More publicity. Less competition. Talent waiting to be scooped up. Here's why starting in a recessed economy may give your business a better shot.
Do you have one good reason to start your business right now?
How about 10?
Regardless of what people around you (including the media) may say, right now is the best time to get into business. Just go back and look at the economic slowdowns throughout history. Most recessions in the post-World War II era last an average of 10 months, followed by growth cycles that last an average of 50 months. What this means for the startup is there's no better time than right now to get going and start pursuing your business dreams--in anticipation of the next period of growth. So with a nod to David Letterman, here are my top 10 reasons you should start your business now--despite the current downturn:
1. Everything is cheaper.
Let's face it: There is great value right now in this and in world markets. This is the right time for fantastic deals in virtually every category, from land and equipment to commercial office space, personnel and labor. As asset prices have been knocked down, there is no better time to get into the real estate or financial markets, or even heavy equipment and construction. Some people have waited years to find value in these markets--and now that time has come.
2. You can hire more and better-qualified people.
In an era when even Microsoft is laying off, you can find great resources at affordable rates. Thinking about getting your high-tech startup off the ground? There are plenty of engineers waiting to be hired. Thinking about forming a professional services firm? There are many accountants and attorneys looking for their next opportunity.
3. People are looking to change suppliers.
From a cost perspective, everything is on the table for most companies. Even if your prices are higher, if you can come in with greater value, you have a good chance at winning new business. You also have the advantage of being the new kid on the block when it comes to pitching your products and services. Many companies are desperate to find new partnerships with new companies that have a different, better or more innovative way of delivering those products and services.
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4. Ownership equals tax incentives.
Business ownership offers a variety of tax benefits that aren't available to employees. While taxes should never be the sole reason to go into business for yourself, it should be one reason to add to you "benefits of business ownership" list.
5. Family and friends don't want to (or can't) invest more money into the stock or real estate markets.
That means they may be willing to finance a portion of your new venture, or the expansion of an enterprise that has proven itself over time. The main benefit is that they know you and have a relationship with you--and if you have a solid business plan that delivers real numbers, your chances of raising the capital you need increase exponentially.
6. Suppliers are giving better credit.
Because the credit markets have virtually shut down, the B2B credit flows are keeping money circulating out of sheer necessity. That means a bullish outlook for companies looking for good terms on stock and/or inventories. The main advantage is that all parties have more incentive than ever for finding true win-win situations that allow for cash and stock flow. When everyone is looking to survive, great deals can be had.
7. You can get good PR by showing you are going against the trend.
The media loves aberrations, and if you are optimistic by expanding or getting into business now, you would be in that category. That means you can generate some great PR by demonstrating your "alternative" view of the market.
8. You can buy everything you need at auction.
In addition to everything being less expensive, you can find great deals at auctions, especially in terms of any large equipment and office furnishings. Auctions are also a great place to find hardly used or "gently" used restaurant and bar supplies at great prices. These days, you may even be able to get deals on fleets of vehicles and trucks for a delivery service or hauling or construction company.
9. You can find great "low money" or "no money" down deals.
This is simply being aware of good opportunities others have buggered up, and finding deals where you could get an entire business simply by taking over a lease (along with all the equipment). Many business owners want out at any cost, meaning you can negotiate great win-win deals that allow the current owners an escape while giving you an opportunity to turn around what could be, if run right, a very viable business.And finally . . .
10. You've lost your job, and you have to do something.
Sometimes, the best business decision is the one you are forced into, and the incentive (as well as need) for income is often enough to push those previously "on the fence" to strike out on their own. There's nothing wrong with being in this position; it simply means there is greater urgency to do something that will start to generate income as quickly as possible.
There you have it: my top 10 reasons to start your business in a recession. After all, the odds are on your side that the expansion will be many times more robust than the present slowdown.
There's no better time to start than the present, especially if people around you are more comfortable with their own list of reasons why they shouldn't start pursuing their own business dreams right now. It only means you'll be facing a lot less competition.
Brad Sugars is Entrepreneur.com's Startup Basics columnist and the writer of 14 business books including The Business Coach, Instant Cashflow, Successful Franchising and Billionaire in Training. He is the founder of ActionCOACH, a business coaching franchise.
Monday, March 30, 2009
Good Times to Be Had in the Bad Economy
We’re all cutting back on entertainment expenses right now, but family fun needn’t go on furlough. Finding new twists on daily activities, making use of things you already own, and finding free or low-cost activities in your own backyard can help keep families entertained and connected through the downturn. “It’s about redefining fun,” says Sara Noel, owner of frugalvillage.com, a community site about spending and thrift.
When money is too tight for a family dinner at the local pizzeria, Ms. Noel holds “bake-offs” with her husband—each prepares no-bake cookies and their kids vote on the winning recipe.
The couple holds similar challenges with appetizers and main courses. Eating at home is not only cheaper but a great way to get the kids to try new foods, she says.
Her kids also love sundae night where they create their own dessert. “It’s a lot cheaper than going out for ice cream,” she says. Jeff Yeager, author of “The Ultimate Cheapskate’s Road Map To True Riches,” recommends families hold themed dinners at home—for example, cooking an Italian meal and screening “The Godfather” in the TV room. To stay in shape, Ms. Noel says her family uses their Wii Fit together. As the weather warms, backyard games such as hide-and-go-seek are making a comeback, she says, and are another fun, free way for families to decompress.
Ms. Noel’s children use the family’s digital camera at the local nature preserve and then crop pictures online using free photo-editing software. (Try Gimp.org or Google’s Picasa.com)
Mr. Yeager says the down economy gives parents an opportunity to pass along life skills that will help their children become capable adults, financially and otherwise. “Helping kids develop a passion like growing their own herb garden or food, car repair, clothing design and cooking is a great way to make them more self-reliant and discover something they might enjoy,” he says.
Families should also take time now to help neighbors in need. “After spending an afternoon at a soup kitchen, it’s a lot harder to complain about what you don’t have,” says Mr. Yeager, a former nonprofit executive. “Once kids start to volunteer, they often get hooked on the fun of helping others,” he says.
Volunteering may also reveal new talents or interests: Helping out at an animal shelter could launch a veterinary career or singing in the church choir may channel an inner American Idol. “There are ways to be happier by spending less money,” Mr. Yeager says.
When money is too tight for a family dinner at the local pizzeria, Ms. Noel holds “bake-offs” with her husband—each prepares no-bake cookies and their kids vote on the winning recipe.
The couple holds similar challenges with appetizers and main courses. Eating at home is not only cheaper but a great way to get the kids to try new foods, she says.
Her kids also love sundae night where they create their own dessert. “It’s a lot cheaper than going out for ice cream,” she says. Jeff Yeager, author of “The Ultimate Cheapskate’s Road Map To True Riches,” recommends families hold themed dinners at home—for example, cooking an Italian meal and screening “The Godfather” in the TV room. To stay in shape, Ms. Noel says her family uses their Wii Fit together. As the weather warms, backyard games such as hide-and-go-seek are making a comeback, she says, and are another fun, free way for families to decompress.
Ms. Noel’s children use the family’s digital camera at the local nature preserve and then crop pictures online using free photo-editing software. (Try Gimp.org or Google’s Picasa.com)
Mr. Yeager says the down economy gives parents an opportunity to pass along life skills that will help their children become capable adults, financially and otherwise. “Helping kids develop a passion like growing their own herb garden or food, car repair, clothing design and cooking is a great way to make them more self-reliant and discover something they might enjoy,” he says.
Families should also take time now to help neighbors in need. “After spending an afternoon at a soup kitchen, it’s a lot harder to complain about what you don’t have,” says Mr. Yeager, a former nonprofit executive. “Once kids start to volunteer, they often get hooked on the fun of helping others,” he says.
Volunteering may also reveal new talents or interests: Helping out at an animal shelter could launch a veterinary career or singing in the church choir may channel an inner American Idol. “There are ways to be happier by spending less money,” Mr. Yeager says.
JOBS THAT WILL NEVER GO AWAY
Choosing a career path can be challenging. Half of all college students change their majors at least once as they travel the sometimes bumpy road that will lead right degree. If you want to follow your dreams as well as provide for a certain future, take heart. As long as human beings continue to inhabit the planet, there are many worthwhile and fulfilling jobs that will never go away.
Accountant As long as there are taxes, there will be a need for skilled accountants to work with clients, helping them keep their books in order. While accounting technology becomes more sophisticated, many accountants also assist clients with the technological aspects of record keeping and tax preparation. An online degree can prepare you for this field by providing accounting coursework and career training. Many assistant accountants begin with training and an associate's degree. Armed with a bachelor's degree in accounting, you could make an average annual salary of $63,180, according to the Bureau of Labor Statistics (BLS).
Computer Support SpecialistIf you thrive on helping your friends and family solve their computer woes, consider becoming a computer support specialist. With computers playing such an important part of daily life, computer support specialists provide their clients much needed technical assistance. As a computer support specialist, you will meet with clients in person or answer questions remotely, via Internet, or on the phone. Many computer support specialists either have a bachelor's degree in computer science or an associate's degree in a computer-related program. In 2007, computer support specialists made an average annual salary of $45,300, according to the BLS.
Entrepreneur To be an entrepreneur you need to be an independent, outgoing risk taker as you establish your own business or company. Although it may be hard to know whether a business will succeed, there will always be a need for a variety of goods and services and businesses to supply them. An online degree in business can help make your dreams a reality, as you earn your associate's or bachelor's degree. Although salaries can vary greatly with the self-employed, small business owners made an average annual wage of $36,000 to $75,095 in 2008, according to Pay Scale.
Mechanic As anyone who commutes or runs to the store knows, we live in a nation of automobiles. If you know the make and model of every automobile that zips by and have an interest in what's under the hood, consider becoming an automotive service technician or mechanic. Automotive service technicians and mechanics diagnose problems with cars and light trucks and fix them. Mechanics need to be analytical, good problem solvers, and willing to work with computerized diagnostic tools and programs as well as traditional tools. You can also specialize in an area such as brakes or cooling systems. Online career training can get you started. Programs range from six months to two years. Mechanics made an average annual salary of $36,480 in 2007, according to the BLS.
ParamedicParamedics make life and death decisions, assessing injuries and providing emergency medical care. To be a paramedic you have to be agile, strong, and be willing to work under pressure. Although the hours can be long, many paramedics find great satisfaction in helping others. An EMT paramedic has usually taken courses in anatomy and physiology and completed a one-to-two-year program -- or the equivalent of an associate's degree. Basic and intermediate certification can get you started in this fast paced, much needed career. According to the BLS, paramedics earned an average of $30,870 annually in 2007.
Teacher As long as human beings continue to have children, there will be a need for teachers. If you enjoy working with young children and want to teach, you can make $50,040 on average annually if you are an elementary school teacher, and $52,450 annually if you are a secondary teacher, according to the BLS. Elementary teachers have the pleasure of teaching all subjects. Secondary teachers also get to follow their bliss. By focusing on specific certification areas, secondary teachers specialize in the subjects they want to teach. Many online programs can get you started towards a bachelor's degree in education and certification.
Whatever your calling may be, with the right degree and career training, your career prospects for these much-needed jobs can help keep you from becoming outsourced or even worse, obsolete
Accountant As long as there are taxes, there will be a need for skilled accountants to work with clients, helping them keep their books in order. While accounting technology becomes more sophisticated, many accountants also assist clients with the technological aspects of record keeping and tax preparation. An online degree can prepare you for this field by providing accounting coursework and career training. Many assistant accountants begin with training and an associate's degree. Armed with a bachelor's degree in accounting, you could make an average annual salary of $63,180, according to the Bureau of Labor Statistics (BLS).
Computer Support SpecialistIf you thrive on helping your friends and family solve their computer woes, consider becoming a computer support specialist. With computers playing such an important part of daily life, computer support specialists provide their clients much needed technical assistance. As a computer support specialist, you will meet with clients in person or answer questions remotely, via Internet, or on the phone. Many computer support specialists either have a bachelor's degree in computer science or an associate's degree in a computer-related program. In 2007, computer support specialists made an average annual salary of $45,300, according to the BLS.
Entrepreneur To be an entrepreneur you need to be an independent, outgoing risk taker as you establish your own business or company. Although it may be hard to know whether a business will succeed, there will always be a need for a variety of goods and services and businesses to supply them. An online degree in business can help make your dreams a reality, as you earn your associate's or bachelor's degree. Although salaries can vary greatly with the self-employed, small business owners made an average annual wage of $36,000 to $75,095 in 2008, according to Pay Scale.
Mechanic As anyone who commutes or runs to the store knows, we live in a nation of automobiles. If you know the make and model of every automobile that zips by and have an interest in what's under the hood, consider becoming an automotive service technician or mechanic. Automotive service technicians and mechanics diagnose problems with cars and light trucks and fix them. Mechanics need to be analytical, good problem solvers, and willing to work with computerized diagnostic tools and programs as well as traditional tools. You can also specialize in an area such as brakes or cooling systems. Online career training can get you started. Programs range from six months to two years. Mechanics made an average annual salary of $36,480 in 2007, according to the BLS.
ParamedicParamedics make life and death decisions, assessing injuries and providing emergency medical care. To be a paramedic you have to be agile, strong, and be willing to work under pressure. Although the hours can be long, many paramedics find great satisfaction in helping others. An EMT paramedic has usually taken courses in anatomy and physiology and completed a one-to-two-year program -- or the equivalent of an associate's degree. Basic and intermediate certification can get you started in this fast paced, much needed career. According to the BLS, paramedics earned an average of $30,870 annually in 2007.
Teacher As long as human beings continue to have children, there will be a need for teachers. If you enjoy working with young children and want to teach, you can make $50,040 on average annually if you are an elementary school teacher, and $52,450 annually if you are a secondary teacher, according to the BLS. Elementary teachers have the pleasure of teaching all subjects. Secondary teachers also get to follow their bliss. By focusing on specific certification areas, secondary teachers specialize in the subjects they want to teach. Many online programs can get you started towards a bachelor's degree in education and certification.
Whatever your calling may be, with the right degree and career training, your career prospects for these much-needed jobs can help keep you from becoming outsourced or even worse, obsolete
In Sales, Give 'Em the Unexpected
In Sales,Prospects are always waiting to crush your sales pitch--so don't give them one.
Every sales meeting you go to is really an ambush in disguise. The clients, prospects or customers you're going to see know precisely why you're arriving on the scene and what your intentions are: to sell them something. Seems fine, right? All is above board, there are no secrets, everyone knows what to expect. What could be wrong with that? Just the simple, powerful and undeniable fact that no one wants to be sold.
This is critical to understand. Once people believe others are coming in to sell them, they recoil, put up defenses and begin to rehearse reasons they don't need whatever it is you're selling. They may disguise this or do it under the surface, but it's there. Chalk it up to a basic human emotion: We don't want others to push things on us that we haven't decided we need. Interestingly and paradoxically, inside the problem lies a solution. Overall, the idea is to disarm and surprise prospects so what they actually experience during a sales call isn't even close to what they expected.
Consider the following:
Avoid Willy Loman salesmanship. No handouts. No documents to read. No PowerPoint presentations. Enter the room stripped of these crutches and you send an immediate message that something different is about to happen. Control the agenda by opening with a statement that demonstrates your knowledge and that quickly dissuades your prospects that you're on the scene to ask for a deal.
I can still see the shock on people's faces--not only of my prospects, but also of my employees--when I opened a sales call with a tech company that I knew would be a difficult prospect to land by saying, "Thank you for inviting us. Allow me to start by saying that our culture is not to do what you want us to do, but what we think is the right thing to do. You are technologists. We are marketers. That fusion is where the power can lie." Put ideas on the table that you're confident your prospects have never heard and have the potential to be of true value to them.
.
People don't want to be sold. But they do want to be educated, informed and surprised. They want to be the first to know. They want a competitive advantage. If you reverse engines, rethink how you enter the room; what you'll say and how you'll say it; chances are good that the would-be ambush will turn into an embrace.
You're not the prey. You're the trusted adviser. The eye opener. And when that happens, you won't have to sell them--they'll ask to buy whatever you have.
Mark Stevens is the CEO of MSCO, a results-driven management and marketing firm, and the bestselling author of Your Marketing Sucks and God Is a Salesman. He is also a popular media commentator on a host of business matters including marketing, branding, management and sales. His latest book is Rich Is a Religion.
Every sales meeting you go to is really an ambush in disguise. The clients, prospects or customers you're going to see know precisely why you're arriving on the scene and what your intentions are: to sell them something. Seems fine, right? All is above board, there are no secrets, everyone knows what to expect. What could be wrong with that? Just the simple, powerful and undeniable fact that no one wants to be sold.
This is critical to understand. Once people believe others are coming in to sell them, they recoil, put up defenses and begin to rehearse reasons they don't need whatever it is you're selling. They may disguise this or do it under the surface, but it's there. Chalk it up to a basic human emotion: We don't want others to push things on us that we haven't decided we need. Interestingly and paradoxically, inside the problem lies a solution. Overall, the idea is to disarm and surprise prospects so what they actually experience during a sales call isn't even close to what they expected.
Consider the following:
Avoid Willy Loman salesmanship. No handouts. No documents to read. No PowerPoint presentations. Enter the room stripped of these crutches and you send an immediate message that something different is about to happen. Control the agenda by opening with a statement that demonstrates your knowledge and that quickly dissuades your prospects that you're on the scene to ask for a deal.
I can still see the shock on people's faces--not only of my prospects, but also of my employees--when I opened a sales call with a tech company that I knew would be a difficult prospect to land by saying, "Thank you for inviting us. Allow me to start by saying that our culture is not to do what you want us to do, but what we think is the right thing to do. You are technologists. We are marketers. That fusion is where the power can lie." Put ideas on the table that you're confident your prospects have never heard and have the potential to be of true value to them.
.
People don't want to be sold. But they do want to be educated, informed and surprised. They want to be the first to know. They want a competitive advantage. If you reverse engines, rethink how you enter the room; what you'll say and how you'll say it; chances are good that the would-be ambush will turn into an embrace.
You're not the prey. You're the trusted adviser. The eye opener. And when that happens, you won't have to sell them--they'll ask to buy whatever you have.
Mark Stevens is the CEO of MSCO, a results-driven management and marketing firm, and the bestselling author of Your Marketing Sucks and God Is a Salesman. He is also a popular media commentator on a host of business matters including marketing, branding, management and sales. His latest book is Rich Is a Religion.
Thursday, March 12, 2009
Foreclosure Auction Draws Eager Crowd
In rapid-fire speech that resembled a horse-race announcer’s, an auctioneer introduced the first of the day’s 375 properties: a seven-bedroom, five-bathroom home in Roselle, N.J., with an estimated value of $565,000 and a starting bid of $129,000. (Final sale price: $245,000.)On the floor, four men called the bids, screaming, blowing whistles, thrusting their arms into the air and using their fingers to signal how much more was being offered over the last bid.
“One man’s misery is another man’s fortune,” the saying goes, and perhaps nowhere was it more true than at the Jacob K. Javits Convention Center on Sunday, where a mob of potential buyers convened for an auction of foreclosed homes, a fast-paced and somewhat unusual happening in a place more used to trade shows and corporate events. Some 1,400 people were there, a crowd twice as large as the one last year, when the California-based Real Estate Disposition Corporation held its first foreclosure auction in the city, in a conference room at a Midtown hotel. But there were not nearly as many foreclosed houses then as there are now, said the corporation’s chairman, Robert Friedman. “The economy is much more severe these days,” Mr. Friedman added. “We’re seeing more foreclosures than any other time in the 19 years we’ve been in business, and we have auctions almost every day all across the country, sometimes more than one auction a day.”
The auction’s rules were simple. Buyers were required to pay 5 percent of a house’s sale price on the spot, so the bidders had to come with a $5,000 cashier’s check and the ability to cover the remaining balance of a down payment with cash or a personal check. The rest of the sale could be financed; mortgage specialists were posted at desks behind the stage.
The properties included a weathered two-family home in Jamaica, Queens, offered for $500 and sold for $125,000; and a two-bedroom, one-bathroom house in Hampton Bays, on Long Island, offered for $89,000 and sold for $185,000. The corporation adds a 5 percent fee to the final price of each house. Beth Kaplan Bongar, 54, a writer and performer who also works as a real estate agent, bought the Hampton Bays house with part of the money she received in the sale of a loft in TriBeCa that she had owned for 30 years, she said. Ms. Bongar said that she visited the house on Saturday. She noted that it had a fenced-in front yard, where her two dogs could run free, and that outside of windows that had to be replaced, it did not require substantial repair work.
Wednesday, March 4, 2009
10 Ways to Save Time and Money When You Search for a Brand New House
One out of every four home buyers choose a brand new house, even though most of the houses on the market are resales. There are certainly advantages to buying a resale home, such as lower prices, mature trees and landscaping, and the simple fact that most of the bugs and defects of the house have been worked out years before. Still, some people desire a new home for many reasons, such as greater energy efficiency, modern amenities and floor plans, and the simple fact that everything is absolutely brand-spanking new.
Here are ten things you should know before you visit your first model home:
1. Contact a real estate agent.
Sit down with them and define what you want in a new home, and what you can afford. Your agent then should be able to provide a proper listing that will narrow your search and save time. And if you’re planning on selling your existing home, they can help you determine how much cash you will have after the sale to put a down payment on a new home, and help you budget accordingly.
2. Know the difference between sellers’ agents and buyers’ agents.
When buying a new home, it’s important to know that the sellers’ agents represent the builder, and have their best interests in mind. By hiring a buyers’ agent, you can feel confident that someone knowledgeable is on your side, and will help you negotiate the best deal possible. A buyers’ agent should also be very knowledgeable about home construction, warranties, overall building quality, finance options and even lot selection.
3. Find a builder that is right for your needs.
Some builders specialize in different aspects in home construction, and may have different priorities when it comes to overall workmanship, the quality of materials, or innovative floor plans. Others may specialize in offering the most value for the money, or offer outstanding warranties on all of their work. Define your own priorities when it comes to buying a brand-new house, and find a builder who shares the same priorities.
4. Do your homework on the builder of your new home.
Research and find out about the builder’s history and reputation. Find out if they are financially secure. Obtain "spec sheets" on everything from energy efficiency and floor plans to lot availability and delivery*.
5. Learn as much as possible about the neighborhood.
Find out about the surrounding community, and investigate such amenities as nearby shopping centers and public parks. Ask the local land-use officials if they have any plans for other construction in the near future. Investigate your commute to work, varying the times and noting the flow of traffic throughout the day.
6. Find out about options and upgrades to your new home.
Options such as additional powder rooms, sun rooms, or upgrades to the kitchen such as granite counters and upscale appliances can definitely add to the resale value of your home. Ask about builder incentives, which can involve free upgrades to your new home, or a discount off the final price. At the same time, note that major upgrades such as finished basements, decks and extensive landscaping can usually be done at a later time, for a lot less money.
7. Know how to negotiate with the builder.
When it comes to new homes, builders usually allow some room for negotiating the price of options and upgrades, especially if a home has already been completed but hasn’t yet sold. You can also negotiate for "premium lots" with better views, since the lots originally cost the builder the same amount of money when they purchased the land. Most builders will offer some sort of incentive to close a sale faster.
8. Make sure the contract meets your standards.
Protect yourself during the sale by placing the deposit in escrow, having all your upgrades and options detailed in writing, and having a guarantee that you will be able to visit the lot freely during construction. Ask for 30-day notice on the closing date, and request a specific explanation on all warranties from both the builder and other manufacturers. Having everything spelled out in writing will help prevent any discrepancies with the builder after the house is completed.
9. Explore your financing options.
Many builders who represent larger companies can offer special financing packages designed to get as many people into the new neighborhood as possible. Be sure to compare the terms with other lending institutions, since there is fierce competition in this area. You can also shop around for the best prices in appraisals, inspections, surveys, closing costs and attorneys.
10. Don’t expect everything to be perfect.
Building a new home is a complicated venture, and sometimes small things fall between the cracks. Hire a building inspector before you take delivery on your new home, and come up with a "punch list" for everything that needs to be fixed. Make sure the builder commits to making everything perfect in your new home.
Here are ten things you should know before you visit your first model home:
1. Contact a real estate agent.
Sit down with them and define what you want in a new home, and what you can afford. Your agent then should be able to provide a proper listing that will narrow your search and save time. And if you’re planning on selling your existing home, they can help you determine how much cash you will have after the sale to put a down payment on a new home, and help you budget accordingly.
2. Know the difference between sellers’ agents and buyers’ agents.
When buying a new home, it’s important to know that the sellers’ agents represent the builder, and have their best interests in mind. By hiring a buyers’ agent, you can feel confident that someone knowledgeable is on your side, and will help you negotiate the best deal possible. A buyers’ agent should also be very knowledgeable about home construction, warranties, overall building quality, finance options and even lot selection.
3. Find a builder that is right for your needs.
Some builders specialize in different aspects in home construction, and may have different priorities when it comes to overall workmanship, the quality of materials, or innovative floor plans. Others may specialize in offering the most value for the money, or offer outstanding warranties on all of their work. Define your own priorities when it comes to buying a brand-new house, and find a builder who shares the same priorities.
4. Do your homework on the builder of your new home.
Research and find out about the builder’s history and reputation. Find out if they are financially secure. Obtain "spec sheets" on everything from energy efficiency and floor plans to lot availability and delivery*.
5. Learn as much as possible about the neighborhood.
Find out about the surrounding community, and investigate such amenities as nearby shopping centers and public parks. Ask the local land-use officials if they have any plans for other construction in the near future. Investigate your commute to work, varying the times and noting the flow of traffic throughout the day.
6. Find out about options and upgrades to your new home.
Options such as additional powder rooms, sun rooms, or upgrades to the kitchen such as granite counters and upscale appliances can definitely add to the resale value of your home. Ask about builder incentives, which can involve free upgrades to your new home, or a discount off the final price. At the same time, note that major upgrades such as finished basements, decks and extensive landscaping can usually be done at a later time, for a lot less money.
7. Know how to negotiate with the builder.
When it comes to new homes, builders usually allow some room for negotiating the price of options and upgrades, especially if a home has already been completed but hasn’t yet sold. You can also negotiate for "premium lots" with better views, since the lots originally cost the builder the same amount of money when they purchased the land. Most builders will offer some sort of incentive to close a sale faster.
8. Make sure the contract meets your standards.
Protect yourself during the sale by placing the deposit in escrow, having all your upgrades and options detailed in writing, and having a guarantee that you will be able to visit the lot freely during construction. Ask for 30-day notice on the closing date, and request a specific explanation on all warranties from both the builder and other manufacturers. Having everything spelled out in writing will help prevent any discrepancies with the builder after the house is completed.
9. Explore your financing options.
Many builders who represent larger companies can offer special financing packages designed to get as many people into the new neighborhood as possible. Be sure to compare the terms with other lending institutions, since there is fierce competition in this area. You can also shop around for the best prices in appraisals, inspections, surveys, closing costs and attorneys.
10. Don’t expect everything to be perfect.
Building a new home is a complicated venture, and sometimes small things fall between the cracks. Hire a building inspector before you take delivery on your new home, and come up with a "punch list" for everything that needs to be fixed. Make sure the builder commits to making everything perfect in your new home.
Monday, March 2, 2009
Improving your FICO® credit score
It’s important to note that raising your FICO credit score is a bit like losing weight: It takes time and there is no quick fix. In fact, quick-fix efforts can backfire. The best advice is to manage credit responsibly over time.
Payment History Tips
Payment History Tips
- Pay your bills on time.Delinquent payments and collections can have a major negative impact on your FICO score. If you have missed payments, get current and stay current.The longer you pay your bills on time, the better your credit score.
- Be aware that paying off a collection account will not remove it from your credit report.It will stay on your report for seven years. If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor.This won't improve your credit score immediately, but if you can begin to manage your credit and pay on time, your score will get better over time.
Amounts Owed Tips
- Keep balances low on credit cards and other “revolving credit”.High outstanding debt can affect a credit score. Pay off debt rather than moving it around.The most effective way to improve your credit score in this area is by paying down your revolving credit. In fact, owing the same amount but having fewer open accounts may lower your score.
- Don't close unused credit cards as a short-term strategy to raise your score.
- Don't open a number of new credit cards that you don't need, just to increase your available credit.This approach could backfire and actually lower your credit score.
Length of Credit History Tips If you have been managing credit for a short time, don't open a lot of new accounts too rapidly.New accounts will lower your average account age, which will have a larger effect on your score if you don't have a lot of other credit information. Also, rapid account buildup can look risky if you are a new credit user.
New Credit Tips
Do your rate shopping for a given loan within a focused period of time.FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.
Re-establish your credit history if you have had problems.Opening new accounts responsibly and paying them off on time will raise your credit score in the long term.
Note that it's OK to request and check your own credit report.This won't affect your score, as long as you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers.
Types of Credit Use Tips- Apply for and open new credit accounts only as needed.Don't open accounts just to have a better credit mix - it probably won't raise your credit score. Have credit cards - but manage them responsibly.In general, having credit cards and installment loans (and paying timely payments) will raise your credit score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.
Note that closing an account doesn't make it go away.A closed account will still show up on your credit report, and may be considered by the score.
See how much money you can save by just following these tips and raising your credit score.
Should you buy or rent?
Emotions, family and personal reasons all come into play in any home-buying decision.
No one knows what the future holds for you, your family, your job or your finances. But we can help you understand what you're going to encounter when you embark on the sometimes-difficult journey toward the American Dream of owning a home.
"When you get that urge to buy a house, the first thing to do is step back and ask whether it makes more sense to keep renting for a while. If you still want to buy, you need to figure out how much house you can afford.
Economic differences between renting and owning:
If you're looking for the best return on your money, historically you're better off investing in the stock market than buying a house. Primary homes generally don't earn the investment return of financial instruments such as mutual funds. While the stock market's long-term average rate of return is in the range of 8 percent to 10 percent, housing historically has appreciated on average in the low- to mid-single digits. Don't buy solely for investment gain.
On the other hand, Uncle Sam helps out by letting taxpayers deduct part of the mortgage interest and real estate taxes each year. Borrowers get the benefit only if they pay enough in one year to exceed the standard deduction. But that usually happens, especially during the first few years of a mortgage when most of each payment goes toward interest rather than principal.
Sunny side of homeownership:
Owners enjoy other benefits, too. They build equity over time as home values rise and their mortgage balances shrink. They also don't have to worry about their housing costs shooting through the roof because lenders can't boost borrowers' rates and payments, unless those borrowers have adjustable-rate mortgages.
Cloudy side of homeownership
When something breaks at an apartment, it's the landlord's problem. When it's your name on the deed, the problem is yours. If you throw every penny into a down payment, you're taking a big risk because you may not have enough money left to fix leaky pipes or buy a new air conditioner.
Potential buyers might want to hold off for other reasons. If there's a good chance that you will be laid off soon, you might want to wait. The same goes for people who plan to leave a job soon. The monthly payment isn't the only obstacle for this kind of customer. Closing costs and other home-buying fees, as well as the commission that most owners end up paying to real estate agents when they sell their homes, add up. People who have to sell after living in one place for only a short time can end up in the hole on their investments.
Explore all the options:
Some middle-ground approaches to homeownership blend elements of buying and renting. Some of the more popular loan types are seller financing, "lease with an option to buy" and "contract for a deed" plans
Seller financingWith seller financing, the seller actually assists the buyer in purchasing the home, by "lending" the buyer either a portion of the amount to be financed or the entire amount.
Let's say the buyer and seller agree on a price of $150,000 for the house. In many cases a lending institution would require a 20-percent down payment -- $30,000 -- and give the buyer a mortgage for $120,000. But if the buyer has only $15,000 cash, the seller could "take back" a second mortgage for the $15,000 the buyer is short. The buyer makes payments on the first loan to the bank and the second loan to the seller.
Another example of seller financing: If the sale price of the home is $150,000 and the buyer has only $15,000 for a down payment, the buyer gives the $15,000 down payment directly to the seller who agrees to carry the entire mortgage amount of $135,000. The buyer would make all payments directly to the seller.
Pro: Seller financing reduces the cash needed to get into a home and could dramatically reduce closing costs. Often the seller will be more flexible in accepting an underqualified buyer.Con: The seller determines the interest rate for that portion of the mortgage being carried, and it usually comes with a higher rate and a shorter term. Perhaps most importantly, it very often comes with a balloon payment. This means that monthly payments would be computed as though the mortgage was to continue for, say, 30 years, but at the end of five or 10 years the entire remaining balance has to be paid in one lump sum. That normally requires refinancing at that point, when rates could either be lower, higher or about the same, or selling the house to meet that balloon payment.
No one knows what the future holds for you, your family, your job or your finances. But we can help you understand what you're going to encounter when you embark on the sometimes-difficult journey toward the American Dream of owning a home.
"When you get that urge to buy a house, the first thing to do is step back and ask whether it makes more sense to keep renting for a while. If you still want to buy, you need to figure out how much house you can afford.
Economic differences between renting and owning:
If you're looking for the best return on your money, historically you're better off investing in the stock market than buying a house. Primary homes generally don't earn the investment return of financial instruments such as mutual funds. While the stock market's long-term average rate of return is in the range of 8 percent to 10 percent, housing historically has appreciated on average in the low- to mid-single digits. Don't buy solely for investment gain.
On the other hand, Uncle Sam helps out by letting taxpayers deduct part of the mortgage interest and real estate taxes each year. Borrowers get the benefit only if they pay enough in one year to exceed the standard deduction. But that usually happens, especially during the first few years of a mortgage when most of each payment goes toward interest rather than principal.
Sunny side of homeownership:
Owners enjoy other benefits, too. They build equity over time as home values rise and their mortgage balances shrink. They also don't have to worry about their housing costs shooting through the roof because lenders can't boost borrowers' rates and payments, unless those borrowers have adjustable-rate mortgages.
Cloudy side of homeownership
When something breaks at an apartment, it's the landlord's problem. When it's your name on the deed, the problem is yours. If you throw every penny into a down payment, you're taking a big risk because you may not have enough money left to fix leaky pipes or buy a new air conditioner.
Potential buyers might want to hold off for other reasons. If there's a good chance that you will be laid off soon, you might want to wait. The same goes for people who plan to leave a job soon. The monthly payment isn't the only obstacle for this kind of customer. Closing costs and other home-buying fees, as well as the commission that most owners end up paying to real estate agents when they sell their homes, add up. People who have to sell after living in one place for only a short time can end up in the hole on their investments.
Explore all the options:
Some middle-ground approaches to homeownership blend elements of buying and renting. Some of the more popular loan types are seller financing, "lease with an option to buy" and "contract for a deed" plans
Seller financingWith seller financing, the seller actually assists the buyer in purchasing the home, by "lending" the buyer either a portion of the amount to be financed or the entire amount.
Let's say the buyer and seller agree on a price of $150,000 for the house. In many cases a lending institution would require a 20-percent down payment -- $30,000 -- and give the buyer a mortgage for $120,000. But if the buyer has only $15,000 cash, the seller could "take back" a second mortgage for the $15,000 the buyer is short. The buyer makes payments on the first loan to the bank and the second loan to the seller.
Another example of seller financing: If the sale price of the home is $150,000 and the buyer has only $15,000 for a down payment, the buyer gives the $15,000 down payment directly to the seller who agrees to carry the entire mortgage amount of $135,000. The buyer would make all payments directly to the seller.
Pro: Seller financing reduces the cash needed to get into a home and could dramatically reduce closing costs. Often the seller will be more flexible in accepting an underqualified buyer.Con: The seller determines the interest rate for that portion of the mortgage being carried, and it usually comes with a higher rate and a shorter term. Perhaps most importantly, it very often comes with a balloon payment. This means that monthly payments would be computed as though the mortgage was to continue for, say, 30 years, but at the end of five or 10 years the entire remaining balance has to be paid in one lump sum. That normally requires refinancing at that point, when rates could either be lower, higher or about the same, or selling the house to meet that balloon payment.
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