Archive for the ‘Renting’ Category

Rental-Property“So what will it cost us to secure your services?”  One of the top questions that I receive.  The answer may vary depending on the services you request.  For the purpose of this 3 part series, I will let you in on Renter’s Agent, Buyer’s Agent, and Seller’s Agent pay.  According to the 2013 National Association of Realtors Member Profile, “In 2012, the typical agent had 12 residential transaction sides [this does not include rentals] – up from the previous year when the typical agent had 10 transaction sides.”  Traditionally, the real estate industry is completely commission based.  Most of the time, a Realtor works under the supervision of a broker unless they are a broker themselves.  In that case the broker may have their own company or work with a large, well known company like Keller Williams for example.  There is also the option for a Realtor to work on a team within a larger company.  All of these folks require payment.  So realistically, on one real estate transaction, there is the potential for the commission to be split 6 different ways before it is all said and done.  Let’s take a look at the Renter’s Agent first…

The Renter’s Agent.  This agent is one that is often overlooked and underappreciated.  How many of you are currently renting a home or have rented in the past?  Did you enlist the help of a real estate agent while searching for a rental property?  Back in the day you could go to a property management company, sign out the key and go view the home on your own.  However, in the Clarksville area, I have heard recently of renters being told they needed to call an agent to show properties.  In my experience, it is the Renter’s Agent who is expected to work the hardest, catch the most heat, and make the least compensation.  You see, oftentimes, we get paid very little or nothing at all to show rentals.

Frequently the property management company will pay the agent 10% of the first month’s rent or $100 but only IF the agent is noted on the application as the referring agent.  I have renters who contact me months before they arrive or plan to move.  Frequent updates are expected.  What new homes are available for rent?  Can you only send pet friendly rentals?  Will you make sure to send only rentals that have a fence?  Will you go do video tours?  You can imagine how the hours of work add up.  Upon arrival, they have a list a mile long of the rental homes they would like to see.  Many times they do not want to buy because they don’t have good credit or possibly an unfavorable payment history.  Property management companies will run credit checking for financial stability too and often expect to see a reasonable score.  The application is in, the requirements are not met for whatever reason, application is denied, and the real estate agent receives no compensation resulting in a significant loss of time and energy.

There is also no representation agreement with a Renter’s Agent.  Buyer’s Agents and Seller’s Agents often have contractual obligations to their clients.  If the agent has a schedule filled with buyers and sellers, it is easy to understand how renters may get lost in the shuffle.  Have you had a hard time finding a Realtor to help you find a rental?  Under the best of circumstances, 10% of the first month’s rent or $100 is paid to the Realtor, but that amount is still split with the company or broker that an individual agent works with, then possibly split with the team too.

Scenario:  A Realtor receives $100 for referring a renter.  The Realtor has a 70/30 commission split agreement with their brokerage.  They also have to pay an additional 5% in royalties.  The Realtor walks away with $65.  Unless they are also on a team, in which case, they may be required to split the commission again by as much as half.  $32.50 take home pay on the rental BEFORE taxes.

If you find a Realtor willing to help you secure a rental, be kind to them.  Many times they are like me, and they help with rentals simply because they enjoy helping families.  It can be hard, thankless work.  We sift through hundreds and hundreds of rentals.  A lot of times, when we finally take you to see homes, they are in terrible condition.  I have heard, “I can’t believe you would rent a place like this!”  It’s not me.  I am not the property manager.  I don’t work for the property management company.  I simply have access to the Multiple Listing Service (MLS) and all the rentals listed on there from any company in town who also has access.  I have a Sentrilock card, and a desire to help ease the stress of finding a home for you in a short amount of time.  I have even heard, “I need a commitment from you to be available for me all day tomorrow.”  I can try my hardest, but sometimes I am not able to make that commitment due to my other contracts and obligations.  Again, please be kind and try to understand where your Renter’s Agent is coming from.

In closing, it is becoming increasingly common to need a Renter’s Agent in order to view rental properties.  It is demanding, and time-consuming work for a small amount of pay.  You may find many Realtors who request that you are pre-qualified before showing rentals, or choose not to show rental properties altogether.  Now you may have a better understanding of the Renter’s Agent pay.  Feel free to share any questions or comments below!

Be sure to read, Realtor Pay Exposed (Part 2 of 3):  The Buyer’s Agent and Realtor Pay Exposed (Part 3 of 3): The Seller’s Agent.

If you have questions or need real estate assistance in the Clarksville, Tennessee or Fort Campbell, Kentucky area or know anyone who does, call me today at (931) 436-6765 or submit your information below.

© Ariel Anderson and https://buyorsellclarksvilletennesseehomes.wordpress.com, 2014.  Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Ariel Anderson and https://buyorsellclarksvilletennesseehomes.wordpress.com with appropriate and specific direction to the original content.

Over the years as a military family, we have moved numerous times.  We have rented apartments and duplexes, lived on post, and owned homes.  We have converted our primary homes into rentals, taking us from militaHome-Happy-Home-1-size-3ry homeowners to investors, and we have managed them personally, making us landlords.  I have been the general manager of a large hotel, worked for military housing, and have since become a licensed real estate agent.  So I got to thinking, (watch out!  It can be dangerous when I get to thinking… ha!), based on all of our personal experience, and experience with all the people I have been in contact with over the years, are homeowners happier?  What I found surprising is that there have been some actual studies done and data collected with the same question in mind.

If we go back to a previous blog post of mine, Which Realtor is Right For You?, I speak of Maslow’s Hierarchy of Needs.  The foundation of the pyramid includes physiological requirements like breathing, food, water, sleep and shelter.  The pyramid theorizes that the next level of human needs include bodily safety, health, and the security of property.  Having a place to call home is one of the most important motivators of human behavior.  So why do we decorate our homes for holidays?  Why do we mow our lawns and maintain our landscaping?  Why do we clean and tidy our homes before we have visitors?  Why do we often ask new acquaintances where they are from originally?  It is plausible to think that it is because we identify ourselves with the place that we call home.  Our home is an extension of who we are; an important display of our personality and identity.

In 2013, Fannie Mae conducted a National Housing Survey (click to see the survey results in their entirety).  Renters and homeowners rated their experiences on the following scale:  very positive, somewhat positive, somewhat negative, and very negative.  There was a significant disparity in the results.  71% of homeowners rated their experience as very positive, while only 34% of renters felt the same way.  For renters ages 18-34, 57% would actually prefer owning a home, only 13% prefer renting, and about 30% have a mixed preference.  Interesting!

According to the survey, the top reasons to rent were:

  • Living within a budget (57%)
  • Less stress (52%)
  • Best decision given the current economic climate (50%)

On the other hand, the top reasons given for owning were:

  • Control over living space (84%)
  • Privacy and security (80%)
  • A good place for family and to raise children (78%)
  • Best investment plan (78%)
  • A nicer home (71%)
  • Building wealth (70%)
  • Saving for retirement (69%)
  • Being engaged in the community (64%)

According to the National Association of Realtors Survey of Home Buyers and Sellers, the top motivator for buying a home was simply the desire to own, closely followed by the desire for a larger home, a job related move, change in family situation, and affordability of owning versus renting.

Now we are getting to the good stuff!  Did you know that there was a study on the social benefits of homeownership?  Yeah, me neither until my pondering got the best of me and I found some incredibly interesting data.  As stated in the 2012 Social Benefits of Homeownership and Stable Housing, homeowners move less frequently.  Now, being a military family, I immediately thought to myself, “We don’t really have control over how often we move.”  But yet, we do.  How many military families have you known stationed at one installation for several years who move every time their lease is up or a deployment rolls around?  I can think of a few.  We’ve done it a few times ourselves.  We’ve gone from on post housing, then moved closer to family during a deployment, then back to on post housing again.  Would we have done the same if we had been more invested in our residence?  Likewise I have worked with families who have gone from on post, to rentals off post, and back to post housing again all within a few short months.  The bottom line is, the research shows, homeowners move less frequently, they are more invested in their neighborhoods, and they tend to build more long term friendships.

Additionally, there is the belief that crime rates may be lower in neighborhoods where the residents are predominantly homeowners.  If you think about it, it makes total sense.  Homeowners who may move less frequently, are more invested in their neighborhoods, who have formed longer lasting friendships may be more likely to notice someone who doesn’t belong.  They may be more likely to look out for the homes in the vicinity and report something that doesn’t look right.  They may also communicate more regularly with neighbors and develop formal or informal neighborhood patrols and watches.

Homeowners also tend to give more back to their communities as far as volunteering, church involvement, and through participation in community organizations.  Just a little side note… Have you ever been having a crappy day and then randomly decided to do something nice for someone?  Maybe you paid for the person behind you in line at Starbucks, or told a stranger that you love her outfit.  It makes you feel better, right?!  If we put positivity out into the world, that tends to be what we attract back into our lives.  I had not even begun to think of the effect that owning a home has on parents that might then in turn effect their children.

As I read through the Social Benefits of Homeownership and Stable Housing, I was pretty astounded by the findings.  What typically happens with children when you move frequently?  They tend to change schools more often.  Makes sense, right?  Data has shown that frequent school changes can have negative impacts on children and families.  Because homeowners tend to move less frequently, their children tend to change schools less often as well.  For younger children this has been shown to mean fewer behavioral problems, and higher scores in math and reading.  For older children, the effects can be life-LONG and life-changing.  They tend to have higher graduation rates and they have lower teenage pregnancy rates!  Ultimately the numbers show that if you own your home, your children are more likely to own their homes as well.

So you may be thinking, “well there is no way we could afford to own a home on one income”.  That is a self-limiting belief.  You may be surprised by what you are eligible for.  What may surprise you even more are the benefits of homeownership to low-income families.  The families living at or below the poverty line who became recent homeowners tend to report a higher level of perceived control over their lives which ultimately lead to higher life satisfaction, and higher self-esteem.  Homeownership was directly correlated with higher educational achievements, higher earnings, and lower welfare dependence rates.  Is it all some strange coincidence?  I don’t think so.

The results were not limited to the United States.  Based on findings in the UK by the Office of National Statistics Survey, 80% of folks who owned their homes reported a medium to high level of satisfaction, while 68% of renters reported the same.  Canada reports one of the highest rates of homeownership worldwide with 70% of their citizens being homeowners.  The Canada Mortgage and Housing Corp. (CMHC), worked with Habitat for Humanity on a study that corresponded with the United States’ Social Benefits of Homeownership and Stable Housing study and reported that 86% of the respondents said their lives had improved since owning their homes.  Among many things, they reported improved health, increased happiness with work and school, and 58% said their finances were better.

Healthy Happy HomeNow I do believe the numbers don’t lie, but don’t get upset, I’m not saying their aren’t happy renters too.  Some of us have the ability to make the most of any circumstance that comes our way.  I simply leave you with my ponderings… Is it possible that homeownership can contribute to happiness?

If you have questions or need real estate assistance in the Clarksville, Tennessee or Fort Campbell, Kentucky area or know anyone who does, call me today at (931) 436-6765 or submit your information below.

© Ariel Anderson and https://buyorsellclarksvilletennesseehomes.wordpress.com, 2013.  Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Ariel Anderson and https://buyorsellclarksvilletennesseehomes.wordpress.com with appropriate and specific direction to the original content.

As if your preferred team determines your state of residence… HA!  But being that time of year, I couldn’t resist:

KY vs TN Pic

Ok, time to get serious!  Clarksville, Tennessee borders Kentucky to the south.  Fort Campbell, Kentucky and Oak Grove, Kentucky border Tennessee to the north.  So another of the top questions I receive; where is the best place to purchase a home?  And which is right for your family?  It took some statistical digging, but as a Realtor I can offer you personal insight along with some important data, that may aid in your decision making.

The most common concern that I hear voiced by the families I work with is that Tennessee has a higher sales tax. That is true.  Tennessee has a 9.5% sales tax, while Kentucky has a 6% sales tax, so we are talking about a 3.5% difference.  If you buy something that costs $10.00, in Tennessee your sales tax will be 95 cents, and in Kentucky it will be 60 cents.  However, Tennessee has no income tax, while Kentucky does tax income.

Kentucky collects income taxes from its residents at the following rates:

  • 2 percent on the first $3,000 of taxable income.
  • 3 percent on taxable income between $3,001 and $4,000.
  • 4 percent on taxable income between $4,001 and $5,000.
  • 5 percent on taxable income between $5,001 and $8,000.
  • 5.8 percent on taxable income between $8,001 and $75,000.
  • 6 percent on taxable income of $75,001 and above.

http://revenue.ky.gov/

Property tax is another factor to consider.  Property tax rates in Oak Grove, Kentucky are less than Clarksville, Tennessee tax rates with an average of $754 per year in Oak Gove, and $1298 per year in Clarksville according to city-data.com.  It is important to understand that some of this discrepancy can be attributed to lower property values.  According to the Middle Tennessee Multiple Listing Service (MLS), so far the average sale price for Clarksville is $163,335 and the average for Oak Grove is $111,663.  The prices of homes are lower in Oak Grove, which may initially seem advantageous, but over the long term property values rise at a much slower rate.  This can be especially detrimental to a military family who may need to sell their home within a few years due to permanent change of station orders.  Which brings me to the next point… foreclosures.

Sales prices in Oak Grove may be negatively impacted by the high number of foreclosures in the area.  As of the end of August 2013, 4.78% of Christian County homes listed on the MLS were foreclosures (6.83% if we include foreclosed homes under contract currently).  Montgomery County has a significantly lower foreclosure rate at 2.99%.  As I browsed the listings for one Oak Grove neighborhood alone, 7 out of the 12 listings were foreclosures!  Foreclosures bring down home values, they harm the economy on a larger scale, and they create significant cost for local governments.  It is estimated that 2/3 of local government revenue comes from property taxes.  When foreclosures are rampant, property values decrease, which causes a loss in revenue for the local government.  Over time, this creates a need to increase property taxes, sales taxes, and income taxes to cover the deficit.  Foreclosures also create drops in consumer purchases as well as investments, both of which are directly correlated with job loss and rates of unemployment.  When people lose their jobs and become unemployed, they are at a higher risk of foreclosure… Can you see the vicious cycle created?  Bottom line is… foreclosures are bad!  They are bad for you as an individual consumer, as a homeowner, and have a negative effect on the economy as a whole.

Read more on that here:  We All Pay a Price For the Foreclosure Crisis

Some other economic characteristics that may eventually or currently effect property values:

  • Median age of the population is 28 years in Clarksville, versus 24 years in Oak Grove
  • Median yearly income for Clarksville residents is $42,237 and Oak Grove residents is $31,221
  • 59% of the Oak Grove population are renters, while 42% of the Clarksville population rent their homes
  • Oak Grove rate of unemployment is approximately 11.5% while Clarksville is 8.1%
  • There are more jobs and industry in Clarksville than in Oak Grove
  • Drive time may or may not be less in Oak Grove versus Clarksville
  • More store and restaurant selections available in Clarksville versus Oak Grove
  • Clarksville is closer to a major city (Nashville) than Oak Grove

Finally, from a personal perspective, consider the following:  Kentucky is in the top 5 in the country for highest car insurance rates, so be sure to check with your individual insurance provider for details on how living in Kentucky versus Tennessee may effect your vehicle coverage and costs.  Be sure to check with the local DMV for information regarding vehicle registration in Clarksville versus Oak Grove.  I called them myself and got a straight forward flat-fee from the Clarksville office, but the Oak Grove office was based on the make, model, and year of the vehicle… An Ad Valorem Tax I believe is what they called it.  I had one homeowner tell me he could registers 3 vehicles and a boat in TN cheaper than he could register one of his vehicles in KY!  I encourage you to investigate what your individual vehicles may cost you in registration by living on the KY side.

Additionally, I frequently hear that utility costs are higher in Kentucky than on the Tennessee side.  You can view a chart of the different utility companies as well as their connection fees and deposits required here (courtesy of the Fort Campbell, Kentucky official website):  Utility Providers 

So what works best for you and yours?  Are you a Kentucky kind of family?  Or look forward to calling Tennessee your home?  Be sure to comment with any additional questions or points to consider, and you could be featured in an upcoming blog!

If you are in or heading to the Clarksville, Tennessee or Fort Campbell, Kentucky area, enter your information below to explore your real estate options today!

© Ariel Anderson and https://buyorsellclarksvilletennesseehomes.wordpress.com, 2013.  Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Ariel Anderson and https://buyorsellclarksvilletennesseehomes.wordpress.com with appropriate and specific direction to the original content.

Buy or Rent?

Consider these points when you are trying to decide between renting or buying a home!

© Ariel Anderson and https://buyorsellclarksvilletennesseehomes.wordpress.com, 2013.  Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Ariel Anderson and https://buyorsellclarksvilletennesseehomes.wordpress.com with appropriate and specific direction to the original content.