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Vacation Home or Income-Producing Investment

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Posted in Buying by Meaghan McGlynn Image Source: Alex Master Shutterstock Whether you’re a skier who loves the mountain slopes of Colorado, a lover of the beaches of Southern California, or a potential retiree seeking to escape the snow-laden Northeast for the wide-open, sunny lands of Arizona, there are homes available to meet a wide range of budgets. The biggest decision a potential second homeowner must make is whether they are going to solely own their vacation home or turn it into a vacation rental. Here are the advantages and disadvantages to both options:   Investing in vacation rentals Pros: A good vacation rental property generally provides a healthy rental revenue which could potentially cover mortgage payments while also generating healthy additional profit. Using an online short-term rental service like Airbnb makes it convenient to manage your rental property. Their website interface makes pricing, marketing, and communication with potential guests quite straightforward and easy. Airbnb will also oversee the billing process for you. You may qualify for federal tax breaks and deductions related to your investment property. Everything from professional fees or commissions – including property management services- to cleaning and maintenance are potential tax write-offs. Cons: Vacation rentals can be costly to manage, both in terms of time and money. These properties may require seasonal upkeep and special maintenance considerations. You may even incur costs to maintain or monitor the property even when it’s not actively being utilized. Vacation rental properties are particularly sensitive to seasonal fluctuations and economic downturns, which could leave you financially exposed if you suffer a lack of booking revenue. Many states and cities are cracking down on short-term rental services. In California, for example, the fight has been primarily local, reaching a fever pitch in the San Francisco Bay Area. Increasingly state and local municipalities are seeking to reign in short-term vacation rentals, which could put a damper on potential revenue from these properties. You may experience higher renovation and repair costs on a short-term rental. Most travelers expect the latest appliances and furnishings, so you will have to update every few years. Unfortunately, short-term renters are less likely to report any necessary repairs and guests are far less likely to treat the property with respect since there’s no sense of ownership or obligation.   Owning a vacation home Pros: Long-term profits: While assets fluctuate in value in the short term, vacation properties are more likely to retain […]

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Incorporate Pantone’s Color of 2020 into Your Home

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Posted in Living and Architecture by Meaghan McGlynn Image Source: Pantone Classic Blue has officially been anointed Pantone’s 2020 “Color of the Year”.  Pantone says it picked this color because of its ability to instill calm, confidence, and connection as we cross the threshold into a new decade. A dependable color, Classic Blue is timeless, and enduring, making it a great addition to just about any room in your home. Here are some ways to add this stunning shade of blue to your home:   Furniture Image Source: Stacy Zarin Goldberg  Add a splash of color to any room with Classic Blue furniture, such as these dining room chairs, which express a sense of tradition and elegance, as well as unexpected boldness.   Tile Work Image Source: Stacy Zarin Goldberg  Geometric patterns are all the rage this year, so why not liven up your kitchen backsplash with tiles that incorporate the color of the year? Here’s an example that achieves this through bold, colorful design that doubles as a piece of art.   Cabinets Image Source: Davonport Kitchen Designers and Remodelers.  If geometric tile isn’t your thing, the are other ways to bring your kitchen to life with this stunning shade of blue. If you’re not in a position to purchase all new cabinets, simply paint your current cabinets for a more affordable update.   Walls Image Source: Stacy Zarin Goldberg Whether it’s built-ins, panels, or an accent wall, Classic Blue can make your furniture and décor pop. Consider this color when you paint your living room or bedroom as a way to encourage calm and confidence in your favorite spaces.

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Staying Safe When Selling Your Home

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Image Source: Canva Staying organized while uprooting your life and moving from one home to another can feel impossible. There’s also the pressure to keep your home clean and tidy for showings to prospective buyers, but your personal safety is an important consideration as well. When selling your home,  there will be strangers entering your space, so it’s important for you and your agent to take certain safety precautions. Like so many things in life, they can feel more manageable once written down, so we made this handy checklist.   Prepare your home: Go through your medicine cabinets and remove all prescription medications. Remove or lock up precious belongings and personal information. You will want to store your jewelry, family heirlooms, and personal/financial information in a secure location to keep them from getting misplaced or stolen. Remove family photos. We recommend removing your family photos during the staging process so potential buyers can see themselves living in the home. It’s also a good way to protect your privacy. Check that your windows and doors are secure before and after showings. If someone is looking to get back into your home following a showing or an open house, they will look for weak locks or they might unlock a window or door. Consider extra security measures such as an alarm system or other monitoring tools like cameras. Don’t show your own home! If someone you don’t know walks up to your home asking for a showing, don’t let them in. You always want to have an agent present to show your home.   Talk to your agent about the following safety precautions:  Do a walk-through with your agent to make sure you have identified everything that needs to be removed or secured, such as medications, belongings, and photos. Go over your agent’s screening process so you are both on the same page about phone screening, and how to qualify buyers before showings, as well as personal safety tactics during showings and open houses. Lockboxes to secure your keys for showings should be up to date. Electronic lockboxes track who has had access to your home. Go through your home’s entrances and exits and share important household information so your agent can advise how to secure your property while it’s on the market.

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LOCAL MARKET UPDATE – FEBRUARY 2020

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[THE STATE OF] REAL ESTATELOCAL ECONOMY New jobs and low interest rates continue to fuel the housing market boom. While January is traditionally a slower month for activity, the new year saw steady buyer demand. With the number of sales exceeding new listings, all indicators point to a strong spring market. EASTSIDE KING COUNTY SEATTLE SNOHOMISH COUNTY The tech industry on the Eastside continues to grow rapidly. Microsoft and Alibaba both have significant expansions underway. Amazon expects to increase its workforce in Bellevue to 15,000 in the next few years, a sevenfold increase from today. As the economy continues to grow, inventory keeps being squeezed. There were 47% fewer single-family homes on the market in January than the year prior. Home prices have been stabilizing for some time, fluctuating slightly from month to month. In January the median home price slipped 2% over a year ago to $892,000. VIEW FULL EASTSIDE REPORT

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How to Cover Unexpected Costs with a Personal Loan

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Owning a home comes with its rewards — it’s an investment, a cozy haven to kick-up your feet after a long day of work, and a welcoming place to bring family and friends together. Although all of this makes homeownership fulfilling, owning a home also opens the door for unexpected (but necessary) expenses. If you’ve suddenly been hit with a home improvement project that’s pinching your budget, like a roofing issue or heater malfunction, a personal loan might be an option to help cover the cost. What is a personal loan? A personal loan is an installment loan that’s typically issued by a bank, credit union or online lender. According to the Federal Reserve, the average interest rate on a two-year personal loan is 10.22% but varies depending on your credit score and other criteria. Some lenders offer repayment terms anywhere from 12 months to five years. A benefit of using a personal loan for emergency home improvement projects is that the approval process is generally quick so you can address urgent home repairs sooner. Some online lenders can run a credit check, approve your application and send funds your way with a couple of days. The approval process for banks and credit unions, on the other hand, can take anywhere from a couple of days to a couple of weeks, if the lender needs additional information. How to find a personal loan If you’ve decided that a personal loan makes sense to fund your next home project, make sure you’re aware of these next steps. 1. Assess your budget   The last thing you need is taking out a personal loan only to realize after the fact that you can’t afford to repay it. Calculate how much you realistically need for your home improvement project, giving yourself a reasonable buffer for unforeseen repair expenses (e.g. permit fees, price changes for a specific material, etc.) Then, tally your monthly income and financial obligations to ensure you still have enough cash on hand to keep the lights on and make monthly installments toward your loan. Using a spreadsheet or budgeting app can help you track these numbers easily. 2. Know your credit score   Generally, you need a good credit score to get approved for a personal loan. Your credit score is one of the key factors that lenders use to determine whether your application is approved, and a higher credit score results […]

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Your Beginner’s Guide to Home Appraisals

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  Appraisals are used as a reliable, independent valuation of a tract of land and the structure on it, whether it’s a house or a skyscraper. Designed to protect buyers, sellers, and lending institutions, appraisals are an important part of the buying/selling process. Below, you will find information about the appraisal process, what goes into them, their benefits and some tips on how to help make an appraisal go smoothly and efficiently.   Appraisal value vs. market value The appraiser’s value is determined by using a combination of factors such as comparative market analyses and their inspection of the property to determine if the listing price is typical for the area. Market value, on the other hand, is what a buyer is willing to pay for a home or what homes of comparable value are selling for. If you are in the process of setting the price of your home, you can gain some peace-of-mind by consulting an independent appraiser. Show them comparative values for your neighborhood, relevant documents, and give them a tour of your home, just as you would show it to a prospective buyer.   What information goes into an appraisal? Professional appraisers consult a range of information sources, including multiple listing services, county tax assessor records, county courthouse records, and appraisal data records, in addition to talking to local real estate professionals. They also conduct an inspection. Typically, an appraiser’s inspection focuses on: The condition of the property and home, inside and out. The home’s layout and features. Home updates. Overall quality of construction. Estimate of the home’s square footage (the gross living area “GLA”; garages and unfinished basements are estimated separately). Permanent fixtures (for example, in-ground pools, as opposed to above-ground pools). After the inspection, the appraiser of a typical single-family home will create their report including their professional opinion on what the price of the home should be. You might hear the lender ask for two reports, the “Sales Comparison Approach” and the “Cost Approach.” These two approaches use different methodologies to find the appropriate value of the home, and help the lender confirm the home’s price.   Who pays and how long does it take? The buyer usually pays for the appraisal unless they have negotiated otherwise. Depending on the lender, the appraisal may be paid in advance or incorporated into the application fee; some are due on delivery and some are billed […]

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Benefits, Risks and Things to Consider Before Adding an ADU to Your Home

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  Have you ever rented the unit in someone’s basement? Maybe your spouse’s mother moved into your “Mother-In-Law Unit” above your garage? Or have you ever travelled and stayed in a pool house for your stay? Commonly referred to as “Mother-In-Law” units, homeowners use these as a way to fill the space in their home and gain residual income, either from vacationers or long-term tenants. The official terms for these units are Additional Dwelling Units (ADU) or Detached Additional Dwelling Units (DADU’s), and are defined as extra spaces in homes and on properties where someone can live completely independent of the main house. These units can be almost anywhere on the property, but they are usually located in the basement, in the backyard, or above the garage. They have their own bathroom and kitchen facilities, and sometimes they share laundry with the main house. Thinking of adding a unit to your home? Here are some benefits and risks, as well as important aspects to consider before you build:   Benefits Homeowners can maximize their investment by renting out the extra space to long-term tenants for short-term vacationers. These tenants can help pay off debt or create an extra stream of income to pay for other needs or wants. Depending on several factors, including the size of the unit, the market in the area, and other factors, each homeowner should decide which option they are more comfortable with. These decisions should be made before they list the unit for rent to best market to the right audience.   Risks An obvious risk is that when you open your space to a stranger, there’s a possibility that things might end poorly. Either the tenants could turn out to be untrustworthy, or unreliable, leading to a financial burden. To minimize the risks, it’s a good idea to use an application process to check backgrounds and employment history as a tool to get to know the potential tenant. Make sure to adhere to the National Fair Housing Laws and your local regulations.   Things to Consider: What are the shared spaces? Would you be comfortable sharing those spaces, and potentially appliances, with a new person each weekend, or would you rather get to know the long-term tenant who would use those on a consistent basis? Rooms like the kitchen can be great for those who want to get more interaction from their vacation renters. However, sharing one bathroom […]

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Mistakes to Avoid When Buyer or Selling A Home

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    There’s nothing more exciting, rewarding, and fulfilling than buying a home. However, it’s a complex transaction; there are a number of steps along the path that can confuse, betwixt, and befuddle even the most seasoned buyers and sellers. How can you avoid those potential pitfalls and common mistakes? Look to your real estate professional for advice and keep these guidelines in mind:   BUYERS:   #1 Review your credit reports ahead of time Review your credit report a few months before you begin your house hunt, and you’ll have time to ensure the facts are correct and be able to dispute mistakes before a mortgage lender checks your credit. Get a copy of your credit report from Experian, Equifax, and TransUnion. Why all three? Because, if the scores differ, the bank will typically use the lowest one. Alert the credit bureaus if you see any mistakes, fix any problems you discover, and don’t apply for any new credit until after your home loan closes.   #2 Get pre-approved Before getting serious about your hunt for a new house, you’ll want to choose a lender and get pre-approved for a mortgage (not just pre-qualified—which is a cursory review of your finances—but pre-approved for a loan of a specific amount). Pre-approval lets sellers know you’re serious. Most importantly, pre-approval will help you determine exactly how much you can comfortably afford to spend.   #3 Know what you want You and your real estate agent should both be clear about the house you want to buy. Put it in writing. First, make a list of all the features and amenities you really want. Then, number each item and prioritize them. Now, divide the list into must-haves and really-wants.   #4 Account for hidden costs In addition to the purchase price of the home, there are additional costs you need to take into consideration, such as closing costs, appraisal fees, and escrow fees. Once you find a prospective home, you’ll want to: Get estimates for any repairs or remodeling it may need. Estimate how much it will cost to maintain (gas, electric, utilities, etc.). Determine how much you’ll pay in taxes monthly and/or annually. Learn whether there are any homeowner’s or development dues associated with the property.   #5 Get an inspection Buying a home is emotionally charged—which can make it difficult for buyers to see the house for what it truly […]

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You’ve Moved Into Your New Home. Now What?

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Congratulations on your new home! You made it through the arduous process that is buying a new home. Now it’s time to take on the task of moving in. You did your research about the neighborhood and you feel like you know the home like the back of your hand. However, there are some things to do as you move in to protect your newest investment, and yourself, from the unknown variables in and around your home.   Change the locks garage door codes Previous owners might have changed the locks, but they may not know who all has a key or a code to open your garage, especially neighbors who they trusted to watch their place while they were away. Changing the codes and locks on all the doors ensures that you have complete control over entry to your home   Check or Install Fire and Carbon Monoxide Detectors If the home already has fire and carbon monoxide devices, make sure they are in working order by testing each one with the tester button. Keep a note of when to replace them as well. If they don’t have them, install a device in each sleeping room, as well as common areas like the living room or kitchen. Hallways are a great place to cover multiple rooms with one detector as well.   Install a security system Enjoy total peace of mind with a new security system. Meet with a consultant on the best ways to protect your home for a system that works best for you and your lifestyle. There are also app-connected systems that you can set up yourself that notify you of movement on the cameras or doors and windows opening.   Meet the neighbors Build a sense of community and get to know the lay of the land by knocking on neighbors’ doors to get to know them. Bring a small gift as a “thank you” for dealing with the moving trucks. This is a great initial step for figuring out who you can trust to watch things while you’re away should you need a helping hand in the near future.   These are just a few ideas on what you should do as soon as you move in. What are some things you do, or suggest to friends and clients on move-in day?

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ARE YOU BETTER OFF PAYING YOUR MORTGAGE EARLIER OR INVESTING YOUR MONEY?

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Photo Credit: Rawpixel via Unsplash Few topics cause more division among economists than the age-old debate of whether you’re better off paying off your mortgage earlier, or investing that money instead. And there’s a good reason why that debate continues; both sides make compelling arguments. For many people, their mortgage is the largest expense they will ever incur in their lives. So if given the chance, it only makes logical sense you would want to pay it off as quickly as possible. On the other hand, a mortgage is also the cheapest money you will ever borrow, and it’s generally considered good debt. Any extra money you obtain could be definitely be put to good use elsewhere. The reality is, however, a little less cut and clear. For some homeowners, paying off their mortgage earlier is the right answer. While for others, it would be far more advantageous to invest their money.   Advantages of paying off your mortgage earlier You’ll pay less interest: Each time you make a mortgage payment, a portion is dedicated towards interest, and another towards principal (we’ll ignore other costs for now). Interest is calculated monthly by taking your remaining balance, the length of your amortization period, and the interest rate agreed upon with your lending institution. If you have a $300,000 mortgage, at a 4% fixed rate over 30 years, your monthly payment would be around $1,432.25. By the time you finish paying off your mortgage, you would have paid a total of $515,609, of which $215,609 were interest. If you wanted to lower the total amount you pay on interest, you don’t need to make a large lump sum to make a difference. If you were to increase your monthly mortgage payment to $1,632.25 (a $200 a month increase), you would be saving $50,298 in interest, and you’ll pay off your mortgage 6 years and 3 months earlier. Though this is an oversimplified example, it shows how even a small increase in monthly payments makes a big difference in the long run. Every additional dollar towards your principal has a guaranteed return on investment: Every additional payment you make towards your mortgage has a direct effect in lowering the amount you pay in interest. In fact, each additional payment is, in fact, an investment. And unlike stocks, bonds, and other investment vehicles, you are guaranteed to have a return on your investment. Enforced discipline: It takes […]

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