Cities like San Francisco or Denver have a lot of older (usually pretty big) houses, oftentimes with carriage houses or detached garages. These cities have also experienced massive population booms as of late. 

When rental units are hard to come by and houses are nearly impossible to afford for the average Joe or Jolene, homeowners who already have these houses can turn the spare residence into a rental.

Does an ADU have to be an existing building?

Homeowners can build new ADUs on their property. However, there are a ton of building codes, zoning ordinances, and other regulations that need to be factored in. Building a new ADU is no easy feat — if anything, just getting approved to have one is sometimes more challenging than actually constructing one.

Are ADUs a good rental property investment?

Potentially. Here are some of the pros and cons of ADU rentals:

Pros:

  • If you already have a carriage house or apartment above a garage, renovations are likely much cheaper than buying a brand new property.
  • Having a rental property on your own property makes it more convenient to renovate (you won’t have to drive anywhere).
  • Depending on your area, a well-constructed ADU could be in high demand.
  • ADUs add more housing in an area that doesn’t have more land to build on.
  • Adding an ADU could also add more value to your home.

Cons:

  • Taxes could be so high that you wouldn’t turn a profit.
  • Zoning and building permits can be some of the biggest hassles and take a ton of time.
  • ADUs are still a new concept; many potential renters might lean towards a traditional apartment or house.
  • Many subdivisions or cities don’t allow them.

Bottom line, if you’re interested in an ADU for your property you should definitely consult with the city to see if it’s allowed, as well as check in with a tax professional before diving in. Weigh out as many costs as you can beforehand. 

If it doesn’t seem feasible but you still want to own a rental property, look through the RealtyHive listings! We connect highly motivated sellers with interested buyers through our time-limited events. Find your ideal rental property through RH.

Is It Worth It: Upgrading Your Backyard

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We know that milkshakes bring all the boys to the yard, but will landscaping bring all the homebuyers? Welcome back to our Is It Worth It series, in which we dive into upgrades and renovations to find out, well, if they’re worth it.

Everyone wants a nice yard, but landscaping can be costly. Homeowners that are starting from scratch can spend anywhere from $3,000 to $16,000 — and that’s not even counting an in-ground pool. With all that in mind, does backyard renovation and landscaping add value to your home?

Backyard Must-Haves

If your home has a yard, there are certain parameters it should meet, at the bare minimum. Your home could actually lose value if these things aren’t in place:

Organization

Your backyard should not serve as an open storage space. Potential buyers are turned off by a messy yard — or, they’re thinking about how they can score a deal on your home. Putting in a shed could help you stay organized (it could also add value to your property). More than anything, make sure your yard doesn’t look like a dumpsite.

Regional Sense

Hardscaping or xeriscaping is practical and energy efficient in the arid Southwest. In the Midwest, people love their lawns. Southern homeowners tend to love a pool. You don’t have to stick to the “norm” for your region, but it’s good to keep in mind. 

Similarly, your landscaping practices should have consistent maintenance. A dried out lawn or a grimy pool could hurt your home’s value instead of help.

An Intentional Exterior

Does your house have peeling paint or missing shingles? Are there any shrubs or flowers? Is the overall look clean and inviting or kind of shabby?

Even if you don’t have a massive yard or any add-ons, putting thought and care into your home’s exterior is extremely important. As we talked about in our bad interior design choices blog, a lovely interior doesn’t mean a whole lot if that same sentiment isn’t reflected in the exterior.

Backyard Features That Add Value

Now that we’ve covered the bare minimums, it’s time to get into the fun stuff! These are all backyard add-ons that, when done well, can end up paying for much (if not all) of their initial costs.

Adding a Deck

Estimated Return: 76%

If you love the idea of a deck and know you’ll use it, you could get some serious bang for your buck. Estimates show that a $13,000 deck (about 16’ x 20’) adds at least $10,000 to your home’s value. Decks play to the imagination of potential homebuyers — who doesn’t love envisioning the backyard shindigs and grill-outs they’ll have in their new home?

Putting in a Patio

Estimated Return: 69%

Patios are similar to decks both in function and return on investment. While patios are usually less expensive than a deck, a deck gets a higher return.

Installing a Pool

Estimated Return: Depends

Determining the ROI of a pool is tricky. In hot climates (think California, Arizona, Georgia, etc.), a pool is considered a necessity in many areas. Having one might be more of an expectation than a luxury, depending on your location.

That being said, pools are expensive. On average, expect to pay at least $20,000-$40,000 (costs vary by state) and then annual maintenance fees, which can also add up to another thousand a year. In states where a home pool is a rarity, this over-improvement might end up biting you.

If you’ve dreamt of owning a pool and know you’ll use it, we aren’t ones to stop you from getting one. Just keep in mind that in some circumstances, a pool can be a financial sinkhole instead of a fun swimming hole.

Planting Trees

Estimated Return: 100%

And to think we were told money can’t grow on trees! You’re likely to get all your money back by planting trees, which can cost a few thousand upfront. Trees look great, they help the environment, they provide shade, and they’re definitely a worthy backyard feature — just don’t plant them too close to your house.

Building an Outdoor Dining Area

Estimated Return: 71%

An outdoor kitchen and dining area is a relatively expensive backyard project (about $14,000 on average). However, its estimated ROI could be of great value to your home. 

If you’re in an area where eating outside is easily accessible and you love to dine al fresco, you’ll love having an outdoor kitchen. But don’t let colder climates hold you back — add the firepit nearby or put in some heat lamps to make use of this space throughout the year.

Installing a Firepit

Estimated Return: 67%

Putting in a gas firepit and patio area isn’t too expensive — $6,000 on average for both — and is well worth the upfront costs. Firepits are synonymous with summer nights. Everyone loves spending time with friends and family out by the fire, watching the stars, and listening to the crickets chirp. This backyard upgrade is great for you in the present, as well as when you decide to sell. 

Before You Get Carried Away…

Remember that too many additions can backfire. You might look at this list and think, “I could really up my home’s value by putting all these things in.” The truth is that an over-improved space can turn away interested buyers.

Buyers might love to see one, maybe two of these backyard improvements that add value. Too many will either a) raise your home’s price so high that you lose a lot of potential buyers or b) come across as a lot to manage or take care of, which also turn people away. An excess of upgrades can also look cluttered, especially if your yard isn’t big.

Maybe you’re feeling inspired to create your dream backyard. Maybe you’re ready to take on some smaller backyard tasks that you know will up your home’s value. Or maybe you’re thinking it’s better to sell your property as-is and start fresh with a new backyard. If that’s the case, look through our listings to find your dream home (and yard!), and learn about the benefits of selling with RealtyHive.

Bad Interior Design Choices That Can Cost You

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Just like the book “If You Give a Mouse a Cookie,” the benefits of a well-decorated space don’t stop when the last picture is hung on the walls. The path of benefits keeps going and going.

To illustrate this, think about how a beautiful home is a more desirable home. A desirable home attracts more buyers. With more potential buyers comes more offers. And with more offers, you have the potential to sell on the best terms possible. 

Conversely, the opposite happens when your home struggles in the interior design department. Less interest from buyers means fewer offers, which means selling will more likely be on the buyers’ terms, not yours. In order to avoid this situation, we’re listing the bad interior design choices that we know can cost you. Trust us, we’ve seen it all.

An interior and exterior that completely contrast

How jarring would it be to walk inside a gorgeous, elegant brick mansion and see it decorated like a log cabin? How off-putting is the thought of a beautiful modern home that has a Victorian-styled interior? 

If the thought of these scenarios makes you shudder, that’s for good reason. While things don’t have to match identically (that would also be creepy), it’s good to think of the impression your home gives from the outside and how you can carry that impression inside. A few tips:

  • Play up your location. Southwest adobe, mountain living, seaside or lakefront — carrying elements of the outdoors inside brings a sense of harmony.
  • Play to your home’s strengths. A log cabin feels blissfully secluded. A Victorian manor is a slice of history. While you don’t have to perfectly match the interior to these styles, it’s great to keep some of the original elements (and nostalgia) intact.
  • Complement colors. A dark brown home exterior would feel off with lime green walls inside. Think about warm and cool tones and try not to overly contrast.

An incohesive theme

The above photo feels super balanced and welcoming. The best interior design is cohesive and coordinated. While this might be tough with a teenager who wants a “beach resort” bedroom despite growing up in landlocked Wisconsin (not that this writer would know…), bad interior design almost always happens when something feels “off” or out of place. 

Cohesive design starts with considering colors AND textures. Metal surfaces work wonders in a cool-themed room, but not as easily in a warmer space. A bookshelf — full of textures like wood and paper — inherently feels a bit off it’s placed in the kitchen.

With all this being said, there is a problem if you get too “matchy-matchy.” I had a friend whose mom did a huge Coca-Cola (of all things) theme in all the bathrooms and it was disorienting. One antique Coca-Cola item could have brought the necessary balance and subtlety.

Too many customizations (especially permanent ones).

The Coca-Cola bathroom is the perfect example. Not only are customizations expensive, they can backfire. 

Interior design must match your style and personality — after all, you live in this space! But you still have to remember how others feel (sellers and guests alike). A good rule of thumb: don’t go too crazy on the custom if you can’t take it with you. 

Sticking too close to what’s trendy in the present.

“Evergreen” is a term that means something is good for a long time and doesn’t go out of style. Just like popcorn ceilings and loud ‘80s wallpaper has fallen off the map, the same will happen for lots of other things that are currently trendy.

Does this mean you should forego all trends and interior design? No! Again, just don’t go too overboard if it’s expensive and/or you can’t take it with you. Your adorable hipster bungalow is fresh now, but you wouldn’t want your decorations to be permanent when things around you start to change.

Supplement your space with accent pieces, or for bigger pieces (like furniture), go with something that could exist in various settings (and trends).

Going overboard on what needs decoration and design.

We all know the cringe that comes from seeing a faded pink toilet and bathtub combo. Not everything in your home has to be decorated or serve as a decoration. Certain things (like tubs and toilets) are just fine existing in the standard white. In fact, it’s what we expect and the absence of it is alarming.

You’ve seen the bad interior design choices, we know they’re out there, but you have the power to break them. If you’re currently looking around your house feeling a little creeped out that we’re describing your exact space, fear not! You can always list with RealtyHive instead of starting interior design from scratch in your current space. Selling your home as-is is a great way to leave the past behind and to start fresh. Start with RH today.

How to Sell Your House During Social Distancing

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Selling a house is a detailed, sometimes complex, and definitely time-consuming process. From finding an agent and setting the right listing price, to staging and marketing and photography, there’s a lot for sellers to do — and that’s not even counting trying to sell during a global pandemic.

But people need to buy houses, and people need to sell their houses. We can’t collectively stop selling while we wait at least a year for a COVD-19 vaccine to come out. If you have asked yourself, Is now really a good time to sell my house?, the answer is yes, you should still put it on the market. You just need to keep your health and the health of potential buyers as the main priority, and to take the following into account.

Consider hiring a Realtor.

Realtors have received tons of information on selling and buying during this time from the NAR (National Association of REALTORS®) and their local MLS. Here are four reasons why hiring a Realtor is a good idea:

  1. Access to industry knowledge. FSBO sellers don’t have immediate access to the insights that Realtors have — not only for selling a house, but for selling specifically during a global pandemic.
  2. Add a level of safety. Realtors will likely know how to set up your space so that it eliminates the chances of contamination as much as possible.
  3. Lighten your load. There are parents of young children being asked to work full time and watch/homeschool their kids full-time. This is an already stressful time — adding another huge responsibility won’t help.
  4. Help someone out. Times are tough for a lot of people. For a part-time Realtor who was laid off or furloughed from their job, commission can mean the world. If you’re in a financial place where you can manage giving some of your sale money over and you know hiring a Realtor will benefit you, this is a win-win.

We think hiring a Realtor is a great solution for many sellers (and we even have cash credit incentives who use RH to find an agent). However, we also know that for some people, FSBO is still going to be the best option. If that’s the case for you, then…

Market your property as normal.

Post on social media, as well as on real estate platforms like Zillow, Trulia, or RealtyHive. Do as much cleaning, staging, and stellar photography as you can on your own. Remember that lighting is key! Bright, clean spaces translate well, even if you don’t have the latest iPhone model. Check out our blog on great examples of real estate photography for ideas.

Set up video tours and go online.

Many aspects of home selling have virtual alternatives. From video tours to even finding the proper closing documents, you could very well end up selling without having to ever shake hands (or even meet in person).

Instead of…Try…
Inviting people overSetting up a Zoom call or FaceTime
Hosting an open houseGoing live on social media or posting a Zoom meeting link for people to join at a certain time
Hosting multiple showings for multiple interested buyersMaking a website, form, or calendar where people can sign up for a virtual showing
Meeting in person to go over closing paperworkDo the paperwork online, including e-signing

Worried about a shaky camera hand and how it might affect your selling potential? Look into getting a gimbal. A gimbal is a support that steadies your phone for an extremely smooth video recording. They’re a little pricey, but some models are under $100 and it could be chump change if it helps you successfully sell your home.

Take extra precautions for an in-person showing.

If you’re selling vacant land, this won’t be nearly as difficult. Just make sure you stand at least 6 feet apart, consider wearing masks, and don’t shake hands. 

While virtual can be great for many things, in the event of buying a house, there’s a good chance that buyers will want a walk-through. Here are some things to keep in mind:

  • Ensure your guests have consistently practiced social distancing (ask them if they’ve social distanced, and to what degree). It is not rude for you to deny someone entry to your house if they aren’t taking this seriously. Health is wealth, and it’s the number one priority through all of this.
    This isn’t to say you should automatically deny essential workers access to your home — if anything, many essential workers are already doing what they can to keep others safe. But if someone is intentionally shirking the necessary precautions, they are putting you (and others) at risk.
  • Only show to people with proof of loan preapproval.
  • Insist that everyone wear masks or some kind of protective covering.
  • Deeply sanitize everything before people enter your home (and again after they leave).
  • Kindly remind guests not to touch anything.
  • Let guests know they can take pictures instead of coming back for a repeat visit.
  • Limit two people per visit, and make sure only one house member is giving the tour.
  • Check with CDC or WHO guidelines for further safety precautions.

Keep these same rules for anyone coming to your home, such as a home inspector.

Connect with a title company and your mortgage institution ASAP.

Title companies and banks are considered essential services. While they’re still operating, many are now offering online or drive-up options to limit contact. However, these institutions have dealt with a boom in calls so you want to act sooner rather than later. Each bank has its own way of dealing with things; find necessary information before you get too far into the selling process.

Sell your home as-is.

You don’t have to have showings in order to sell your home. You can even avoid having a house inspection if you decide to sell as-is. With RealtyHive, your property gets marketing with no upfront costs, amazing exposure, and access to a market of highly motivated buyers. Our time-limited events naturally practice real estate social distancing, even if there isn’t a pandemic to worry about. List with RH today to safely sell your home.

Is It Worth It to Finish a Basement?

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Welcome to the first of our “Is It Worth It To…” series! Homeowners are always trying to add the most value to their home, but projects can get pretty pricey. RealtyHive is here to tell you if the project you’re considering is worth the cost. Today we’re starting at the bottom: the basement.

How much does it cost to finish a basement?

Finishing a basement costs $7,500 on average, if you’re just doing the basics of hanging drywall, painting, and putting in crown molding. Adding in a basement or extra amenities could raise your costs to $25,000 to $30,000 or higher. 

Another thing to keep in mind is the after-project costs. A completely finished basement adds taxable square footage, so expect to pay more in taxes. If you’re suddenly heating this space and turning on the lights more downstairs, your energy bills are also going to increase.

With these prices, is it really worth it to finish your basement? The answer is yes. Take a look at why this is and how it works.

Finishing a basement adds resale value.

At some point, you’ll likely sell your home. If your basement resembles anything like the one above, it might creep a few potential homebuyers out. While the upfront prices of a finished basement are expensive, they can majorly improve your home’s overall value. As HomeAdvisor reports, homeowners can see a return on investment upwards of 65% from finishing a basement.

A finished basement gives you extra space.

If you’ve dreamt of starting an Etsy shop or a YouTube channel or anything in between, a finished basement can give you the space your dreams need. Especially with so many people working remotely, putting a home office in the basement provides some necessary peace and quiet.

Even if you don’t use the basement that much, remember that future homeowners will love seeing the potential of this space. Sometimes, homeowners can even rent out their basements for some extra revenue.

A better basement increases desirability.

As the saying goes, “honey attracts more flies than vinegar.” While no one wants to deal with a bunch of flies, you definitely want as many people interested in your house as possible. Even if you don’t raise the price too much at the time of selling, a finished basement can lead to more interested parties. The more people interested in your home, the more offers you get to choose from.

So, what is a finished basement going to look like?

The amount that your basement is “finished” is up to you, but here are some general ideas.

Basic $Intermediate $$Advanced $$$
– Flooring
– Drywall
– Paint
– New light fixtures		All the basic features, plus:
– A bar/countertop
– Half bathroom
– Built-in storage cabinets		The sky’s the limit! Some ideas include: 
– Bar
– Home theater
– Sauna
– Home gym
– Rec room
– “Man/woman cave”

One thing to remember: while installing a ton of unique features might be appealing, you don’t want to inadvertently limit your buying demographic. Sometimes a design that’s too specific to your tastes can backfire.

Do you have to finish your entire basement?

You don’t have to finish your whole basement, and you probably shouldn’t. It’s good to keep a section where some house essentials (like a sump pump, furnace, or water heater) are easy to access. Preferably, this area of your basement is separate from the finished part — a couch next to a water heater isn’t aesthetically pleasing. 

When does it not make sense to finish a basement?

If you’re dying for a new space but know you’ll be moving within 1-2 years, you should probably hold off. It’s a lot of work and a lot of upfront costs to be leaving so soon after it’s finished. 

The better option at this point is to start looking for a house with a basement that’s already finished. RealtyHive has a number of properties for sale that might be just up your alley — take a look!

The 5 Ws of Building a Custom Home

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We’d like to think that building a dream home is like building a LEGO home or a house on the Sims, except we all know that’s not the case. Building a custom home is a lot of work, but the rewards are pretty incomparable.

We’ve talked about the differences between buying and building a home in past blogs. But if you’re finding yourself more ready to take the leap, there are some essential questions to answer. RealtyHive takes a look at the who, what, where, when, why, and how of home building to help get you started.

Who should build a house?

You’d be a good candidate to build a house if you:

  • Meet all the financial criteria of home ownership
  • Are you looking to live in a developing area
  • Are excited by the idea of building
  • See an opportunity where the building is more beneficial than buying
  • Need or want a custom home (and buying an existing home and renovation would be more expensive).

You don’t have to meet everything on that list to qualify for building a home, it’s more of a guideline. If you have no desire to build, there’s no reason to force yourself to. However, if the type of home you’re looking for is so custom that it’s impossible to find (or way more expensive to renovate), then maybe you should consider the building after all.

What’s the cost difference between buying and building a home?

It depends. In most cases, buying a house is cheaper than building, but that’s not a guarantee. There are plenty of instances where people buy a house that needs a lot of work, and the renovations + house cost ends up costing more than if they had just built.

How do you pay for house building?

When it comes to building, you can get a construction loan that only requires you to pay the interest during the building process. The rest of the loan rolls into your actual mortgage at closing. If you’re worried that you can’t afford to build a house, just know that the payment process isn’t all that different from buying.

Plus, some states offer tax credits to alleviate some of the expenses that automatically apply for homeowners, but homeowners who built their home have to apply for. Homeowners in Wisconsin, for example, get a tax credit through the lottery system. Those who had their home built can get this same credit, but they have to send a form to do so. Do some research on what rebates exist in your state.

There’s another hack that many people are unaware of: you don’t have to put everything in all at once. Adding some things now that can set up for later is a huge cost (and time) saver. For example:

  • Don’t add air conditioning yet, but get forced air heating. Adding A/C later on is extremely easy if you already have forced air.
  • Don’t build the deck right now, but do install a patio door for it.

Where’s a good place to build a custom home?

Building locations depend from state to state — even if you own land, you’ll likely have to consult with local municipalities about building (or contact a general contractor with insight on building permits).

In the case of subdivisions, there are a couple things to note:

  • Builder exclusivity: Some subdivisions only allow you to use certain builders.
  • Restrictive covenants: You’ll have to play by the subdivision’s rules. Often this means no sheds or outbuildings or that your home exterior has to meet certain requirements (i.e. siding colors or incorporating brick for one-fourth of the exterior). 

When is the best time to build a house?

If time is of the essence, spring or summer is a good time to build. Except, of course, if you live in warmer climates, in which case winter might actually be more ideal.

However, if you’re not in a rush, you might want to talk to a building company about starting in the fall. In extremely cold climates, they might be unable to work through the winter. But the benefit to starting in the fall is that work and demand slow down a ton, which could lower your costs.

Why should you build a house?

Other than the appeal of building a custom home, there are several other reasons why people go this route:

  • Building for the future: You can create a highly sustainable, environmentally-friendly smart house from the start.
  • Meets your needs: Did you know that nearly 13% of the population has a disability? Not to mention, most of us eventually need adaptive assistance as we get older. Most homes are built assuming that homeowners can walk up and down stairs or have functioning hearing or vision. Building a custom home means many homeowners can have a home that truly adapts to their needs.
  • Houses are still in demand: The population continues to grow, and people need space to live. 

How do you get started?

You’ll want to have a general outline in mind. How many bedrooms and bathrooms? Two-story, ranch, or split-level? How big of a plot are you looking for? In a subdivision or out in the country? What’s your time frame?

Next, do some research on building teams in the area (if building in a subdivision, talk to them directly). They’ll help you narrow down what you’re looking for and what they can provide, and hopefully have a crew that includes a surveyor, engineer, plumber, and electrician. They will help you clear the land to prepare the area as well.

But before you can jump into any of that, you need land to build on! Look through RealtyHive to find vacant land for sale, and best of luck in your building process.

Apartment vs. Condo vs. House: Which Is Best?

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The birds are chirping, the snow is (hopefully) melting, and that can only mean one thing: the May-June rush to find housing is nearly upon us.

Leases are ending, jobs are changing, and if you’re like one of the countless people in need of a place to live, you’re probably trying to decide between your three options. Should you live in an apartment, a condo, or a house?

Renting Out an Apartment

Pros

Less permanent. Renting an apartment is perfect for the tenant who doesn’t know how long they’ll be in this location. Even if you’re on a year lease instead of month-by-month, you usually have the option to sublease if something comes up and you need to leave. Apartments offer a lot of flexibility.

Less upfront costs. Apartments typically come with an oven, fridge, and access to laundry. Not having to pay for these appliances is a huge money saver.

Less responsibility. Leaking sink? Broken heater? Your landlord will (or at least, they should) take care of it. This frees up a lot of costs that, as a homeowner, you would otherwise have to pay for.

No property taxes. The average homeowner pays nearly $2,300 a year in property taxes. In states like Illinois or California, property taxes are even higher.

Location. You’re more likely to find apartments in the heart of a city or downtown area than you are houses. Apartments are ideal for the renter who loves being near the hustle and bustle. 

Cons

No equity. Oftentimes, monthly rents are not much different than a monthly mortgage payment. The difference is that with a house, you’re paying off a massive financial asset. Unlike an apartment, homeowners get something back for their money. 

More rules. Painting, pets, and even how you hang stuff up in your apartment are all subject to the landlord’s rules. There’s a lot less freedom in renting an apartment.

Buying a Condo

Pros

You own the unit. You can sell later on if you choose, you can potentially rent out this property down the road, and you’re definitely getting more of your money’s worth and building equity.

Less work than a house. No need to worry about shoveling, replacing the roof, or getting new siding. That traditional “Saturdays are meant for yardwork” mentality that many homeowners maintain can be replaced with lounging on your balcony and sipping some coffee.

Potential for more amenities. Condo complexes often are in highly desirable locations. They also sometimes have amenities like workout rooms or swimming pools (things that would cost homeowners much more to install).

Cons

Less privacy than a home. Hopefully, your neighbors are monks practicing an extended vow of silence and meditation, but the odds aren’t likely. Owning a condo still means you’ll have to share walls in most cases instead of having your own plot of land with a house.

Condo fees (and property taxes). Condo association fees are pricey — they range anywhere from $1,200 to $8,000 a year, on average.

It could be tougher to sell. Families, buyers looking for more space, or people wanting some distance from a city will likely lean towards getting a house than a condo. This isn’t to say selling a condo is impossible, but there might be limits on who’s in your buying demographic.

Buying a House

Pros

More freedom. Decorating, landscaping (unless you’re in an HOA), remodeling — the sky is practically the limit for how custom you’d like your home to be.

Equity. As soon as you start paying off your mortgage, you’re starting to build your equity. Owning a house (and making responsible, timely mortgage payments) also helps build your credit.

More space. Condos and apartments are less likely to come with yards. They also are typically surrounded by more tenants (and people in general). Houses have more space (both inside and outside) than apartments or condos.

Sometimes cheaper than renting. If your goal is to live in, say, the Chicago area, there’s a good chance that mortgage payments on a house will cost less than an apartment or condo — even if they’re smaller in square footage. 

This isn’t only true in cities, either. Mortgage payments usually aren’t that different from rental prices, but the difference is that one gives you equity and one does not.

Cons

More responsibility. We can’t stress this enough. Owning a house is a lot of work, a ton of maintenance, and if you’re not financially ready, it will sink you. Buying a house should only happen when you’re thinking long-term and have the foresight to take on the financial and laborious responsibility. Homeownership is highly rewarding, but not for nothing.

More permanent. If you plan on leaving your area and selling in the next few years, buying a house might not be the move. For one thing, many homeowners are subject to paying a capital gains tax if they sell before the 2-year ownership mark. 

Secondly, if there’s anything to be gleaned from 2020, anything can happen. The selling market can change pretty rapidly. If you’re dead set on moving in the next few years, owning a house will complicate things much more than leaving at the end of your apartment lease.

Finding a home and moving is stressful, but there’s some excitement in thinking about the future as well. If you’ve decided to keep renting for now, we wish you the best of luck. But if you’re ready to take the next step, look through our condos and houses for sale to find your dream home!