Homeownership

The Limit on Your Dreams Does Not Exist, but the Number of Homes For Sale Does.

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As we enter the summer months, the busiest time for purchasing a home, a common problem across the United States is facing the next generation of potential homebuyers. Although many Millennials have delayed marriage and children, they are reaching the age where it is “getting real” and they are wanting to purchase their first home.

We should all have an image of our dream house but then acknowledge the actual home we are able to afford. While many in Generation X may have missed the opportunity to purchase their top choice during their search for their first home, they knew there was always going to be another home to purchase. Historically, the housing market has had a 6-month availability of housing inventory that was actively available for sale on the market at any given time. Today, with less than 60 days of housing inventory available and multi-bid situations becoming the norm, if first-time homebuyers miss an opportunity to purchase a home they like and are able to afford, they may be waiting a very long time before they can be in a position to submit the winning offer on a home they want.

What does 10 years of record lows in new home construction look like? What does it mean for the future of first-time homebuyers?  Take a look at the chart below from the Commerce Department.

As a nation we are building too few single family homes. The nation has not seen an extended timeframe with a low level of new home sales activity per adult population like this since prior to 1965. A generation of 4 million people are continuing to turn 31 every year across the nation and we are only building around 800K new homes annually. The cycle we are in of historic low levels of new construction is not bent, it’s broken. Correcting this long-term challenge will require alignment of local and national government agencies and private equity to target a solution that requires all of them to be involved in solving this problem.

How is this going to affect your real estate business and your income? Goal orientated individuals realize that it’s not only the market that determines their future, but how they approach the market. For instance, 30% of homes in Southern California markets sold in Q1 without being entered into the MLS system. The amount of pocket listings held out of the MLS by brokerages and agents are growing and will be coming to your market.

My plan is to help you develop the mindset you need and the activities to perform in order to succeed as a top-performing real estate agent in this market. Homebuyers and sellers need local market expertise, and to be a successful real estate agent you must own that position in the mind of your consumers.

Join me at Amplified Selling in Richmond and Fredericksburg, Virginia June 20 and 22 and learn how to tune up your activity to amplify your results.

To your success,

Peter Giese

President

United Real Estate

Tax Changes and How to Increase Your Sales in 2018!

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While attending the National Association of REALTORS® (N.A.R.) conference this past November in Chicago, there was an air of uncertainty about housing that I have not seen since 2007 when it became evident that the housing crisis was real.  By the end of 2008, the Case-Shillar housing price index reported its largest price drop in its history. Housing prices in most urban and suburban areas struggled to recapture their value before starting to rebound in 2013.

The theme of the 2017 N.A.R. conference, “The Sky’s the Limit”, focused on raising attendees’ real estate careers to higher levels.  With a pending massive tax legislation being proposed, the idea of raising your income in 2018 was an immediate challenge to envision. This time, the uncertainty at the major real estate conference of the year was not about the financial stability of households, the economy, or the quality of mortgage underwriting.  It was legislation proposing the elimination of mortgage interest and property tax deductions. These deductions have helped to promote and incentivize homeownership, helping millions of families realize the American dream of owning their own home. Eliminating those deductions completely would have a major negative impact on housing markets across the United States.

Credit is certainly due to the N.A.R., as their efforts helped impact the decisions of congress. The deductions stayed in the tax reform that passed into law. However, there are now limitations that affect certain areas more than others. Specifically, high tax states such as California, New York, Connecticut and New Jersey, where it is estimated that 30% of homeowners pay more than $10,000 annually in property taxes. The limitation for interest deductions on mortgages above $750,000 will give pause to buyers in the luxury market, and the elimination of the interest deduction on home equity lines combined with the maximum mortgage deductions will also affect individuals who are considering buying a second home. If you are already close to the $750,000 mortgage cap on your primary residence, buying a second home will not have the same benefit of ownership, as the additional interest and property deductions would be eliminated and not tax deductible on that new residence. You also are less likely to take out an equity loan for a down payment on a vacation home.

How local real estate markets will be affected by the new law remains to be seen. What is clear for 2018 is a universal agreement amongst economists that there will be a modest, at best, increase in the number of home sales. This means more competition for real estate buyers trying to purchase an affordable home and an increase in competition amongst REALTORS to build their client base.

What will it take to grow your income in 2018? First, you will need to become an expert. Not an expert in your entire city, but an expert in a micro-market. Real estate consumers will do their research and will want to work with someone they like and trust. That trust will be gained in 2018 by agents who position themselves as micro-market experts, not generalists. Second, develop the thinking of an entrepreneur. Being an entrepreneur in real estate is not only a business model, it is a mindset. You need a mindset of positivity, growth, and personal accountability in 2018 to raise your income.

To learn more about the 2018 market, micro-markets, and developing a mindset of growth, please view my Facebook live interview with RealTrends at the N.A.R. conference.

https://www.facebook.com/realtrends/videos/10154962768797927/

Best wishes for growth in 2018!

Peter

The iPhone® Turned Ten in June and Changed How Real Estate Agents Operate

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Whether you are an AndroidTM fan or an individual like myself who could not bear to part with the iPhone, the disruptive impact that smartphones have had on many industries has been proven time and time again. Steve Jobs described the first iPhone as a “truly magical product.” Looking back, as well as into the future, it’s hard to imagine another device that will ever be more readily used each day by the majority of the population than our smartphones. In 2016, Apple® stated that the average iPhone user unlocked their phone 80 times a day and checked their phone over 150 times a day!

The mobile phone started as a way to increase communication and now the idea of owning just a “mobile phone” is considered ancient. It’s not only mobile phones that were replaced by the invention of the smartphone. Think of cameras, personal computers, GPS devices and even Apple’s own product, the iPod® – all have been replaced by smartphones. It’s not hardware makers alone that have been affected; new industries emerged and disrupted other traditional businesses with the invention of smartphone applications. You now have a computer, video camera, gaming device and movie studio in the palm of your hand. With those capabilities available on our phone, it is easy to get distracted. What are we doing when we constantly check our phones?

Yes, we still spend a lot of time talking and texting on our smartphones, but for many our phones have replaced our computers for website searches, email and have become the main vehicle for interacting on social media and with our community, in general.

A great deal of time and money has been spent by real estate brokers and agents to make their websites mobile friendly and responsive to help facilitate the interaction with buyers and sellers. This shift to mobile responsive websites was caused by the majority of real estate searches being performed on mobile devices. The amount of online research that potential home buyers and sellers conduct continues to increase each year as connectivity and the smartphone ease of use improves. Mobile search and key terms are definitely critical for an agent’s online success. But with the easy access to information and time on our hands, another search category has developed.

Home buyers and sellers are no longer looking at real estate properties, neighborhood demographics and valuation trends alone, they are researching prospective agents extensively too. Two out of three people interested in buying a home are researching prospective agents comprehensively online prior to working with them (see graph below).

It’s no longer enough for a REALTOR© to be proficient at their trade, they now need to pass the Google® test and be seen as the most competent choice online. The first step in this new process is being certain you, as a REALTOR©, dominate a consumer’s search. How do you accomplish this? First, you should own your own website domain with a personal URL and have a website with relevant content. You also need to have a professional profile on dominant national consumer real estate websites, a presence on social media (i.e., LinkedIn, Facebook) and participate on consumer review sites.

The next question to ask yourself is, have you shifted your mindset to that of a media company? The reality is that when you are being extensively searched online, you are your own brand! With the mindset of a media company, you move past checking the box and being found on the Internet or social media and move towards properly promoting and managing your brand. This means you have to develop content, distribute content and be readily seen as a market expert – you have to be someone people want to do business with. The impact of the smartphone will continue to be felt by all brands. Take this opportunity to promote your real estate brand beyond what your competition is willing to do. The rules for winning at this brand game have been already determined. You need to fully commit to the new personal promotion strategy to win.

As you finish this article, take a moment to search yourself using your smartphone and see what results appear on the first page. You would be prepared for an in-person meeting with a client – you need to be prepared for the client meetings that are happening online without you. Be certain to be Google and smartphone prepared because your customer base expects it.

Check out the United Intranet for the latest training on building your brand presence.

Peter

A Brief History of National Home Ownership Month

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June is National Home Ownership Month and if you missed it you weren’t the only one. Not only was there a lack of press coverage, there was also a large group of individuals who missed out on the opportunity to buy a home. In 2003, National Home Ownership Month was announced by President George W. Bush to promote awareness and policies to expand home ownership across the country. The awareness campaign and policies were not completely new, but rather an extension of President Bill Clinton’s National Home Ownership Day of 1995 and the Clinton 100-point action plan to increase home ownership to record levels.

Both the Democratic and Republican administrations’ plans had noble intentions, as they both recognized that home ownership is a part of the American dream. Home ownership does, in fact, promote civic responsibility and financial security for most Americans. I experienced this first-hand when I relocated my family to Dallas, Texas. We opted to rent for nearly a year while we learned more about the area. My family’s attitude towards our rental house and neighborhood were different than our current home. Our feelings toward our rental home were not bad or negative, we just did not experience the pride we feel now that we have purchased our own home.

Looking back now, we see that the President’s goal of increasing home ownership to record rates was met. However, it came at a great price as the “bubble” was created and real estate prices came crashing down shortly thereafter. The bubble bursting took most of the economy down with it which is now referred to as the “great recession.” The reality is that while most Americans dream is of owning a home, not everyone should or can afford own a home, due to all different kinds of circumstances.

Homeownership rates are now at the lowest levels in 50 years (see chart below) and there is pent up demand for affordable housing.

The term “home ownership rate” can be misleading. It is defined by the government as “the percentage of homes that are occupied by the owner.” It is not the percentage of adults that own their own home. The problem with this rate is it does not count adult individuals who are neither home owners nor are renters. Since the great recession of 2007, the group of young adults between the ages of 18-34 has increased dramatically. In fact, the individuals in this age group are opting more often to live with their parents than with a spouse, as marriage is being postponed to a later age. See chart below.

The home ownership rate alone can mislead you because if young adults don’t create a new household, then the percentage is skewed. Comparing number of actual historical households, it becomes clear that the number of young adults who are fulfilling the dream of home ownership is significantly less than the current home ownership rate states. Starting a new household is important for many factors, including the overall economic growth of the country. Owning your own home is equally important for most individuals’ financial security.

The month of May reached a new peak in the median price of homes. Unlike in 2007, this peak was not caused by government involvement but rather the laws of supply and demand.  May demonstrated a new low in listing inventory and a new record low of time on the market for a house to sell. The real estate headlines this summer will continue to highlight the shortage of affordable housing. Let’s hope by next June a plan is put into place that will spur new construction of homes that are priced to encourage more young adults to buy and afford buying their first home.

As June ends, it is the true beginning of summer.  Here’s to hoping that you have plans in place to enjoy both the benefits of home ownership, and enjoying the summer.

Peter

The One Chart That Explains Why You Can’t Find a Home to Purchase

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Summer is not only the time every school age child looks forward to, it is also the traditional time of year that many families eagerly look forward to buying a new home. In fact, historical home sales data shows that the month of June is typically the busiest month for buying and selling real estate. As the school year ends, families execute plans they made in the spring to move to a new school district or buy a larger home. This year the challenge that many will face is the shortage of affordable homes available to buy.

This shortage of available housing is not a short term problem. With an ever growing population and housing construction that lags way behind the country’s population growth, the lack of available housing will continue into the foreseeable future. While news headlines have covered the annual increase in housing over the past five years, the actual data shows that the number of homes for sale is still at record lows. When you look at the actual amount of new homes being built and take into consideration the continued population growth, a clear picture comes into view of what challenges still lie ahead for potential homebuyers (refer to graph below).

Keep in mind that the “increase” in new home construction in 2016, compares to the same actual levels of new construction in 1982, when the country was in the midst of a deep recession. However, after the 1982 recession, home construction immediately and significantly rose again in 1983. There is no such increase in new homes being constructed in 2017 and the population of the country has increased by over 100 million people since 1982.

Want to know why home prices keep going up and you can’t find a home to buy? It’s a simple matter of supply and demand. There is an ever increasing demand driven by a growing population and a lack of inventory of homes for those buyers in the market to make offers on.

With the current rate and foreseeable future of new home construction remaining stagnant, this won’t be a short-term problem but rather a systematic long-term challenge for many trying to buy their first home or next home. You can expect home prices will continue to rise and affordable housing options will be in high demand driving up prices to even higher levels. The supply of new and existing homes available for sale across the country will remain very tight.

Homeownership is not just part of the American dream of freedom and independence, but also the number one way for most people to improve their long-term financial security. While it may be costly this year to buy a home, more than most likely it will be even more expensive next year. The law of supply and demand won’t change. Your best bet is to sit down and build a personal plan to achieve your family’s home ownership goals and financial needs and begin to take action to achieve those goals. On this topic, time is of the essence.

Best wishes for a fantastic, fun-filled summer and a successful home buying season!

Peter

Gen X is Turning 50 and They’re Stuck in Their Homes

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The leading headlines on the future of the housing market typically read, “Get ready for the millennials!” If not that, the alternative subject line highlights the number of baby boomers retiring and whether they will move to the coast, move to be close to the grandkids or just stay put. In between the two is a generation of high wage earners that is mostly ignored in the national housing conversation. This doesn’t occur only in the housing market, the majority of news coverage in the last election was given to the, “We don’t want to change” boomers and the idealistic “We want the world to change” millennials. In the middle, described by some authors as the middle child, is Gen X. Once described as slackers, they are now in their prime earnings years and have the highest average income of any other bracket of consumers. Gen X who grew up on grunge music, wearing ripped jeans and flannel shirts has grown up and is very influential in the business world and yes, many are stuck in their homes.

I don’t view Gen X as having a middle child generation syndrome, despite not being written or talked about as much as the older and younger generations they interact with. I view this generation as the link connecting the baby boomers and the millennials. They have an understanding and share interests with both generations. While sociologists and the census bureau will give a different date range for members of this generation, I use the simple definition that identifies Gen X, with individuals born the first year the birth rate in the country began to once again decline after its continuous rise post World War II, 1965 to 1980 and the start of a new decade of patriotism. In all cases, generations are defined by a certain birth date and a general world view outlook.

Gen X understood the values of the baby boomers but challenged them with the indifference that went along with growing up as latchkey kids who either had two working parents or were part of a family separated by divorce. They went to college, got married, had kids, some got divorced and began to change social norms and alter the direction of popular music. It wasn’t the millennials that took the popularity of tattoos away from the exclusivity of bikers, gangs and members of the military. It was Generation X that started that trend, although for most it was more conservative and hidden than you see today. They looked at race differently, birth control was the norm, as was women being in the workplace. They don’t feel ignored like a middle child, but rather are often indifferent and are adept at independently figuring things out, which all goes along with growing up as a latchkey kid. They went to school with computers and are very proficient at technology, and unlike the millennials, can freely turn the technology off.

While the housing shortage across the U.S. appropriately discusses the impact to first-time millennial home buyers, Gen X was hit the hardest during the real estate down-turn that began in 2007. Some still own homes with negative equity and those with equity have the challenge of where will they move to, if they sell their home? The housing shortage has a negative impact on upward mobility for Gen X. With housing construction still below historical rates, and homes available in areas where Gen X want to live, in even shorter supply, balance of lifestyle is not just a millennial desire. The American story of moving and advancing to that next community or larger home every 5 years is gone.

The macro issue of more homes being available is a broader challenge that would require government, new entrepreneurs and businesses working jointly towards a solution. In the interim, what can members of this generation do if they truly want the step-up move? There is a solution that could work in certain markets and that is selling their home and then leasing it back to them for 60-90 days so they have time to search for a home with the money already in hand for the down payment. Under this scenario, a new buyer can purchase a home they want and can afford, and Gen X can have the time and the money to be more diligent about finding the next size home. After all, it is a generation that is accustomed to creatively figuring things out.

To the early Gen Xers, a happy 50th birthday wish to the likes of Dave Matthews, Billy Corgan, Keith Urban, Tim McGraw, Faith Hill, and Will Ferrell who are all turning 50 this year. Know someone who is turning 50? Send them a text wishing them Happy Birthday, they are also the generation that texts the most.

Best wishes to all who are pursuing owning their dream home.

Peter

Partner Feature: American Home Shield

When you purchase your home, homeowners insurance is a must. But, what about a home warranty?American Home Shield

A home warranty is a great choice for most homeowners as it covers the repair or replacement of major home systems including HVAC, electrical, plumbing, large appliances, and pools, amongst others. This will give you peace of mind (often for a one-year period before you must renew) that your home is covered should anything break down.

If you’re currently considering a home warranty, American Home Shield is a leader in home warranties and a valued partner of United Real Estate. Check out just some of the major benefits of choosing them for your own warranty below!

 

A Brief History of American Home Shield

Since 1971, American Home Shield (AHS) has been providing home warranties to homeowners just like you. The company serves the needs of homeowners through their network of qualified repair professionals that are ready to help whenever necessary.

Most AHS customers use their plan twice per year, giving them the support and flexibility necessary to keep their homes running. Through their relationship with the ServiceMaster company, AHS offers premier services from well-known names like Terminix, ServiceMaster Clean, Merry Maids, Furniture Medic, and Amerispec (amongst others) to homes across the nation.

 

Major Benefits of Using American Home Shield

There are major benefits of trusting your home to AHS over other potential organizations, including:

  • 24/7 Service – Home repairs don’t happen on a predictable schedule. Open 24/7, AHS is always there when you need them.
  • 90% Responsive – 90% of the time AHS assigns contractors to homes within just 15 minutes, meaning you receive the service you need (and quickly)!
  • 93% Effective – AHS has fulfilled 93% of customer service requests in the past three years. This guarantees they’ll provide the service promised when you need it most.

 

Learn More About American Home Shield for Your Needs

If you’ve been considering a home warranty, American Home Shield is a great resource.

Learn more about their services and pricing today to see if this is the right option to protect your important investment!

Staging That Sells: Using Mirrors Throughout Your Home

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Do you have a mirror in your home? Chances are the answer is yes (and that you have more than one) and for more reasons than beyond checking your reflection.

After all, mirrors are a simple way to add natural light to your home, making rooms appear large, spacious, and desirable. And as such, using mirrors strategically in your home staging efforts can help you sell, all without having to spend a significant amount of money.

Now, let’s discuss how you can use mirrors in each important room to sell your home quicker than you could otherwise.

 

Using Mirrors in Each Important Room

Mirrors aren’t just for bathrooms or bedrooms (although they are important in these rooms too). In fact, you should use mirrors in multiple ways and areas throughout your home:

  • Entryway – By placing a mirror in your home’s entryway, you can help buyers imagine the home as if it were their home. It makes your home feel, well, like a home! And it gives buyers a distinct image of themselves in the home.
  • Living Room – If you have a fireplace, placing a mirror above it is a great accent that will make the room appear larger. You should also look to place mirrors on large walls opposite windows. Doing so will reflect light and fill empty wall space, immediately making the room appear more spacious.
  • Bedroom – If you don’t already have a mirror above your dresser, it’s a great idea to do so. It will make the space feel more livable, not to mention add a nice decorative touch to the room.
  • Kitchen – Kitchens don’t often have mirrors, but sometimes adding one can add another personalized touch that resonates well with buyers. In particular, you may want to add one if you have an entry/exit door in your kitchen near a hook for keys or other accents.
  • Bathroom – Every bathroom comes standard with a mirror, but that doesn’t mean your mirror has to be boring. In fact, you can choose a fun shape or mirror with a decorative frame to make even the smallest of bathrooms more stylish.

 

United Real Estate Specializes in the Staging and Sale of Homes

Are you currently trying to sell your home but aren’t quite successful? If so, the team at United Real Estate can help with the tips above and more!

Since 1925, we’ve helped homeowners like you stage and sell homes throughout the United States. Contact us today to discuss your unique needs and learn more about how we can help sell your home!

Get Your Credit Mortgage Ready

The path to homeownership can be stressful and often difficult. If you have less than perfect credit history, the obstacles might be even greater. Even if your credit is good, there are a few red flags that might prevent you from getting a mortgage (or the mortgage rate/type) that you are hoping for. Below is a list of items that can hinder the process of obtaining a mortgage:

Don't leave your credit score up to chance.

Don’t leave your credit score up to chance.

  • Bankruptcy– Some mortgages will work with a past bankruptcy. But you usually need to be several years past the discharge date and have rebuilt your credit. A bankruptcy, even when discharged, can stay on your credit report for up to ten years.
  • Foreclosure short sale – Some mortgages will work with a past foreclosure short sale. But you usually need to be several years past the sale date and have rebuilt your credit. Even when finalized, a foreclosure short sale can stay on your credit report for up to seven years.
  • Unpaid judgments– No mortgage lender wants to take the risk that an earlier debt could take precedence over their loan. All judgments must be satisfied, removed or vacated from your credit report. And, if paid, your judgment will stay on your report for seven years. Solve open judgments. Try to vacate them first or pay them and get proof that they’re paid. Yes, I know it hurts to take money out of your hard-earned down payment savings account. But that down payment won’t do you a bit of good if you can’t get a mortgage because of an old judgment from the cable company you fought with in your first apartment.
  • Open collections– If you don’t pay a bill, the company you owe may sell your debt to a collection agency who will try to get you to pay. ONLY PAY THEM OFF IF YOU ARE TOLD TO DO SO. Keep in mind that paying a collection will not raise your credit score, but LOWER YOUR SCORE. Once a debt has gone to collections, your credit is hit and can only recover over time.
  • Too much monthly debt– A good rule of thumb is that if you’re paying more than 5 percent of your gross monthly income for debt payments (credit cards, student loans, car payments, personal loans), you’re decreasing the amount of mortgage you’ll be approved for. If your income is high and housing prices are reasonable, high debt might not hurt you much. But if you have a modest income, debt can price you right out of a mortgage.
  • Pay your current bills on time, religiously – You’ll need the boost to your credit score if you’ve had problems in the past. And you’ll want to prove to a lender you’ve gotten past old issues and made a fresh start in rebuilding your credit.
  • Make sure the problems are right – If not, you must dispute them off. Experts disagree about how many people have serious errors on their credit reports, but I have witnessed a client who discovered that someone had posed as his spouse after finding lots of strange information on his credit report. Don’t pay the price for someone else’s mistake.

This piece is guest written by our partner, Credit Law Center (CLC). CLC helps clients achieve financial success by cleaning up their credit history and putting them on track for financial freedom. Contact them today at (800) 994-3070 or by visiting creditlawcenter.com.

The Skinny on Home Warranties

Your furnace goes out. Now what? It’s a costly repair that can really take a toll on your pocketbook.

Do home warranties protect your new investment?

Do home warranties protect your new investment?

There are many people that rely on home warranties to repair their appliances. Home warranties are service contracts that are designed to cover appliances and other items that can break within the home. However, the age old question is – are home warranties worth it?

First, it’s important to understand the difference between a home warranty and home insurance. A home warranty typically covers repair and replacement costs for appliances – with a service fee. Home insurance covers appliances, but normally won’t cover them unless damage occurs to the house – for example, a fire, flood or theft.

The Pros – For sellers, home warranties that are included on a home they are selling can be a big bonus. According to a recent survey by a large home warranty provider, homes that come with a warranty sell 11 days quicker and make an average of $2,300 more that those that do not. Buyers can have the reassurance that their appliances are covered and possibly save up to thousands of dollars.

The Cons – Many consumer reports argue that home warranties aren’t worth the cost – $400 to $600 a year. One complaint is that many claims are denied because it is determined to be a pre-existing condition. Claims are also denied because the appliance hasn’t been maintained properly. Other problems included no coverage on more expensive items like leaky roofs or basement moisture and extra charges for things like plumbing and heating.

If you’re ready to purchase a home warranty, here are some tips to consider:

  • Check out multiple providers. Just like with any purchase, review your options. Also, make sure the company has the proper licensing and other requirements to provide a home warranty.
  • Review the contract carefully. As mentioned, there are many reasons a claim can be denied. There are also many appliances that could possibly not be covered under your plan. Read the contract carefully, including the fine print.
  • Create a budget. Add in the payment to your monthly budget. Include a possible service charge – which could range from $50 to $100.
  • Talk to your real estate agent. Keep your agent in the loop about your search for a home warranty. They may have a good relationship with a company and know who to watch out for.

United Real Estate is here to help you make the best decisions for you and your family.  If you are ready to get started on the home buying process, or if you have questions about buying, contact our support team.

 

Sources:

http://www.consumerreports.org/cro/news/2014/09/why-you-should-avoid-home-warranties/index.htm

http://www.latimes.com/business/realestate/la-fi-lew-20140511-story.html