Elizabeth's Tips November 21, 2022

What’s the difference between Pending or Contingent?

Each home listing has a status that’s updated by information that the listing agent feeds into the multiple listing service (MLS). A home listed contingent or pending is under contract, but there’s still a chance for you to buy it.

Most purchase offers for the buyer to back out if they can’t get financing, the home doesn’t pass inspection, or the home price doesn’t meet appraisal. In some cases, the listing agent will update the listing with showing instructions such as:

  • Contingent – continue to show (CCS): the seller wants to pivot to a backup offer if the buyer can’t perform.

  • Contingent – no show: the seller believes the buyer will have no problem removing the contingency.

  • Contingent – with kick out: the buyer has a limited time to remove the contingency or risk the contract being voided.

  • Contingent – probate: a deceased homeowner’s assets are going through the probate process, so the home may not be available for purchase for some time.

When a listing is pending, the contract is closer to closing, but there are exceptions:

  • Pending- taking backups: the seller is accepting backup offers in case the buyer can’t perform.

  • Pending- short sale: the mortgage holder has been asked to take less money than the seller owes on their mortgage.

Your real estate agent can advise you about your chances. In a hot market with low inventory, shopping contingent or pending homes could be a great way to make offers with less competition.

Elizabeth's Tips September 29, 2022

What is a Seller’s Disclosure? Here’s Why It’s Important

Whether you’re about to purchase a new condo or sell your current home, there is a lot to learn and paperwork to sign. One of these critical documents is called a seller’s disclosure.

A seller’s disclosure, also known as a property disclosure, is a document that sellers are legally required to provide buyers. This piece of paperwork will include all the undisclosed details related to the property that negatively affect its value. So before you finalize the buying or selling of a home, read on to find out why a seller’s disclosure is an essential part of any real estate transaction.

Why is a seller’s disclosure important?
A seller’s disclosure is a legal document protecting both the seller and the buyer. It protects the buyer by informing them of any issues or defects the home and surrounding property may have. It also safeguards the seller from being sued by the buyer after the transaction if the seller’s disclosure was completed correctly.

For buyers
The goal of the seller’s disclosure is to inform the buyer of the property’s history and future repairs so buyers can make an informed decision. If the seller’s disclosure reveals a major issue with the home, buyers can back out of the deal without losing earnest money. Any problems documented in the seller’s disclosure can also give the buyer some negotiating power, such as the price of the home or requesting the seller make any necessary repairs.

For sellers
The seller’s disclosure can only protect the seller if done accurately and honestly. If done correctly, this document will protect the seller from being held legally liable for any issues that may develop with the home in the future. This is only the case if the seller made the buyer fully aware of all home defects before the completed purchase. The seller only needs to disclose what is required by their state.

When should a seller provide the disclosure?
ypically, a seller’s disclosure is provided a few days after mutual acceptance during the closing stages of the transaction. However, some sellers may choose to disclose as early as home tours. The listing agent must be transparent with buyers about any known issues with the property, so some will do this upfront to make the process quicker. Usually, your state will have a standard form the seller fills out, while some states allow sellers to disclose more casually. Before the seller’s disclosure is signed, the buyer can still back out of the deal. However, once it’s signed, the buyer only has a few days to back out of the agreement without consequences.

How a seller’s disclosure can impact a home sale
The seller’s disclosure can significantly impact the home selling process if a property has substantial issues. Buyers will need to decide if they’re comfortable with any significant issues disclosed and get a professional inspection to assess what it takes to handle the problem. As a buyer, it’s important to carefully review the seller’s disclosure packets with a real estate agent and during the home inspection.

What are the standard real estate disclosures?
Each state has different requirements for seller disclosures – it’s best to check with your state’s guidelines. They can vary on a county basis, so make sure to check there as well. To help you get an idea of what to expect, here’s a list of standard disclosures:

  • Neighborhood nuisances: Often refers to noise or odor from a source outside the property that could irritate the homeowners.

  • Hazards: High risk of natural disasters or threats like contamination, lead paint, radon, asbestos, and toxic mold.

  • Repairs: Any significant repairs the house may need and has had. Significant repairs would include structural, electrical, and plumbing issues.

  • Water damage: Flood risk or existing flood damage.

  • Missing items: The seller needs to list any items that will be removed after the sale, such as refrigerators or lighting fixtures.

  • Death: Sellers are required to disclose deaths that occurred because of the property’s condition or violent crimes that occurred on the property.

  • Other possible disclosures: Other disclosures could include special historical districts, homeowners associations, and unpermitted improvements.

Not every state requires all of these disclosures. Most required documentation is mandated at the state level, but there are a few federally mandated disclosures. Some federally mandated disclosures include lead paint, asbestos, wetlands, and floodplain disclosures. If you want to know something about the property, you can always ask the seller. Take time to understand what disclosures aren’t required to be disclosed in your state. That way, you’ll know what to ask when the time comes.

As a buyer, will I always receive a seller’s disclosure?
There are several circumstances in which a buyer may not receive a seller’s disclosure – this is known as a “no seller’s disclosure sale.” This means the seller is selling the property without disclosing any defects or issues that the buyer might need to know to make an informed decision. We’ve outlined the basics below, but visit your state government page for further information.

  • Selling an as-is property

  • A foreclosure or deed-in-lieu of foreclosure (usually applies to a bank-owned home)

  • A gift or other transfer to a parent, spouse, domestic partner, or child

  • A transfer between spouses or between domestic partners in connection with a divorce or ending of domestic partnership

  • Certain business transfers in which the buyer already had partial ownership of the property (usually applies to rental properties)

  • Estate sales or bankruptcy sales

  • Sales in which the buyer waives the right to disclosure. However, the buyer can’t waive certain environmental disclosures, which refer to naturally occurring concerns like mold or flood zones.

If a no seller’s disclosure occurs, there will be a due diligence period. During this time, the buyer will thoroughly inspect the property. If the buyer goes through the due diligence and closing process, about 14 days, without raising any concerns, then they’re deemed to have waived their rights against the seller.

What happens if the sellers fail to disclose issues adequately?
If the seller fails to disclose or actively conceals problems they’re aware of that affect the property’s value, the buyer can sue. The seller can be subject to lawsuits for recovery of damages based on fraud, deceit, misrepresentation, and breach of contract. If the law doesn’t require you to disclose something, it’s best practice to find out if it may impact the buyer.

Even with a seller’s disclosure, don’t skip a home inspection
In addition to the seller’s disclosures, the buyer should always have an inspection done. No matter how thorough or trustworthy the seller may be, a seller’s disclosure is no substitute for a thorough home inspection by a licensed and qualified professional. Most buyers aren’t trained to look for and identify the issues that can affect the average home. Before you buy, it’s in your best interest to get an inspection.

Final takeaways about seller disclosures

  • The seller’s disclosure is necessary for both sellers and buyers.

  • There are several disclosures, but not all will be mandatory in your state. Work with a real estate professional to understand your situation better.

  • In some cases, you will not receive a seller’s disclosure. This is known as a “no seller’s disclosure sale.”

  • In addition to a seller’s disclosure, it’s recommended to have a professional inspection of the property still.

Elizabeth's Tips August 19, 2022

Interest Rates: How Fast and How High Will They Climb?

If you’re shopping for a new home now or are hoping for this spring, you probably feel your heart racing a little. The word is out: Mortgage interest rates are on the rise. This means for the same size loan and house, borrowers will have to pay a higher monthly mortgage bill every month. And that’s prompting many homebuyers to feel as if they need to hurry up and find a house, ASAP. It is hard for buyers not to be hyper aware that interest rates are climbing and they know it is important to purchase a home quickly.

The panic and feeling of needing to rush is intensified by the rising cost due to low housing inventory. The median home price for the nation is just over 10% higher than last year at $375,000. This can make buyers feel like they are being hot on both ends.

It’s a hard time to be a homebuyer, for sure. But if your palms are getting sweaty just thinking about what you’ll face when you apply for a loan, it’s time to take a breath and get realistic answers to the questions swirling in your head. For example: How quickly will interest rates rise, and how high will they go?

How high will mortgage rates go—and how fast?

First, a quick Economics 101 lesson to understand what’s going on: At the end of January, the Federal Reserve—a government agency tasked with preserving the health of the U.S. economy—announced that it would be raising its interest rates in mid-March. The goal they have in mind is to control elevated inflation by slowing down consumption. So what does that have to do with mortgages, you ask? Not much, at least not directly. While the Federal Reserve doesn’t set mortgage rates, they do set the rate at which banks borrow and lend to one another. A higher rate for banks makes borrowing more expensive for consumers. Long story short: The Fed’s actions have a ripple effect.

Even though the Fed hasn’t raised interest rates yet, this likelihood has already caused mortgage interest rates to creep up over the past month. Given the expectation of a rate hike in the first half of 2022, investors have already been pushing up rates. They are more than half a point over the last month. In late December, the typical rate was 3.05%. In late January, it was 3.56%.

So just how high will they go? Not as high as you might think, and not all that quickly either. It is expected that the 30-year fixed mortgage rate will be at an average of 3.9% at the end of the year. Even with that increase, mortgage rates will remain near historic lows. So there is no need to panic.

Still, since a half-point in interest can still add up to a decent chunk of change over the life of a loan, homebuyers may want to get moving on their house hunt sooner rather than later—and be aware that snagging a great interest rate isn’t just about timing. If landing a low rate is a priority for you, here are some tactics that lenders say are more essential than ever to try today.

How a mortgage ‘rate lock’ can help turn back time

Homebuyers should know that there’s a way to freeze time on rising interest rates. How? By paying to “lock in” your rate for a certain number of days. So even if interest rates spike, you get to keep the original rate. The most common rate lock is for 30 days, but there are also options for 15 days, 45 days, or more. Homebuyers pay for a rate lock and spend more money the longer their lock’s in place. So you pay only for what you know you’ll need.

Example: If a lender quotes you 3.5% and it’s a 30- or 45-day lock period—but you plan to close in 10 to 15 days—perhaps you could select a 15-day lock for something even lower, like 3.375%.

If you’ve barely begun your house hunt, however, paying for a longer rate lock may be worth every penny for your peace of mind. The last thing you want is to be racing around trying to find a house right before your rate lock is up!

How mortgage points can help lower interest rates

With interest rates rising, it’s also a good time to consider “buying down” your interest rate by paying points. How this works: Mortgage lenders may offer you the option to pay a lump sum upfront that will effectively lower your interest rate over the life of the loan. Generally, one discount point costs 1% of the total mortgage and will lower the interest rate you pay by around 0.25%.

Let’s do the math: If you obtain a mortgage for $500,000 on a $600,000 home at a 4% lending rate, then pay 1%, or $5,000, to discount your rate to 3.75%, you’ll pay $71.50 less per month and save over $25,000 over the loan’s life.

That’s significant savings just for one discount point. Purchasing more upfront can save you tens and even hundreds of thousands. Many lenders will allow you to buy up to four discount points when you secure a loan.

Why comparing multiple lenders matters now more than ever

Another tactic homebuyers are turning to is to simply shop around and turn over every stone for the best possible loan they can get. Comparing quotes is the best way to get a low mortgage rate. Go online and inquire with multiple lenders. Also shop around within a set window of time. You can apply for as many mortgages as you want within 14 to 45 days.

One often overlooked lender that budget-conscious homebuyers may turn to in a tight market are credit unions. These nonprofit, member-owned banks offer loans, typically at extremely competitive rates. Even if you end up with another bank, it’s a good place to get your bearings on just how low interest rates can go.

A little-known low-interest option: portfolio lenders

Another little-known niche lender today’s homebuyers may want to consider are portfolio mortgage lenders. Unlike with most “conforming” home loans, which get resold to Fannie Mae or Freddie Mac, portfolio mortgage lenders hold on to your loan as part of their portfolio.

This gives portfolio lenders a specific advantage, and they can offer competitive rates with closing costs that are often substantially lower than other competitors in the market. You may also be able to avoid private mortgage insurance, appraisal fees, and other typical costs.

Portfolio lenders are rarely advertised or promoted, so you may have to ask lenders or your real estate agent for recommendations. Your own bank may offer this option, and may be partial to long-term customers. While each institution is a bit different, portfolio lending can provide a very large competitive advantage. It leaves money in the buyer’s pocket, which can turn into additional buying power.

Will more homebuyers embrace an adjustable-rate mortgage?

During the period of historically low interest rates we’ve experienced, many homebuyers have wanted to lock in at a minimum monthly payment for as long as possible. As such, a 30-year fixed-rate loan has been the preferred path for many. But with rates on the upswing, many may turn to the alternative: an adjustable-rate mortgage, or ARM.

ARM loans give you a set number of years at a fixed interest rate. The period could be three, five, seven, or 10 years before they would adjust. During the fixed period, they come with an attractive interest rate that is lower than a 30-year fixed interest rate.

An ARM may be a smart choice if you aren’t planning to stay put for long. For example, you’re buying a home as a young couple but know you’ll be moving in a few years as your family expands. Or you’re near retirement age and plan to downsize and move in the next decade. You’ll want to think about how long you plan on being in the loan. This will help you determine if an ARM would be appropriate for you.

All in all, even if interest rates are rising, there are many hidden pockets where rates remain low if you know where to look.

Elizabeth's Tips July 20, 2022

6 Mortgage Tips for Single Parents

If you’re a single parent, it’s arguably more challenging to buy a home than for those in a partnership with dual incomes. Yet it’s easy to see why so many single parents are eager to purchase a house. Beyond finding a perfect kitchen and playroom, owning a home is an integral part of building a healthy financial future. And while homeownership may seem like an increasingly out-of-reach dream for single moms and dads, buying a house is definitely an achievable reality for most folks. To help inform you on this journey, we reached out to experts for tips on how to land a great mortgage as a single parent.

1. Leverage benefits

When applying for a mortgage, be sure to include any alimony and child benefit payments you receive. The most significant leverage a single parent has against lenders is their benefits. As a borrower, it’s essential to establish the capability to pay. So highlighting the monetary amount received from child benefits, tax credits, and maintenance fees is important as all of these can be taken into account.

2. Remember the 25% rule

Single parents have to carry a mortgage by themselves. With that in mind, it’s wise to leave plenty of financial wiggle room when shopping for a home. (An affordability calculator can help you determine what monthly payments you can swing.) As a single parent, there are more ‘what ifs’ to worry about, so it’s important to give the budget breathing room for emergencies and extra child care costs. They should aim for the monthly mortgage—including taxes and insurance—to be around 25% of their income. This way, there is enough to cover house costs, child costs, and still reach savings goals, such as saving for retirement and college.

3. Make a significant down payment if possible

No matter who you are or your financial and life situation, making a substantial down payment on a house will pay off. Getting a good mortgage rate can be a challenge for a single person. Making a big down payment will not only improve their chances of getting a good lender but also getting a better deal on the mortgage. It will also lower their monthly payments moving forward. Also to add, having a good credit score (740-plus is considered optimal) will improve the odds of getting a reasonable mortgage rate, because good credit lets lenders know you can keep up with financial commitments.

4. Consider specialty loans or down payment assistance

Can’t swing a large down payment? That’s OK. As a single parent, there is an opportunity to maybe be able to qualify for loans that require much less than the standard 20% down payment. A conforming, aka conventional, loan may only require a down payment as low as 3%, with a mortgage insurance add-on. One of the best loans for single parents is from the United States Department of Agriculture. The USDA loans are particularly helpful because most feature low-interest rates and do not require a down payment. The catch? You have to ensure that the property is within the USDA-eligible area. It also requires you to pay a mortgage insurance premium upfront, but it’s significantly lower than many other premiums.

And if you’re a teacher, firefighter, EMT, or member of law enforcement. the Good Neighbor Next Door program can get you up to 50% off on a foreclosed home.

5. Look for local loans

No matter what type of loan they ultimately try to secure, try to find a local lender. Working with a mortgage professional who is local to their market can be a huge asset. There are so many online platforms offering seemingly great deals, but that utilize loan officers out of the area or in call centers that may be completely out of the market. This can make sorting out market-specific details very challenging.

6. Beware of adjustable rates and multiple applications

The Federal Reserve may hike interest rates soon, so getting a mortgage with a fixed rate is critical. A 30-year fixed mortgage will allow a single person with kids to accurately forecast their monthly expenses. They should also watch out for prepayment penalties. These are penalties the lender would charge for selling the home within a set period of time. And beware of applying for multiple mortgages with different companies in a quest for the best offer. Each time you apply, they pull your credit, which reduces your credit score.

Elizabeth's Tips June 23, 2022

Supply and Demand: What does that tell us about today’s market?

The law of supply and demand explains what’s happening with prices in the current real estate market. Put simply, when demand for an item is high, prices rise. When the supply of the item increases, prices fall. Of course, when demand is very high and supply is very low, prices can rise significantly.

Why Are Prices Rising?

According to CoreLogic, home prices have risen 18% since this time last year. But what’s driving the increase? When we take NAR’s buyer activity data and compare it to the seller traffic during the same timeframe, we can see buyer demand continues to outpace seller activity by a wide margin. In other words, the demand for homes is significantly greater than the current supply that’s available to buy.

Where Are Prices Headed?

Many experts forecast prices will continue to increase, but they’ll likely appreciate at a slower rate. Buyers hoping to purchase the home of their dreams may see this as welcome news. In this case, perspective is important: a slight moderation of home prices does not mean prices will depreciate or fall. Price increases may occur at a slower pace, but experts still expect them to rise.

What Does This Mean for Homebuyers?

If you’re waiting to enter the market because you’re expecting prices to drop, you may end up paying more in the long run. Even if price increases occur at a slower rate next year, prices are still projected to rise. That means the home of your dreams will likely cost even more in 2022.

While prices may increase at a slower pace in the coming months, experts still expect them to rise. If you’re a potential homebuyer, message me today to discuss what that could mean for you if you wait even longer to buy.

Elizabeth's Tips May 26, 2022

How to get over losing out on a home

You had such big dreams for the two of you. You were ready to make the big commitment. You thought you’d grow old together. But then your offer on the house didn’t go through. You lost out. You won’t be buying that perfect-for-you place. You won’t be cooking in the all-white modern farmhouse-style kitchen or planting roses in the lushly sodded and fenced yard. You’re no better off than when you started, in the same digs you wanted to leave last year. When you lose out on a house you wanted, the heartbreak is real. It’s the real estate version of being ghosted right when you started scouting honeymoon spots. Here is how to deal with heartache—and all of its many symptoms—when the house that was supposed to be “it” turns out to be just another listing.

Symptom: Your head (and friends) know it was “just” a house, but your heart huuuuuurts.

Solution: Go and feel all your feels.

Don’t hold that nasty stuff in. Don’t pretend it’s no big deal. Let yourself feel everything—the disappointment, frustration, and the empty feeling of wondering what might have been. Cry it out. Scream it out. Find a punching bag and take it out. You’re mourning a lost dream. It’s legit. It’s OK to lie in a fetal position and tearfully binge watch House Hunters. Or The Hulk. You do you.

Symptom: Can’t. Stop. Refreshing. Listing.

Solution: Take some me time.

Do the one thing you wanted to do in your relationship, but didn’t. When you were house hunting, did you save every spare dollar for your down payment? And never leave town in case you missed a great listing or the chance to make an offer? It’s time for a getaway. Treat yourself. You will get a house that’s perfect for you at some point, but you need to get out of your head for a minute. Remember: when one door closes, another opens—and it’ll stay propped until you’re back from your weekend away with a few mojitos.

Symptom: You accidentally keep driving by.

Solution: Stay away from reminders.

Don’t drive by the house to see if it’s marked pending or if a moving van is in the driveway. Don’t even drive by the neighborhood or that awesome little coffee shop that was just down the street where you had already imagined yourself lounging on weekends with an espresso con panna. And take it out of your Favorites on Trulia so you don’t see it every time you log on. You don’t want to obsess over what might have been.

Symptom: You realize life before the house dream…kind of sucked.

Solution: Restock your life with people

Let’s be real for a minute and recognize that it was just one house (too soon?). Sometimes we attach ourselves to any dream that feels like a needed change. So change your world in another way. Call your friends. Reconnect with old ones. Meet (gasp!) new people. Step outside of your comfort zone and try meeting a new friend at the gym or a painting class.

Symptom: Real talk? You regret ever seeing that damn place.

Solution: Learn from the heartache.

Anger’s fine. Totally normal. Try to see an ended relationship as a lesson, not a failure. What worked and what didn’t with that home buying process? What might help you have a better shot at success next time? Be honest. Did you go too low? Can you live with two bedrooms instead of three? Can you really afford that hot neighborhood, or are you trying to punch above your weight? It could be time to look for different traits in a house so the two of you will succeed as a couple.

Symptom: You think it’s time to get back in the house hunting game. But you also can’t even.

Solution: Get back out there.

When you’re ready, know that it’s okay to test the waters again. When you really start looking at just how many homes are for sale, you might start wondering how you got so fixated on just one anyway. Whether it’s setting up a search on a home search site or with your trusted agent for houses in that perfect neighborhood, or dropping by an open house you spotted online, get back in the game. Not every listing has to be perfect for you to check it out. Just look. Keep dreaming about the place you want, and “the one” will eventually open the door.

Elizabeth's Tips December 10, 2021

Find and Fix Drafty Windows

Before the cold sets in, it’s important to ensure that your home remains comfortable despite the outside temperatures. It’s important to take a close look at your windows. Windows with air leaks not only let in cold air but also allow heated air to escape. There are many ways to seal such drafts — but first you’ve got to find them.

How do I locate the draft?

Here’s a quick and easy method of testing the seal on your windows. First, walk through the house and close all the windows as tightly as possible. Next, light a candle. Hold the flame near each window, inches from the glass, slowly moving the candlestick around the seam between the window and its frame. If the flame bends or flickers while your hand is still, then there’s probably an air leak. Mark the trouble spot with a sticky note so you can return to repair it later. Test every window in the house, marking each area where you suspect a draft.

Ways to address the problem

Having pinpointed the locations of window drafts in your house, the next step is to seal them all up. There are several ways to get the job done. Some methods are inexpensive, temporary, and manageable for DIYers. Other more permanent options are quite expensive and best left to contractors. Choose the fix that best fits your needs and budget:

  • Weather Stripping

Easily affordable, with a price tag of only a few dollars per window, weather stripping lends itself to easy DIY installation. There are a few material options such as felt, foam, plastic, or metal that are readily available in hardware stores and home centers for you to choose from. Cut the strips to size and use them to fill the gaps between a window sash and jamb.

  • Caulking

Whether you’re working inside or outside, you’ll caulk windows in two places: where the window meets the surrounding casing, and where the casing meets the surrounding wall (inside) or siding material (outside). Tubes of caulk are inexpensive, and with a little practice, easy to use.  If you’ve caulked your windows in the past, that doesn’t mean you’re off the hook — caulk deteriorates over time. It may be time to remove the old caulk and start over.

  • Draft Snakes

You’ve likely seen or even used a draft snake in the past. These are stuffed tubes, placed on a windowsill or under a door, as a modest measure of keeping out the cold and keeping in the warmth. Buy one at low cost or make your own for next to nothing. If you go the DIY route, you can use virtually any fabric, including extra towels or socks. Fill the middle with batting, rice, potpourri or anything similar you have on hand. Though decidedly makeshift, draft snakes work well in a pinch.

  • Insulation Film

If you don’t plan to open and close the window, try sealing it under a layer of insulation film. Sold by the roll, insulation film either self-adheres or goes on with double-stick tape. Also available are special shrink-wrap kits that, once heated with a hair dryer or other tool, create an impermeable, airtight seal without visible wrinkles.

  • Replacement Windows

The bad news: It can cost a small fortune to replace the windows in your home. The good news: you may be able to recoup a large percentage of what you invested in the replacement. This isn’t a simple case of out with the old, in with the new. Properly installed, today’s energy-efficient windows minimize drafts and create an overall tighter seal.

  • Consider adding a layer of protection

No matter the benefits of replacement windows, many people are either unable or unwilling to cover the initial expense. If you’re looking for a less costly but permanent solution to window drafts, consider storm windows. Some designs fit within the window on the interior; others cover the window from the outside. Any type can go a long way toward insulating and protecting the windows you currently have.

Of course every layer helps. If you do nothing else to remedy the problem, why not at least hang curtains? You stand to gain not only greater comfort but also real savings on your month-to-month heating bills.

Elizabeth's Tips December 3, 2021

Accessory Dwelling Units: Tips for Building One!

Before building an accessory dwelling unit, there are some legal, design, and financial implications to consider. Accessory dwelling units or ADUs — those separate living units tucked inside a single family home or sharing land with one — are increasing in popularity. Dozens of cities and counties, and at least nine states have changed or adopted laws that make it easier and more attractive for homeowners to build ADUs. For homeowners, ADUs can be a source of rental income or serve as living quarters for adult children or extended family, a work-at-home space, a place to escape to, or run a home-based business.

Still, there are still enough challenges involved in building one that they’re usually undertaken only by homeowners with the motivation, money, knowledge, and confidence to see the project through. The rewards can be substantial for those willing and able to build one.

What is an ADU?

An ADU can be:

  • a newly constructed stand-alone structure

  • a home addition that creates a separate living quarter

  • conversion of an existing space such as garage or basement into a separate dwelling

  • ADUs are commonly known by other names, including in-law apartment, granny flat, casitas, she-shed, or backyard cottage. Once common prior to World War II, they are considered a more affordable source of housing because they can be built without having to purchase land — usually the biggest component of housing prices, especially in expensive coastal cities.

Changes in state and local laws could speed up the construction of ADUs and streamline the process for building them.  If you’re thinking about building an ADU, or buying a home with the intention of building an ADU for rental income or multi-generational living, here are some things to consider:

1. Can I build an ADU on my property? 

Before you start sketching layouts and picking paint colors for an ADU, check with your city or county department that oversees planning, construction, or zoning to make sure you’re allowed to build, what you’re allowed to build, and where. Rules around ADUs vary widely across the country, and can vary among cities in the same state. If your home falls under the governance of a homeowners association (HOA), be sure to check the rules there as well.

2. Who can I hire to build an ADU?

If you’re thinking of building an ADU as a DIY project, do a realistic assessment of your skills and how much you’re prepared to take on. While it’s certainly possible to be your own contractor, it requires knowledge, time, and coordination.  If you’re the kind of person who thrills to the challenge and satisfaction of building something from scratch and you’re eager to learn what it takes, you’ve hit the lottery.

Developing land — and this is basically what you’re doing when you construct a new building — requires attention to things you might not anticipate, including construction permits, utility connections and scheduling work at the right cadence.  More likely, you can expect to hire professionals to do some or all of the work, including the following:

  • Design: An architect and/or engineer to draw up plans. If you’re considering a pre-fabricated or manufactured home or a kit for DIY assembly, check with your local building department to make sure the home you’re considering meets local building codes.

  • Construction: A general contractor who can act as conductor for the entire project, or individual contractors who for electrical or plumbing work.

  • Site work: Water, power, sewage and grading, if needed.

  • If you’re hiring professionals, get recommendations from people who can vouch for their work. The Federal Trade Commissions has some good tips on what to look for before hiring a contractor.

Interest and growth in ADU development has given rise to companies who bill themselves as one-stop shops for ADUs. Some offer their own models to choose from, which could make it less expensive than building a custom ADU.  If you opt for a pre-fabricated or manufactured home that can be delivered to your property, check with your city or county building department to make sure it meets local building codes.

3. How much does it cost to build an ADU?

As a general rule, ADUs aren’t cheap. Even without the land costs, the cost of construction — and viable ways of paying for it — are limited. The cost will depend on the size and type of ADU, and the local wages.

You can save money on the design if you live in a city that offers “pre-approved” building plans that homeowners can use to build their ADU either for free or for a licensing fee. The plans, which can be customized to a degree, speed up the review process because they already meet the city’s building code and design guidelines.

Fixed costs in new construction, such as excavation and laying a foundation, make even small ADUs expensive. Given the fixed costs, some homeowners choose to build to the maximum size allowed in their jurisdiction since adding additional square footage is relatively inexpensive. Some cities or counties charge “impact fees” for larger buildings, so check with your local building department when considering the size of your build.

4. Can I finance an ADU?

Financing can be the hardest part of the process. That’s because the majority of traditional lenders don’t offer loans to construct ADUs, and the few that do generally write loans only for work done by professional contractors. Those loans tend to carry higher interest rates and require mortgage insurance. Due to those factors, most people put together a patchwork of sources to pay for their ADU.

5. How might I save on the construction cost of an ADU?

Converting an existing space into a separate living unit is likely to cost less than new construction, although things can get pricey if you choose high-end finishes. Another way to cut costs is to build a dwelling from plans that have been “pre-approved” by your county or city building department. Buying a pre-built model or kit home also may offer a way to cut costs, but be sure to factor in all applicable costs, including utility hookups. Some pre-built models only include the structure itself, so be sure to factor in the cost of finishing the inside and installing electric and plumbing. You also might save money by purchasing used materials such as doors, cabinets, flooring and  windows that have been salvaged from other construction or demolition projects. Check your local business listings to see if there are salvage businesses nearby. Whatever you decide, you’ll want to make sure the space is inviting.

6. Calculate the Return on Investment (ROI) in your real estate market

In cities with high housing costs, rental income can pay for the costs of development in a matter of years, while providing a homeowner with future options for downsized living without having to move from their home. Legally permitted ADUs also tend to add value to a property. Some localities have created ADU calculators to help people determine whether area rents will generate enough to cover monthly expenses. Beyond that, there are considerations about what is involved in being a landlord. While ADUs don’t promise instant riches, they can be a good way to build some wealth over time.

Elizabeth's Tips November 18, 2021

Why Should You Stage Your Home To Sell?

As the real estate market turns sluggish, you may have to take steps to set your home apart from others. It won’t be enough to just put out a for-sale sign and wait for potential buyers. One way that homeowners can sell their homes more speedily is by home staging, which can have the added benefit of pushing up the selling price of your home. Basically, staging consists of arranging your home’s décor and furniture in such a way as to make the home have more of an appeal to prospective buyers.

In some cases, home staging can be a relatively simple and inexpensive undertaking. You may be comfortable with just cleaning up your home and removing all day-to-day items. On the other hand, you may want to consider investing a more substantial amount of time and money into your home staging project. The main benefit of investing in landscaping, painting and new furniture is that a potential buyer will come away from a visit to your home with a better idea of how his or her new home will look.

Home staging has been around since the 1970s. Although it began on the West Coast of the United States, the concept eventually spread to the rest of the country. There’s more to home staging than just decorating. The general idea behind home staging is to depersonalize your home so that a prospective buyer will be able to imagine him or herself living in it. By removing piles of newspapers and family photos, you’ll be able to increase your home’s appeal. Another tip is to choose neutral colors for your home’s carpet and paint. If it’s within your budget, you’ll also want to think about buying new appliances. Although many people do a good job of staging their own homes, you can also hire a professional to do the job for you.

Elizabeth's Tips November 12, 2021


If you’re getting ready to buy a home, you’re likely realizing that one of the most important parts of the process is getting approved for a mortgage that works for you. To get the best rate and avoid losing your deposit, steer clear of these common mistakes.

Leaving out details from your financial profile.

The best way to avoid doing this is having a great mortgage lender. Making sure you include not only your basic information, employment and living history, income, assets and debts, but also ensuring you answer every single question. Leaving details out of your profile can throw off the entire process, so having someone who is meticulous enough to make sure all your information is made available is key.

Assuming pre-approval is equal to actual approval.

Pre-approval for a mortgage means that you’ve talked to a potential lender or maybe even provided some documentation that gave the impression that you will be approved for a certain amount. Don’t be confused – this is not an actual approval. You need to make sure your loan is approved by an underwriter before making any offers to buy a home. When you are “underwriting approved” you will be able to get a formal loan commitment. Without this document, there is no proof of actual approval, meaning that your profile has been evaluated but nothing official to show approval.

Failing to provide every single piece of documentation needed.

Your lender is going to want very detailed documentation of your financial profile, including the following:

  • Pay stubs covering 30 days

  • 2 of tax returns & W-2s

  • YTD business financial statements (if you’re self-employed)

  • 2 months of statements for all your asset accounts

  • Explanations and paper trails of all deposits withdrawals over $1,000

  • A home insurance quote with adequate coverage

  • Full financial information on any other homes/businesses you own

You will need to provide all these documents, and if you have a commissioned or variable income, you will need to give permissions to your lender to verify that income. Your credit will be run, which can expose any information you didn’t disclose.

Not knowing enough about mortgage rates.

Once a seller accepts your offer, you will be in contract on that home and you will be ready to lock in your mortgage rate. You cannot lock your rate until you’re in contract, which means that any rate market movement can impact you until then. Rates change throughout each day, and they are priced based on how long they are locked. A shorter lock, about a month or less, will have a lower rate than a lock of 60+ days. If you want to avoid any surprises, talk to your lender and ask them to use your closing timeline to quote rate locks.