Rehoboth Beach, DE Real Estate Acronyms Include These Puzzlers
Buyers and sellers are more well-informed than ever before due to easy access to online Rehoboth Beach, DE real estate sites (like mine—and BTW, thanks for stopping by!). Given the advent of constantly updated listing data and the abundance of accompanying commentary and analysis, it’s no surprise that the level of real estate sophistication is significantly higher than it was even just a few years ago. It also means that more members of the general public are likely to find themselves in the puzzling presence of some real estate alphabet soup that haunts realms formerly visited only by real estate and mortgage industry professionals.
True: it’s easy to query Google to decipher acronyms like “DHSC.” But then you’ll have to wade through red herrings like “Doctor of Health Sciences” and “Defense and Homeland Security Consortium”—or even Deployment Health Surveillance Capability (that’s from Munich, Germany, but it’s listed as a possibility). Real estate’s “DHSC” is short for Direct Home Selling Costs”—meaning the combined selling expenses (carrying costs, loss on sale, repairs and improvements, commission, closing costs, etc.) all lumped together in one succinct 4-letter package.
Here are some common real estate-related acronyms you may come across from time to time:
HUD/RESPA—The statement you get at the closing table which spells out all the monies paid out and received: short for “Housing and Urban Development/Real Estate Settlement Procedures Act.”
PMI—The kind of insurance borrowers pay for home loans of more than 80% of the property’s value: short for “Private Mortgage Insurance.”
TOM-When a listing is taken off the market because of illness, travel, repairs, etc.: “Temporarily Off Market.”
PITI—the four parts that make up monthly mortgage payments: “Principal, Interest, Taxes, Insurance.”
IDX—the technical term used in connection with real estate search sites that display the parts of Multiple Listing Service information that’s marked for public access: “Internet Data Exchange.”
APR—the by-now familiar term which takes all of the costs of generating a loan and combines them into a single percentage number: “Annual Percentage Rate.”
- Written by Jimmie Bachand
Answering the Selling Your Home Chicken-Egg Riddle
Especially when the market is moving briskly, selling your Rehoboth Beach, DE home can put you up against a chicken-egg quandary. “Which came first?” is as unanswerable today as when we argued about in the second grade—yet when a key decision about selling your home depends on answering a similar puzzler, it’s anything but whimsical.
The metaphor is almost exact. If you know you will be buying a new house but haven’t yet sold your current Rehoboth Beach, DE home, which comes first?
As for the new purchase, the universally agreed upon best practice for house-hunting is to be able to produce a lender’s preapproval for X dollars.
So selling your Rehoboth Beach, DE home has to come first, right?
But if you need to have sold your home before you get serious about finding a new one—what if the tight market means it may take a while to find the right home at the price you’re looking for? Selling your current home usually means committing to moving out at a date that’s fast approaching!
So that means locking up the new home comes first, right?
The answer is to have faith that—unlike the chicken-egg riddle—generations of Rehoboth Beach, DE buyers and sellers have successfully solved the dilemma. It involves a number of working parts including the particulars of your current financial profile, a formulation of the post-sale net proceeds, and a properly constructed pre-approval letter that will be contingent on the successful closing.
- Written by Jimmie Bachand
Again, Robotic Real Estate Estimates Run into Trouble
There’s news on the real estate value estimating front (robotic version).
For any kind of Delaware real estate activity—whether you are buying or selling; financing or refinancing; whether for your family residence or as an investment—there are at least two value estimation figures that determine how the Delaware transaction is likely to fare.
The first is a value estimate that you come up with: a dollar amount that reflects what the subject property is worth to you. That’s a calculation likely to be based on some mix of the property’s features, your own personal tastes, and your financial profile and outlook. If I’m your Realtor®, it will also be greatly influenced by the research I prepare for you: the real-world values of all the latest comparable transactions that have been taking place locally—along with the asking prices of similar properties.
That figure is one thing, but the second kind is an actual appraisal—the estimate that lenders use as the collateral value for the Delaware property. That estimate is the one a professional appraiser calculates using guidelines and formulas that have been painstakingly developed over time. It’s fortuitous when the first number comes close to the professional estimate—and I’m happy to say that it’s often the case.
But since 2006 there has been a third kind of Delaware real estate value estimate—one that’s increasingly mentioned in news of real estate controversies. This is the “Zestimate” offered by the website data company Zillow: a number that is arrived at via an automated system that assembles publicly available data. It’s stated purpose is “to aid potential buyers in assessing market value of a given property.” Unlike the painstaking reports that certified assessors create for a fee, Zestimates are widely disseminated to everyone for free. There is one problem, which I’ve mentioned before: the figures may be misleading.
Although Zillow claims an “incredibly low” national median error rate of 5%, last June they hailed a new improved algorithm that dropped the rate to 6.1%” [that’s not a typo: 6.1% is indeed a larger error rate than the still-claimed 5%]. Worse yet, research shows that in 10% of the cases examined, the error was 20% plus or minus…so a home with an actual fair market value of $300,000 could show a Zestimate of anywhere from $240,000 to $360,000!
Given that possibility, it’s probably no wonder that Zillow has announced a $1 million prize “to the person or team who can most improve the Zestimate” formula. MarketWatch points out that the contest was announced “just a week after a class action suit was filed against them” for offering unlicensed appraisals that hurt business—but the company claims the timing is just a coincidence.
- Written by Russell Stucki
Rehoboth Beach, DE Real Estate Investments—2 Significant Tax Facts
For those who may have been wondering how the final GOP Tax Bill could affect possible real estate investment plans and tax liability next year, the changes can be significant.
I know, I know. As soon as you saw “tax liability,” your eyes glossed over and your finger got ready to swipe right. But before you skip the following, I promise to keep it short, relevant, and potentially beneficial for investors and potential investors here in Rehoboth Beach, DE :
SIGNIFICANT fact #1:
You can now take 100% depreciation upfront for assets with useful lives of less than 20 years. For example, if you buy personal property (like carpet, new appliances, tools, equipment) or if you make land improvements (like landscaping, driveways, parking) you can probably immediately write off the entire cost of these assets. Under previous rules, the allowed depreciation was 50% in the year of purchase.
However, as points out, “It is important to note that this is bonus That means that when you sell the assets, you will pay depreciation recapture tax. Keep that in mind.”
SIGNIFICANT fact #2:
A new “freebie” deduction has been granted to sole proprietors, LLCs, and S corps generating qualified business income. According to , “Landlords are among the biggest winners under the new law. Virtually all landlords will save money--many, to quote our President, will save ‘bigly.’ Enjoy it while you can.”
So basically, if your rental activity qualifies as a business for tax purposes (as most do, according to Nolo), you may be eligible to deduct an amount equal to 20% of your net rental income. This would be in addition to all your other rental or real estate investment-related deductions. If you qualify for this deduction, you’ll effectively be taxed on only 80% of your rental income. Thus, the effective rate for taxpayers in the top 37% tax bracket is 29.5%.
- Written by Jimmie Bachand