Understanding the Basics of Home Mortgages

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When you’re starting out in the real estate world, mortgages are one of the first things to learn about. They seem super confusing (after all, why is there a silent “t” in there?!), there are lots of different types, so where should you begin?

Welcome to the Real Estate 101 class where today, we’ll cover the mortgage basics. You don’t need to take notes (unless you want to). Sit back, relax, sip some coffee, and find the answers to frequently asked mortgage questions right here.

What is a mortgage?

Put simply, a mortgage is a loan. The median house price in the US was $226,800 in 2019. Very few people have that kind of cash laying around (and even if they did, their home purchase would have to be a wire transfer, but that’s another story). Most people wouldn’t be able to afford a house outright until their 40s or 50s, which is why mortgages exist.

Just like a car loan, a home mortgage allows you to pay off your house over time. You can reap the benefits of home ownership (such as having your own place and not paying rent to someone else) without having to put hundreds of thousands down upfront.

Do you have to get a mortgage to buy a house?

No, but most people do. Even if you have enough money upfront, no one can buy a house with outright cash. This is a massive transaction, so don’t expect to bring duffel bags full of cash to a homeowner and call it a day. If anything, expect account transfers, wait time, and, as always, lots of paperwork.

You will more than likely need a mortgage to buy a house. This involves having a good credit score, pre-approval from a lender, and final loan approval once the house you’re looking to buy has been appraised (and the house value matches up with what you’re requesting to borrow).

What happens to your mortgage when you sell a property?

How to sell a house with a mortgage

  1. Get a quote from your mortgage lender regarding your current payoff.

    See how much is left on your balance.

  2. Find out if you have a prepayment penalty.

    This sometimes exists if you’re selling your home after owning it for less than 5 years.

  3. Continue your mortgage payments up until closing day.

    You might still have a final payment on closing day.

  4. If you end up owing on your mortgage on closing day, the proceeds of the sale will go towards covering it.

    A new buyer doesn’t “take over” your existing mortgage.

  5. Any additional profits after paying off the mortgage and other seller’s fees are yours to keep.

    This money is usually deposited into your account or goes to your next property if you’re buying and selling at the same time.

How do home equity loans and refinancing affect your mortgage?

Both refinancing and home equity loans offer homeowners the chance to convert their home’s equity into money that they can access.

While your first mortgage is for buying your property, a home equity loan is like a second mortgage. If you owe $200k on your mortgage but your house is worth $250k, you have access to a nice $50k that you can use. When you use that money to renovate or improve your house, you can even claim it on your taxes for a refund.

Cash-out refinancing is when you replace your current mortgage with a bigger one. Instead of taking out a second mortgage (like a home equity loan), you just have one big loan. The difference between your new loan and what you owe on your house is money that goes straight to your pocket (or as a wire transfer). That money can be used for anything.

When considering cash-out refinancing vs. home equity loans, it pays to do your research. And remember, this is money that you’ll still owe. You could risk foreclosure if you don’t continue making timely payments.

This concludes our Real Estate 101 class for the day, but all questions can be posted for our “professors” to review. One thing that we can all take away from today’s lesson: it doesn’t matter if you’re looking to buy a house or are preparing to sell — the more you know about mortgages, the better.

How to Hire a Realtor Before Looking at a Home

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They keep your best interests in mind. They have experience in the area, and can help you find a property that you might not have otherwise found. Not only that, but since Realtors’ commissions are typically paid by the sellers, finding an agent to help you buy a house won’t cost you a dime.

It’s pretty clear to see why you need an agent before buying a house, but today we’re backing it up a step further. We’re here to tell you that even before you look at a house, even before you tour the place, you need a real estate agent. Here’s how to make that happen.

See the agent’s number on the “For Sale” sign? Don’t call it!

We’ve all seen those signs outside of houses with a Realtor’s headshot and phone number. But as a buyer, that’s not the number you want to call. That number is for the listing agent, the agent that has the seller’s best interests in mind.

It might not be a big deal, but do you really want to work with someone who doesn’t have your best interests as their top priority? You want to hire a buyer’s agent to help you find your dream home.

Put your needs first (and stick to them).

Far too often in the real estate game, we see buyers choosing agents as a favor to someone else. This can quickly end up working unfavorably for the buyers. Your sister’s friend might work out great, but if you get the sense that she’s not the right fit, it’s OK to find someone else. Your 65-year-old Realtor neighbor might be a lovely person, but not your first choice as an agent if you want to communicate via FaceTime or WhatsApp and they lack that technical knowledge.

Buying a house is possibly one of the biggest investments you’ll ever make. While doing favors for others is a nice gesture, finding the right agent for you is truly the biggest favor you can give yourself. Trust that you deserve it!

Just like trying to find the right outfit for a wedding, you want a seller’s or buyer’s agent who’s a good fit. Here are some considerations to help you put your Realtor needs first:

  • First time buying? Talk with someone you know and trust who’s worked with a Realtor to buy a house. Find out what they liked, disliked, and what (if anything) they’d do differently.
  • Know your schedule. A lot of agents do real estate work part-time, usually working another job elsewhere. As you’re looking for agents, make sure you find someone who can meet on your schedule.
  • Make a list of priorities. Is experience more important to you, or are you fine with someone with less experience who’s a hard worker? What do you want communication to look like? Keep this list with you as you’re finding a Realtor.
  • Find someone in the area. Wherever you’re looking to buy, it’s critical to find an agent with knowledge in that specific location. No worries if you don’t know of anyone — find a referral agent through Cashifyd (and get cash back in the process!).

As soon as you’re ready to look at houses, it’s time to act.

Houses in a lot of places go fast. If you wait until you find a house you love in a highly desirable area and then reach out to an agent, it’s almost a guarantee that the house will go to someone else. Finding an agent beforehand expedites the process. 

When you go to a Realtor first and then look at houses, they’ll already have administrative stuff on file (such as a buyer agency agreement and proof of loan pre-approval). This puts you on the fast track to see the property — the sellers know you’re serious. 

And, bonus, your agent will know your schedule and is on the lookout for great houses for you. Having a second set of eyes helps you find a house faster. You might even find a dream house that you otherwise wouldn’t have spotted through searching on your own.

If you’re in this stage and the time to act is now, work with RealtyHive to find an agent and to purchase your dream home! We have a network of highly qualified Realtors you can rely on. Best of luck in finding your perfect house!

What Does Buying in a Time-Limited Event Look Like?

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Most of us know (or at least have a general idea) how the traditional house-buying process works. But what happens if you’re looking to buy in a time-limited event? Are things drastically different? Should you plan on walking up to the house with briefcases full of cash like something out of a Scorsese film?

The good news is it’s a lot simpler than you think, and many things stay the same. You have two options when it comes to time-limited events.

Time-Limited Event Option #1: Offer Before or After

One option that buyers have is to make an offer before or after an event takes place. In this case, you go through the same process as a traditional home purchase. Contingencies, home inspections, showings — it’s all the same.

But just as is true with the traditional process of buying a house, the seller can reject your offer. And in terms of financing, it’s good to note that certain loans (such as FHA or USDA loans) might not qualify for various properties. Any houses up for sale in a time-limited event that don’t meet certain requirements (like having lead paint or not having a working furnace) won’t be approved.

Time-Limited Event Option #2: Wait Until the Day Of

The day of the event, you can place a bid and submit a letter of intent. On our site, this is found in the “documents” tab of the property. You’ll be able to see bids from other interested buyers. If your bid is accepted by the seller, you’ll buy the property as-is.

A few things to note:

You won’t get any inspections and cannot write any contingencies.

In a time-limited event, you’re purchasing the property as it currently stands. While you can schedule an appointment to look over the property before the event, you can’t get an inspection and you can’t back out if you suddenly see a ton of issues with the place. If your bid is accepted, it’s final.

Sellers choose which bid they want to accept.

In most auctions, the largest amount of money offered is the winning bid. The property will go to that highest bidder. This is not the case with a time-limited event.

In TLEs, sellers get to review the offers and have the final say (one of the many reasons a TLE is so beneficial for selling property). They might choose the highest bid, but they might also go with whatever seems like the best offer.

Based on the above scenario, you can see why a seller would be motivated to go for a lower bid price if it means less hassle.

Benefits to Buying in a Time-Limited Event

When buying with RealtyHive you gain access to:

  • A marketplace of motivated sellers
  • An opportunity for cash back at closing
  • A chance to purchase before auction event
  • The potential for an expedited closing process

Ready to get your feet wet? Look through our listings and place your bid (or pre-event offer) today!

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Top 5 reasons you NEED an Agent when buying a home

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Thanks to the internet, you can learn almost anything. While this is a great benefit, there’s a huge difference between knowing how to technically do something and knowing how to do it well. YouTube is filled with fail videos that prove the difference between knowing how to do something versus having the expertise to do it well. Buying a property is a much bigger commitment and investment than trimming your bangs, for example, but the consequences are similar. In either case doing it yourself can work out well or can cost you significantly more time, money, and heartache than you intended. Here are the top reasons to hire an agent when buying a home.

They Have Your Best Interest In Mind

The absolute best reason to have an agent assist you in buying a home is that they are licensed professionals who have a contractual obligation to put your best interests first. While an agent who is listing the property you’re interested in can draft up all the documents you’d need to complete the purchase, they are in fact, working for the seller. Having an agent working for you will mean that they are negotiating on your behalf and trying to do what is best for you, even if it results in a lower commission for themselves.

They don’t cost you anything

As the buyer of a property, you generally don’t pay anything for the using the services of your real estate agent. Property sellers are the ones who pay all agents in a transaction. Some sellers will price their home higher to account for these costs, but negotiating the final sale price is part of what an agent can do for you.

There’s a lot at stake

In most cases, buying real estate is going to be the largest, most expensive purchase you’ll ever make. How can you be sure you’re making the right choice and not getting suckered into buying a Money Pit home? What happens if you accidentally transpose the address and on paper, you just “bought” a home that the owner wasn’t selling? Having an agent representing you means that you’ll get sound recommendations on things like what kind of inspections you should have and who should do them and the errors and omissions insurance carried by real estate brokerages covers you in the event of a typo.

They do this every day

For most people, buying a house is a few-in-a-lifetime experience. The day you sign the closing papers will be a day you clearly remember, but for your agent, it’s likely just another day. While your agent will be excited for you, for them it’s business as usual, which is great news for you! This experience means they know how to handle unusual circumstances and they know what to look out for to make sure you’re getting a fair deal. In a straightforward transaction this experience might not seem that important, but this knowledge will be invaluable for situations that pop-up without warning.

They have tools you don’t

How do you know if a property is fairly priced? While the internet has some good tools for consumers to use, real estate agents have access to a lot of information that isn’t publicly available. They can tell you when the home you’re looking at was last sold and for what price, what comparable homes are going for in the area, and how this property stacks up. This can help raise red flags and let you know what to dig into more. For example, if the same home has been sold three times in the last two years or if a home sold for dramatically less than it previously had, you’re going to want to find out why.

Ready to get started? Find a top-rated local agent who will give you a cash back credit at closing by checking the newest RealtyHive program, Cashifyd.

What Do Real Estate Agents Do (And Can They Really Help)?

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You’ve got Zillow, Trulia, RealtyHive, and countless other online real estate databases these days. So what exactly is the point of a listing agent? Are they still relevant, particularly if you’re selling your house?

Spoiler alert: The answer is yes. But we’re going to dive into this topic with full transparency, weighing the pros and cons of hiring an agent.

Wait a minute — what’s a listing agent?

A listing agent is a real estate agent who works directly with sellers. A selling agent (more colloquially known as a buyer’s agent) works with people trying to purchase a home. Those who are new to buying and selling houses tend to use “real estate agent” as a blanket term. All the same, it’s good to know the distinction.

So with that being said, in a world where everyone seems to put their house up online, why should you consider working with a listing agent?

Listing Agent Pros

Agents have more experience.

Unless you also have your Realtor license, an agent has experience and connections that far surpass the average seller. They might know buyers’ agents who are helping someone find their dream home (and that dream home could be your current property). They know the region specifically in terms of selling a house, not just in a “this is where the grocery store is” type of way.

Agents can set the right price.

Knowledge of the region aside, are far more experienced in setting the right price. An appraisal tells the value of your property, but an agent knows how much it can likely sell for. They calculate other sold properties in the area to get you the most bang for your buck. 

Not to mention, they’re highly motivated to do so since they’re paid on commission. The more your home goes for, the more they get as well. 

Agents are like personal assistants.

Imagine a world where you never had to go through emails or make calls and someone else handled all the minutiae of your life. Now take this dreamy scenario and make it real by hiring a listing agent. Phone calls, paperwork, scheduling, house showings, stagings — the best listing agents are borderline superheroes for the work that they do.

Agents market your property.

Oftentimes, simply uploading house pictures that you took on your iPhone to a real estate database is not enough. Agents will actually market your property to ensure that it sells (and again, for the right price). Not having to worry about marketing saves you time and maybe even money — a proper marketing job might get you more on your home’s sale.

Listing Agent Cons-iderations

One thing to note — these situations might be cons for some, but pros for others. It’s up to you to decide if working with an agent is worth it. Take these “cons” as questions to think over. 

Are you OK with paying commission?

A lot of sellers are reluctant to pay a 6% commission to their listing agent. And, fair, you want to make as much as you can from selling your home.

That being said, many people think this is reasonable trade for the hassle of going the FSBO route. As we mentioned, you might get more for your home with the help of an agent than from flying solo. 

Is your agent doing anything that you couldn’t do on your own?

If you have a great agent, the answer to this is a resounding “yes!” A not-so-great agent and, well, you might be paying for something that you could have handled by yourself.

A way to find the answer to this question is to ask some questions of your own:

  • Do you know anyone who’s worked with a listing agent in your area? If so, would that seller recommend them?
  • Does your potential agent have a sound marketing strategy in place?
  • What’s their experience level?
  • Do they help with staging (great agents will)?
  • What can you expect from them (or what do they say you can expect from them)?

Can you take on some of the tasks but get help with others?

Sometimes you can work with low-fee or flat-fee agents who can do certain tasks (like draft up paperwork) but not everything. You could find someone who takes on the aspects of house selling that you consider least desirable.

If that’s more up your alley, consider working with RealtyHive. While we do have a network of agents, we understand that not every seller wants to go that route. We provide marketing for sellers and if your house doesn’t sell in a time-limited event right away, you don’t have to pay any fees. Whether you go with this option or are in search of an outstanding listing agent, we wish you the best of luck!

How Much Renovation Does Your Property Need?

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From healthy eating to getting enough sleep to certain yoga poses, we’re always trying to find the right balance. But in the world of home renovation, how much is too much? What is the “just right” amount, and how much should you expect to spend?

If you’ve debated renovation for awhile now (or have never thought of it until this moment), let this post serve as a guide to help you on your journey.

Type of Property

The amount of renovation (and the subsequent cost to renovate) depends a lot on property type:

When you’re the primary resident:

Your renovations might be the most substantial in this instance. After all, you’re likely living in your house for awhile and especially if you plan on staying for the next decade or so, it’s important to keep things current with the times.

The average homeowner spends nearly $50,000 on an entire home renovation. Here are a couple cost breakdowns for rooms that are most frequently remodeled:

RoomAverage Cost to Renovate
Bathroom$10,000
Kitchen$25,000
Basement$20,000

Keep in mind, these prices vary greatly based on where you live, but this is nonetheless a good way to start thinking about project costs.

When you rent out the property:

Your remodels will likely cost less than renovations for your own home. Tenants don’t want (or need) all the embellishments that you’d add to a personal home remodel. They’re staying temporarily, and they want to picture themselves in your property — too many details or renovations can be overkill.

Some common renovations to keep a rental property fresh include:

  • Installing new countertops
  • Replacing carpeting (or ripping it out entirely)
  • Repainting walls
  • Adding built-in storage or shelving
  • Refinishing hardwood floors
  • Putting in new fixtures

Each of these renovations helps maintain your property’s relevancy and, as a result, its desirability. They also add value to your home. But these examples also approach things more at a foundational level, ensuring your property lasts for years (and renters) to come.

When you flip the property:

Similar to renting out a property, you don’t need to go overboard on home renovations when flipping a house. For example, while you might dream of a steam room-type shower in your personal bathroom, this is probably too extravagant (and not cost-effective) for a house you’re going to sell.

That being said, you could end up spending more on remodeling when trying to flip a house. Since the point of flipping is taking a home that’s in poorer condition, fixing it up and making a profit, renovations for flipping houses are often more severe (and pricier). Here are a few examples of projects that are both costly and necessary:

Remodel ProjectAverage Cost
Fix cracks in the foundation$300-$600 for small cracks, $15,000+ for severe damage
Replace roof$8,000
Repipe house$4,100

Property Size & Older Homes

Condos and apartments will cost significantly less to remodel than full-scale houses (about $25 to $100 per square foot). Victorian and older homes usually cost more to fix up because they have more issues needing work. Depending on the extent of the remodel, you could pay double the price to renovate an older house than one built in the last 30-50 years.

We mentioned this in a previous blog, but don’t forget that you can get grant money to fix up older, historic homes. If the fear of lots of zeros following a dollar sign is holding you back, know that you might not have to pay as much as you’re thinking.

Area Where the Property Is Located

As we mentioned, your region drastically impacts how much you’ll pay for renovation projects. But area also impacts the amount of renovation you should consider. Remember, no matter if you’re selling down the road or trying to rent the place tomorrow, you want remodeling to be worth the price.

People living in tech-industry cities like Boulder or Austin will likely find higher rent (or high-priced listings) reasonable. The jobs pay higher, and cost of living is greater. If you upgrade your small-town, rural Ohio house to the point where the average person can never afford to rent or buy, you’ve gone too far.

When to Not Renovate at All

If your budget can in no way cover renovation costs and loan repayment is out of the question, if you’re at a point where it’s more cost-effective to sell than to fix everything, or if you need to move away faster than you can complete these projects, it’s time to sell. More specifically, it’s time to sell with RealtyHive. 

We take properties just like yours and put them in time-limited events. This encourages faster selling and takes the worry and stress out of your hands. Plus, you don’t pay any fees until your home sells! Look through our listings to get an idea of what we do, and sell with RH today.

Tax Information for Real Estate Investors

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Studying tax codes might sound like a snoozefest, but that couldn’t be farther from the truth. At least, not if you think of yourself as Indiana Jones.

As a real estate investor, you’re on a mission to maximize your revenue, to find the Holy Grail of properties, and to grow your financial portfolio. Understanding taxes that directly benefit your quest is like finding a map in a mysterious language: difficult to decipher, but a necessary part of the journey.

We’ve already covered tax incentives for homeowners. If you’re a property investor, it’s time to grab your bullwhip and fedora. We’re about to give you the Rosetta Stone for understanding property investing tax benefits.

Capital Gains Taxes (and How to Avoid Them)

Any time you profit from a real estate sale (such as a land sale or a rental property), you can be taxed on this income. A capital gains tax is the tax you pay on that profit.

However, one of the biggest draws to the real estate investing game is that there are ways to avoid paying capital gains taxes. It’s like selling a crystal skull that you found but not having to pay taxes on however much you made. Here are some tax things to know:

Opportunity Zones

If you invest in an area that is considered economically distressed, you could qualify for tax breaks. Opportunity zones (sometimes also called tax incremental districts) are places that are certified as economically distressed by the federal government. They have the potential for tax benefits for new investors.

One thing to note: many people worry that opportunity zones contribute to gentrification. In other words, as an economically-distressed neighborhood is reinvested into, the price of everything (especially rent) skyrockets, which hurts the people already living in the area.

All things considered, this is still a tax benefit. It could greatly benefit your personal financial portfolio, but it could also benefit some communities as well. Turning a place (such as a rural, middle-of-nowhere town) into a desirable area definitely still has some pros.

1031 Exchanges

We covered 1031 exchanges in detail in a previous blog, but it’s good to refresh. You can defer capital gains taxes in a 1031 exchange as long as you use the profits from one property sale to buy a similar property.

Picture Indiana Jones using his whip to get some precious item into his hands. You can segue your sold property (the precious item) to a 1031 exchange (the whip) into an opportunity zone  (Indy’s hands) for a commercial property.

Other Tax Benefits for Rental Property Investors

For rental property investors specifically, there are some other tax benefits you’ll want to know about:

  • Mortgage Interest Deduction: The first $1 million of your mortgage ($750k for properties bought after 12/15/17) qualifies for a tax deduction on its interest.
  • Depreciation Deduction: The second your rental property is in use, you can start tracking depreciation (and subsequent costs), which can be deducted on your taxes.
  • Travel Costs: Any time you buy gas or even a plane ticket to get to your rental property (this includes international properties), write this down! Travel expenses are business expenses, and they’re tax deductible.
  • Maintenance & Repairs: These may also qualify as business expenses and can be deducted.

You’ve got your map, you’ve got the keys to the hidden cave chamber. You’ll still cross paths with some snake pits in your property investing journey, but the proper resources will swing you out of them. 

One of those resources is RealtyHive — we connect you with motivated sellers! Whether for residential or commercial properties, these sellers want to see your offer, whether for residential or commercial properties. Look through our listings and join the bidding in one of our time-limited events!

Is Buying an Older Home a Good Idea?

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There’s a certain feeling to older homes, and it’s one that can’t be replicated. The sense of history, the character, the craftsmanship — stepping into old homes is like stepping into another time. 

While we relish in that sense of wonder, there’s a lot to consider from a homeowner perspective. As great as it is to visit a Victorian manor or beautiful house built 100+ years ago, is buying really worth it?

Buying an Older Home: Pros

Unparalleled Character

Like we said, it’s pretty spectacular to walk through an older home. For Victorian-style houses that are at least a century old, there’s something awe-inspiring in walking through a home that’s survived so much history. 

People feel a deeper connection to the past and, to some degree, probably feel hopeful for the future. If this house can stand for so long, so can we. It’s hard to put this exact feeling into words, but anyone who has felt it understands why people love old homes. Their magic is absolutely a draw.

Incredible Craftsmanship

“They don’t make homes like they used to” isn’t just a saying, it’s kind of true. Victorian homes often have details that blow newer houses out of the water. And as we’ve said in past blogs, the devil is always in the details when it comes to how valuable a house is.

Old homes also have features that keep on pace with modern trends. Hardwood floors, unique tile, huge clawfoot tubs (if you’re lucky) — people are renovating their new homes to match these vintage styles!

Potential Value

From the character and craftsmanship to the historic value, old homes could be worth more than newer homes in the area (such as these homes in Wisconsin). This is also due to size — Victorian houses are typically bigger — and the need to preserve the property. Older houses in historic districts tend to fetch higher prices — great news for you when you’re looking to sell.

Buying an Older Home: Cons

Higher Price = Less Buyers?

When the price matches the condition, older, run-down homes are quick to sell. Houses in great condition (even if modernized) can sometimes struggle to find a buyer since their price is inevitably higher.

However, that’s not to say you’ll never sell if your old house is in tip-top shape. Some people even buy older houses to renovate them into commercial spaces. All the same, it’s good to note that an old house (especially a bigger one) may struggle to find the right buyer.

More Upkeep & Renovation

Lead pipes, asbestos, a crumbling foundation — these are the not-so-great parts of owning an old house. There’s a solid chance you’ll need to update the home with everything from light fixtures and wall sockets to adding air conditioning. 

These renovations are both time-consuming and expensive. It’s worth noting that some cities provide grant money to restore a historic home. But if you want a no-muss, no-fuss home, an older property is not for you.

Have an older home that’s in great shape, but not selling? Feeling like your Queen Anne house has lost too much of its regality? Searching for a Victorian house with lots of potentials? You can have it all with RealtyHive. 

We’ll happily list your home through a time-limited event and have tons of properties for you to sift through. Look through our listings or get started on selling with RH!

Real Estate Investing & Non-Conforming Properties: What to Know

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A rundown, seemingly vacant house doesn’t excite most people. Unless they’re real estate investors, in which case it feels like finding buried treasure. 

Property investors are always on the lookout for a great deal that they can flip or rent out. While this strategy can increase their ROI, it can backfire. Like anything else in life, there’s no such thing as a perfect system. In this instance, troubles ensue when a good deal turns out to be a non-conforming property.

What is a non-conforming property?

A non-conforming property is a property that followed zoning laws at the time it was built, but not currently. This often happens if a property is not used for what it was built for over an extended period of time (anywhere from 6 months to a year). Here’s an example:

Elenita finds an incredible building that used to be a store. She wants to rent out this commercial property and knows a lot of people in her area are trying to start a business but need the space. It needs a ton of repair after sitting vacant for just over a year. 

Elenita gets a great deal on the property, but as soon as she turns on the utilities, she hears from code enforcement: this property can only be used as a single-family home now.

This is a massive setback for Elenita, who now either needs to pay even more to turn it into a residential rental property or find another buyer. This is also why as a property investor, you have to be on the lookout for non-conforming properties.

What are some signs that a property is non-conforming?

The biggest thing to look out for is the amount of time a property has sat empty, or how long it has gone without fulfilling its original, intended use.

As another example, say Joe finds an incredible four-plex that’s a bank foreclosure. It has sat vacant for a year. Joe’s expecting some amazing cash flow, thinking of how he can rent it out to multiple renters, and instead experiences the same thing as Elenita: it’s a non-conforming property.

This four-plex can now only exist as a single family home. At best, Joe is only going to make one-fourth of his predicted revenue stream. At worst, this property could prove difficult to rent out and he might not make anything.

Why do these rules exist?

Most cities have real estate zoning rules that place limits on what can be built, and where it can be built. These rules are all around us — in newer subdivisions, it’s why you don’t see any commercial buildings (such as grocery stores) being built near houses.

But as we know, there are plenty of times when this isn’t the case — one walk around a downtown area or older city and you’ll see countless apartments and houses coexisting right next to each other. 

Cities don’t want to close businesses just because their rules have changed. They’ll allow building owners to have what’s called legal non-conforming use, allowing business to continue as usual — even when those buildings are not up to current code.

This all changes if:

  • The building isn’t used for its original purpose for a period of time OR
  • The building was completely or partially destroyed (such as from a fire)

If you think this is unfair or strange, look through some photos of Houston, a city without real estate zoning. Not to hate on Houston, but zoning laws do offer a sense of organization and provide some method to what would otherwise be madness.

How can you safely avoid buying a non-conforming property?

Pay attention to the time a property has sat unused (whether in general or for its original purpose). But what if you’re new to an area and don’t know? Or what if you want to branch outside of where you’re living?

That’s where RealtyHive comes in. We have an expansive database of residential and commercial properties for sale, and can provide you the details so that you don’t end up in a trap. Look through our listings to help grow your portfolio!

Psychology tips to sell your home

5 Psychology Tips to Use When Selling Your Home

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Using Psychology to Sell Your Home

When selling real estate, either as a profession or as the property owner, the goal is always to get the highest sale price possible. Much consideration should go into setting the right price — too high and you might be waiting indefinitely for a buyer, too low and you may leave money on the table.

In slower, less competitive markets, this can be fairly easy. Do some research, find some comparable properties, and set your price. The challenge, though, comes with highly competitive markets. In places where housing inventory is significantly lower than demand, you’ll often find homes selling above list price.

In December 2019, real estate website Redfin released a report of the 20 most competitive neighborhoods to buy real estate in the US. While California predictably took up many of the top spots, the Golden State shared space on the list with areas outside of Grand Rapids, Michigan, Minneapolis, Minnesota, and others. In these areas, homes typically sold for more than list price (some areas averaging more than 25% above list) and typically in under two weeks.

Location is typically most responsible for sold-above-asking-price scenarios, but home type, amenities, and other features come into play. By avoiding common pitfalls and using psychology, sellers can get the highest price for their property in the shortest amount of time.

Psychology Trick: Overconfidence Bias

What it says: People tend to think they’re smarter/more skilled than they are.

Why it matters: Pricing a home wrong can lead to not selling or leaving money on the table.

What to do: Hire a real estate professional you trust!

Talk to a few agents before hiring one or deciding to go it alone. Selling real estate may seem like a really simple process, but once you get a look under the hood it starts to become clear the advantages of hiring a professional. Looking to buy a home? This psychology trick applies to buyers too! Make sure you don’t overpay or get swindled by letting the pros handle it — as a buyer, you don’t have to pay to use an agent!

Psychology Trick: Reciprocation Tendency

AKA The Foot-in-the-door Phenomenon

What it says: People are more likely to give you something reasonable if you ask for something outlandish first

Why it matters: A home priced at $515,000 seems like a great deal if another property in the area sold for $675,000 even if the properties aren’t similar at all.

What to do: Price it right! Unless your home is the nicest one on the market, it’s wise to price your property in the middle of the field. When buyers see the highest price, everything below it seems reasonable, whether or not they’re truly comparable.

Psychology Trick: Envy/Jealousy Tendency

What it says: People will want what others have and are reluctant to give it up to others

Why it matters: If a home appears to have a lot of interest, buyers are likely to put in more aggressive offers than if it seems like no one else is interested.

What to do: Host an open house on a weekend afternoon when there isn’t a lot of competition from other local events. Sure, some “just looking” folks or nosey neighbors make show up (thanks, Curiosity Tendency!), but even that will help to make the home look even more popular!

RealtyHive Time-Limited Events are another great way to use this trick in your favor. By creating massive levels of exposure through digital marketing, you can leverage the Envy/Jealousy Tendency to get more offers from buyers who are afraid of losing out on your home.

Psychology Trick: Confirmation Bias

What it says: People tend to look for information that supports their beliefs and reject any information that contradicts it.

Why it matters: If a buyer thinks the home is overpriced, they’ll look to confirm that belief by finding all the small issues they can — even small things like burnt out bulbs or a dingy outlet face plate can make buyers wonder what else could be wrong that they don’t see.

What to do: Take a walk through your home with fresh eyes and try to spot the wear-and-tear pitfalls. These fixes are inexpensive to do and can prevent potential buyers from creating a mental list to price-reducers as they walk through.

Psychology Trick: Anchoring

What it says: Anchoring is the tendency to jump to conclusions and base a final judgment on information gained early on in the decision-making process. Once an initial assumption is made, it’s hard to see other possibilities.

Why it matters: There’s no second chance to make a first impression so it’s important that any property puts its best foot forward. If a buyer falls in love at first sight, it’ll be easier for them to continue to come back to that initial reaction after seeing the rest of the home.

What to do: Step up your curb appeal. Grass needs to be mowed, bushed should be trimmed, porch lights on, and any clutter cleared from view. If possible, have buyers enter through the front door instead of a garage or side door to really give them the “Wow” impression.