Understanding Home Equity

Home equity…Everybody wants it, but what exactly is it, and how do you get it?

Equity represents the degree of ownership an individual or entity has in an asset after subtracting any debts against the asset. To say someone shares equity in a company means they would share in any assets remaining after all debts are accounted for.

For example, if your business has sold $500,000 worth of product this year, but you have rent, operating expenses, and a business loan payment totaling $400,000 for the year, you have $100,000 of equity in your business. Equity changes as the value of your assets and debts change.

Home equity works the same way. When you take out a mortgage to purchase a home, your home is collateral on the mortgage loan, so the outstanding mortgage principal must be deducted from the value of the home to determine your home equity.

In most cases, you make a down payment when you purchase your home. That down payment is your initial home equity. If you pay a 20% down payment on a $200,000 home, you have $40,000 equity when you close on your purchase.

As time goes on and you continue to pay down your mortgage principal, your equity grows. Usually, the longer your own your home, the more equity you gain because you are paying down your mortgage. However, any debts you take on using your home value as collateral, such as a second mortgage or home equity line of credit (HELOC,) decrease your home equity.

The changing real estate market also influences your equity. If you paid $200,000 for your home, and two years later the homes in your neighborhood start selling in the $400,000 range, your theoretical equity increases. (Theoretical because you don’t realize your home equity until you sell your home and pay off all debts against it.) You can also lose equity if the market takes a dive but be patient and it should recover in time.

Equity also grows if you make improvements on your home that increase its value. Let’s say you add a swimming pool and all new appliances. You have increased the value of the home. Your equity doesn’t increase by the amount your spent on the improvements, but on the value you get upon resale. This is an important point when considering making improvements prior to putting your home on the market, and one that is often misunderstood.

Let’s say Joe spends $50,000 on upgrades to his home. He might tell his neighbor, “I have $50,000 in my home,” but when he goes to sell, the current market dictates how much he will actually get in return. If Joe ends up selling for $40,000 more than he originally paid, his $50,000 investment got him $40,000 in home equity.

Some things you can do to increase your home equity include:

1) Make a large down payment when you purchase your home. The more cash you put down, the more equity you begin with.

2) Make increased or extra payments on your mortgage principal. Adding to the principal portion only on your monthly payments, or making extra payments when you are able, helps chip away at your outstanding debt.

3) Be smart when making home improvements. Not all improvements build equity. Some improvements may be personal preferences that don’t necessarily add value for resale. Improvements such as a new HVAC system, new appliances, or a new roof are usually more reliable investments than a fountain in the front yard or surround sound speakers throughout the house.

4) Don’t borrow against your home equity unless you must. Home equity is often a homeowner’s biggest asset, and can help to build your retirement nest egg, but it can also come in handy if life throws you a curve ball and you need to borrow against it for an unforeseen emergency. Be careful not to borrow against your equity for frivolous purposes, so it will be there if you really need it.

5) Sell when the market is favorable. If you are counting on your home equity to help finance your next home, pay for your children’s education, or add to your retirement funds, try to sell during a seller’s market when inventory is needed in your area.

7 Tips for Saying Goodbye to Sentimental Belongings

When I work with clients who are downsizing to a smaller home, one of the hardest chores they face is letting go of sentimental belongings they no longer have room for. Souvenirs collected during travels, family heirlooms, and your children’s keepsakes can be quite stressful to part with. It doesn’t matter whether the items have monetary value or not; in fact, often the most difficult items to let go of are worthless in terms of money, but priceless in sentimental value.

Here are some tips to help you part with belongings you are attached to but no longer want to keep.

1. Remember that our memories reside within us, not within our possessions. Psychologists say that letting go of sentimental items can be extremely therapeutic. When we keep things, the items occupy both physical and mental space in our lives. It’s healthier to focus on your memories and not the items that represent your memories.

2. Focus on the present. Letting go also helps to bring your focus to the present. Sometimes things are continual reminders of the past and hold us back from living in the present. Dwelling in the past can make one more prone to depression and can affect our ability to deal with stressful situations in our lives. Realize that while we can always cherish our memories, we don’t need the past to be happy in the present.

3. Let go of guilt. People often hold onto an item they don’t want or need because someone special gave it to them or it represents a special person. Learn to let go of the guilt associated with getting rid of gifts you can’t use. Appreciate the thoughtfulness of the giver or the special memory it represents but pass the item on to someone else who can use it or donate it to charity.

4. Don’t save it for your grown children. Times have changed and today more young adults are able to buy their own furnishings. And they aren’t as sentimental about family heirlooms as prior generations were. Talk to your kids now and find out if you are holding onto your china, crystal, and silver tea service for nothing.

5. Compromise with your spouse. It’s not uncommon for one spouse to resent the others’ favorite belongings while holding onto their own special stuff. It’s important to recognize that, while you may not understand your husband’s need to keep a ball cap for every MLB team he’s seen play, he may feel the same way about his hats that you do about keeping every book you have read. Decide together on a reasonable number to keep.

6. Start with the easy stuff. If you have a lot of belongings to sort through, start with the easier decisions and work from there. Often people find that once they get some momentum going it feels good to let go.

7. Write a family memoir. Hold onto your memories with words instead of things by writing your memoir or the story of your family. Writing your story can be very therapeutic and can help you release your hold on tangible items. If you need help, try a service like Storyworth.com.

5 Tips for Buying a Luxury Home

Luxury homes are generally described as those in the top 10% of their market. Luxury homes are usually located in the most optimal areas in a market, are large in size, and built with high-end materials. Luxury homes often have unique design elements and amenities not found in most homes. Want an indoor shooting range, a rock-climbing wall, a ballroom, or a bowling alley? A luxury home might have one of these– or all of them!

If you have not purchased in the luxury market before, you should be aware that the process can be very different from buying a standard single-family home. Here are some tips to help you navigate your way through the luxury home market.

1) Be patient. Shopping for a luxury home may take longer than average. For one, there are not as many of them, which, of course, is what makes them special. Since many luxury homes have décor or features that are distinctive, quirky or eccentric, finding one that fits your style may take a little while. The closing process may also take longer as there is more to inspect, more to negotiate on, and often special circumstances to be worked out. Make sure you are getting what you want. When you are investing millions of dollars in a home, you want to make sure you don’t settle.

2) Know where to look. Luxury homeowners, particularly if they are high-profile people in their area, often don’t want their home pictured on MLS. You may need to network with people in your desired area to find out what homes are being offered. Look online for luxury home sales websites such as mansionglobal.com or luxuryportfolio.com.

3) Check for possible planned development. Don’t assume that the lovely pond or wooded park behind the property will always be there. Make sure you know of any development plans that may affect your view, the amenities around the property, and the future resale value. You don’t want to buy a home for its beautiful ocean or mountain views only to find out another property will be built in the way.

4) Consult with your financial advisors. Make sure you qualify for the purchase amount you are thinking about. Luxury home sellers will often want to see proof that you qualify to purchase their home before they even allow a showing. If you do get a showing, you will certainly need to have your financial preparations done before you contemplate an offer. Everything is scrutinized more closely in the luxury price range. You should also make yourself aware of all the financing options available to you.

5) Work with an experienced luxury home agent. The right agent knows all of these tips and more. We are knowledgeable in the high-end neighborhoods in our market area and understand the intricacies of negotiating and closing on luxury homes. Are you ready to purchase a luxury home? I’m available and ready to help you in your search!

Secrets for Selling Your Home, #5

I’m rounding out this month of luck with the last secret in our 5 Secrets of a Successful Sale — secrets that together will help you sell your home without a hint of luck or wishful thinking.⁣

Before jumping to Secret #5, a quick review:⁣

Secret #1: It’s your kitchen that’ll sell your home.⁣
Secret #2: Declutter, depersonalize, and stage your home.⁣
Secret #3: Don’t go overboard on upgrades.⁣
Secret #4: Find out what your home is worth, then shave 15-20% off the price to spark a bidding war.⁣

And last but certainly not least…⁣

Secret #5: Work with the right agent.⁣

How do you know I’m the RIGHT agent?  Just look at my credentials and testimonials!

~I was awarded Associate of the Year at Gables & Gates, REALTORS, for 2020
~I’ve been selling real estate for 23 years⁣
~I love Knoxville and have lived here for 31 years
~I’m just a phone call, text, or email away, and always respond as quickly as possible
~I don’t pressure my clients, but listen to them and work with their needs

“We worked with Janet in both the buying and selling of our homes, and in all instances she demonstrated the same determination and commitment to ensure our needs were met. She made our Real Estate transactions a pleasant experience, helping us every step of the way, even well beyond closing” ~ Forrest and Julie Stover

“I have purchased two houses and sold one using Janet. She has been exceptionally attentive and response to anything I needed. Her knowledge of the area is fantastic, and she helped guide me to sound purchases both times. Highly recommend her!” ~ Bob Sledzik

There are a ton of AMAZING agents out there. So don’t settle! Let me help you sell your home and I’ll make getting a successful sale as smooth as possible (and maybe that pot o’ gold!).

Secrets for Selling Your Home, #4

Got the kitchen looking great?⁣
Got your home decluttered, depersonalized, and staged?⁣
Chatted with a realtor about worthwhile upgrades?⁣

Fist-bump! You’re SO ready for Secret #4 in our 5 Secrets to a Successful Sale! ⁣

While this one won’t require any elbow grease, it will take a tiny leap of faith. Secret #4 is all about pricing your home to sell — fast.⁣

Secret #4: Find out what your home is worth, then shave 15-20% off the price to *hopefully* spark a bidding war.⁣

Sound scary? That’s okay — I’m here to walk you through every step. Here’s why I love this pricing strategy: ⁣

• Pricing your home just below market value instantly gets buyers’ attention and motivates them to schedule a showing ASAP.⁣
• Once buyers see your home (and LOVE it), they’re more likely to put in an offer if they feel like they’re getting a deal.⁣
• When they realize there are other offers on the table, buyers tend to get competitive and are willing to increase their bid to land the home they want.⁣

With interest rates at historic lows and a lower than normal inventory, if you’re looking to sell, you’ll 100% be in the driver’s seat. ⁣

Curious what your home is worth in today’s market? I’d love to run the numbers for you — just drop me a message.⁣

Secrets for Selling Your Home, #3

Checking in this week to share Secret #3 in my 5 Secrets of a Successful Sale. A quick look back at the past two secrets:⁣

Secret #1: It’s your kitchen that’ll sell your home.⁣
Secret #2: Declutter, depersonalize, and stage your home. ⁣

And this week…⁣

Secret #3: DON’T go overboard on upgrades.⁣

It’s a mistake I’ve seen too many times. ⁣

In an effort to get top dollar for their home, well-intentioned sellers take on major renovations without consulting a realtor first. Misinformed and assuming they’ll get every dollar back (and then some!), they go overboard on upgrades only to be disappointed at the closing table.⁣

And while there are upgrades worth doing prior to selling, they’re often quick fixes, not major renovations. ⁣

If you’re thinking about selling soon, reach out to a realtor who knows your neighborhood and can give you data on the upgrades that matter most to buyers in your area. ⁣

Not thinking about selling, but know someone who is? Pass this along and save them from the stress, headache, and expense of unnecessary upgrades.⁣

Secrets for Selling Your Home, #2

Got a sec? Great. All alone? Perfect! It’s time to lean in real close cause I’m back with Secret #2 in my 5 Secrets of a Successful Sale. ⁣

Secret #1: It’s your kitchen that’ll sell your home.⁣
Secret #2: Declutter, depersonalize, and stage your home.⁣

Buyers must be able to picture themselves living in YOUR home. Give ’em a chance to do just that by decluttering, depersonalizing, and staging your home:⁣

• Declutter: Picture your home as a vacation rental. If you wouldn’t see it out in a rental, you shouldn’t see it out during a showing.⁣
• Depersonalize: A few modest photos here and there is fine, but pack away the excess, take down oversized monograms, and remove wall letters from the kids’ rooms.⁣
• Stage: If you’re using the dining room as a craft area or home office, reset it as a space to dine. Also, get rid of unnecessary furniture to make your living room feel airy and spacious. Staging doesn’t have to be costly or complicated — it simply helps buyers make sense of your home and see its potential.⁣

When it comes to getting your home ready for the market, less is ALWAYS more. Need advice on how to get your home prepped? I’d love to help. ⁣

Stop back by tomorrow for secret #3!

My Secrets for Selling Your Home

It’s the month of shamrocks, leprechauns, and Irish blessings, and while some are worried about getting pinched, you’ve got other things on your mind — like how you’re gonna get your home listed and sold fast. ⁣

In honor of St. Patty (and so you can kick luck to the curb), I’ve got 5 secrets I can’t wait to spill — secrets that’ll hand you a successful sale, and quite possibly, your very own pot of gold. ⁣

This week, Secret #1: It’s your kitchen that’ll sell your home.⁣

While buyers want the right bed and bath count to meet their needs, years of experience tell me it’s your KITCHEN that’ll sell your home. ⁣

As you get your home ready for the market, every minute (and dollar!) you spend prepping your kitchen to look its best will give you a high ROI. ⁣

At a minimum, clean, declutter, and clear off those countertops for every showing (save a vase of fresh flower). ⁣

Wanna do a little more? Update cabinet hardware, replace the faucet and sink, install a backsplash, or splurge on new light fixtures.⁣

That’s all for now — keep your eyes out for Secret #2 tomorrow!⁣

Should I sell or should I remodel?

It’s the question every homeowner asks at one point or another: Should I sell or should I remodel? Here are a few questions to ask as you make the king-size decision.⁣

First up, Team Remodeling:⁣
• Do I love my current home’s location?⁣
• Do I have space (inside and out) for an addition?⁣
• Will remodeling address my biggest concerns about my home?⁣
• Do I have a place to temporarily move during the remodel (or the patience of a saint to live in an “under construction” house)?⁣
A YES to most of the above means remodeling is probably in your future.⁣

Next up, Team Time-to-Move:⁣
• Do you anticipate needing more space than a remodel can provide in the next 5 years? (more bedrooms, bathrooms, etc.)⁣
• Will remodeling put your home above neighborhood value?⁣
• Would you prefer a home that’s closer to your everyday places (work, school, shopping) or do you desire a different school district or a larger lot?⁣
Resonate with these questions? Find a realtor and at the very least, take a look at what’s on the market. Sometimes moving in one direction is just what you need to clarify your thinking.⁣

Whether you’re leaning towards remodeling or moving, send me a message. I’d love to do a quick analysis on your neighborhood and give you the stats you need to go along with your intuition!

8 Ways to Make Buyers Fall in Love with Your Home

We all want people to love our home as much as we do, but especially when you are trying to sell it! While it’s impossible to please every buyers’ taste, there are several easy things you can do to make your home more appealing without spending a lot of money. Try some of these tricks and see if your showings cause buyers to swoon.

1. Check your curb appeal. Take an honest look from the curbside. What are buyers seeing first? If your home needs to be painted or pressure washed, consider making that investment. Clean up landscaping by trimming trees and bushes, planting some fresh annuals and laying new mulch. Clean windows, repair sagging soffit, or porch railings, and have any trip hazards on your driveway or front walk repaired. Finally, consider some attractive, yet subtle decorations for your front porch.

2. Create an inviting entryway. When buyers step inside your front door, you want them to feel welcomed. If you have a foyer or front hall, it is easier to make an attractive entryway, but even if your front door opens right into your living room, you can create the feel of an entryway with a couple of simple tricks. Clear the area of clutter things that tend to pile up at the front door, like backpacks, dog leashes, or shoes. Place a small table or bench beside the door with plants, candles, or other simple décor. A small area rug can help define the space as the entryway.

3. Let the light shine in. Take advantage of natural light as much as you can. Trimming any bushes or trees outside your windows can help immensely. Wash your windows inside and out and replace or remove any worn screens. Make sure to open blinds or curtains before all showings.

4. Add some fresh color. Painting is an easy and inexpensive way to make an older home look new and is especially important if your current wall color is dark or outdated. Choose a light neutral color like a warm grey or light beige and use the same color throughout the house. If your home tends to be dark, this will help brighten it up.

5. Let storage spaces speak for themselves. Many sellers make the mistake of waiting until they have a contract to start cleaning out closets. Cleaning out clutter is part of getting ready to show, not just getting ready to move. You want buyers to perceive that there is ample storage in the home, and this doesn’t work if every drawer, cabinet, and closet is stuffed to the gills.

6. Eliminate distractions. Streamline your decorating so your buyers see the house and not your collection of Mexican roosters. Go ahead and pack up collectibles and family photos and keep decorative touches to the minimum. Too many plants, magazines, or toys distract the buyers from seeing the home as their own.

7. Entice them with outdoor space. The back yard shouldn’t be an empty space of infinite possibility, nor should it be a storage area for neglected toys. Get rid of any eyesores you’ve been avoiding dealing with, spruce up your landscaping, repair irrigation or pool issues, and create an entertaining space with a patio set, or a backyard oasis with some potted plants and a hammock.

8. Make it easy for them. Taking care of minor repairs is another step you can take to help buyers see your home as an easy and comfortable move. You want them to be mentally arranging their furniture as they walk through, not making a list of nicked woodwork, torn window screens, and leaky faucets. The less work involved, the easier it is to fall in love.