The Home Owners Advantage

As a renter you are paying someone else’s mortgage for them. As a home owner the money you put toward you home builds equity in your future as well as your home. Not only do get the equity that is built every month you pay, you also get the equity built up by appreciation it the homes value.

Now let us look at the value you get with home ownership through taxes. If your rent is $850 a month you get NO tax deduction. (Unless you run a business out of your home) Now if you were to buy a home for $200,000 at 5% interest your monthly payments would be right around $1200.00 a month with taxes and insurance. But at the end of the year you get to deduct the property taxes and the interest you paid on your mortgage. The deduction you would get off your federal taxes would be approximately $14,000 and if you are in the 28% tax bracket that would be a tax deduction of $3925 per year. If you divide that by 12 months you monthly payment would be equivalent to $875 rent. The different is that your monthly payment will never go up unlike rent that increases 10-15% per year on average.

People who own their own home build wealth faster than those who continue to rent. According to the Federal Reserve Board the median net worth of most moderate-income owners is almost $60,000 compared to less than $10,000 for renters in the same income group.

As a home owner you are 3 times more likely to start your own business. Home equity is one of the largest sources of collateral for bank loans to start new businesses.

Homeownership offers a benefit to the children of homeowners also. Children of homeowners are more likely to own homes, make more money, do better socially, and have better scores in school on average. Children of homeowners score an average of 9% higher on math achievement tests and 7% higher on reading achievement tests. They area also 25% more likely to graduate from high school. 100% more likely to go to college and are 116% more likely to acquire post secondary education.

Todd Clark – broker
Kastings & Associates
(503)524-9494
Todd@IFoundYourNewHome.com
IFoundYourNewHome.com

The Commission Question

The question is why is there such a variance in what one agent charges over another agent? The reason for this is the amount of service they provide to you for their commission.

What some people don’t realize is that the commission isn’t paid by the buyer. So a Real Estate Agents services are free to the buyer. You can have a agent represent you in a transaction for free. What most sellers don’t understand is that not just your agent gets a cut of the commission. The listing agent gets only a portion, and the company he works for get a portion. Then the buyers agent and his company get a cut also.

So why does one company charge so much more than another? The difference is usually the amount of service you get. When you pay your agent. 2.7% of that usually goes to the buyers agent the company that they work for. Now if an agent will offer a buyers agent 2.7% for one home and the home next to it is selling for the exactly same price but is only offering 1% to the buyers agent, what home is the agent more likely to want to show and present in a more favorable light to their buyer?

That doesn’t mean all agents think this way. But there are agents that are not willing to even show that other home. This can effect how fast you sell your home, even in a hot market. It also will effect how much money the listing agent is willing to put toward advertising your home, or even having an open house.

My best advise is you usually get what you pay for, and if it sounds to good to be true it usually is. What you end up saving in commission you will usually lose in price.


Todd Clark – broker
Kastings & Associates
(503)524-9494
IFoundYourNewHome.com
Todd@IFoundYourNewHome.com