New Home Price Negotiating Tips: How to Negotiate Home Prices and Terms with Home Sellers

The following is a guest post from Houston, Texas real estate developer and entrepreneur Tracy Suttles.

Overall Home Price

The most obvious new home negotiation point is the overall home price. When determining the price to be offered for the home, it is best to use the asking price of the home as a last resort. This number is typically just what the owners want to receive for the house and may or may not reflect its actual value. Working with a Realtor, comparables of recently sold homes in the area can be used to determine an appropriate home price. Use an average of homes that are similar in size, design and maintenance level.

If the real estate market in the area is a seller’s market, be prepared to pay top dollar for the home. The buyer may even have to compete with other offers when the offer is made which gives the seller the upper hand in the negotiation process. If it is a buyer’s market, the buyer may be able to make a low-ball offer that is below the perceived fair market value of the home.

Home Sale Contract Contingencies

In addition to overall price, the buyer can also negotiate based on other terms or contingencies. For instance, the sales contract may be contingent on an appraisal of at least the offer, an approved mortgage loan at a certain interest rate and a satisfactory inspection of the home.

New Home Concessions and Terms in Sales Contract

In a buyer’s market, the buyer can likely negotiate additional concessions into the contract such as a carpet or paint allowance or additional sod and landscaping. A buyer may also negotiate a portion or all of the closing costs into the price of the home. For instance, the buyer may make an offer of $200,000 for a home that also includes the seller paying for $5,000 in closing costs. This is in essence offering the seller $195,000 for the home.

Depending on the buyer’s situation, it may be necessary to negotiate certain terms into the sales contract. These terms could include the sale of the buyer’s home before this sale is complete. Or it may include a shortened or extended time before the home is closed.

A sales contract should not be signed unless all terms have been reviewed by both the buyer and the seller. Once the contract is signed, it will be difficult to walk away from the contract without giving up the retainer that was paid by the buyer upon acceptance of the offer. Negotiate the sales price and terms before signing and know that if it is not in the contract, the buyer nor the seller can be held to it.

 

Book Review – The Credit Crunch Cookbook: Delicious Recipes and Clever Ideas for Cooking on a Budget

Book Review – The Credit Crunch Cookbook: Delicious Recipes and Clever Ideas for Cooking on a Budget

There is more to spending less on food than cutting back on takeaway and giving up luxuries like decadent desserts and expensive ingredients. The Credit Crunch Cookbook (Hamlyn) offers a collection of recipes and tips to help singles, couples and families save money in the kitchen by wasting less, being more organised and shopping more efficiently.

Cooking on a Budget

Many householders know that they need to spend less on groceries and meals, but it can be difficult to know where to start to cut back on expensive shopping and cooking habits.

Filled with practical, economical recipes and a large collection of tips for reducing waste, being more organised in the kitchen and saving money when shopping for groceries, The Credit Crunch Cookbook is ideal for those who want to make changes to their spending habits, but don’t know how.

Recipes are divided into three sections covering family meals, entertaining and make-at-home restaurant meals:

  • Budget Basics (light meals, main meals, sweet things),
  • Impress for Less (starters, sides, mains, desserts)
  • Dine In (Italian, Mexican, Indian, Thai, Chinese)

Recipes are easy to prepare, featuring readily available ingredients and easy to follow step-by-step instructions. There are no photos of completed dishes. Recipes are generally suitable for both children and adults and include:

  • Beef and ginger salad
  • Spaghetti carbonara
  • Meatballs in spicy sauce
  • Pumpkin and root vegetable stew
  • Chicken and spinach potato pie
  • Steak and mushroom pie
  • Tomato and green been salad
  • Pears with chocolate crumble
  • Caramelized orange and pineapple

Spending Less on Groceries and Meals

There is more to reducing the grocery budget than swapping to cheaper alternatives for favourite ingredients. The Credit Crunch Cookbook includes a collection of practical and easy to follow tips to reduce food waste, increase organisation at meal times and making sure that meals are prepared efficiently.

Helpful kitchen tips include reducing food waste by using leftovers and planning meals in advance. Writing a menu plan and thinking about the amount of food required for each meal can significantly limit waste and thereby reduce grocery costs. Suggestions for using leftover yoghurt, eggs, potato, rice, pasta, bread and cheese for using leftover vegetables and other ingredients are included.

Other tips include reducing food costs by buying fruit and vegetables in season and storing food correctly in the pantry and freezer. There are hints on how to save money by saving energy and water when preparing meals and tips for shopping wisely.

The Credit Crunch Cookbook encourages readers to be organised as well as economical. With planning, the book advises that it is possible to serve a romantic dinner for two for the same cost as an everyday meal and to feed hungry children and picky eaters without blowing the weekly shopping budget on expensive snack foods.

Save Money by Getting Organised in the Kitchen

Ultimately, the best way to save money at home is to be organised and plan ahead in all areas, including buying groceries and preparing meals. The Credit Crunch Cookbook offers tips for preparing a meal plan to reduce unnecessary grocery purchases and includes a sample budget menu for a weekly meal plan, romantic dinner for two and a dinner party menu for no-fuss entertaining on a budget.

The Credit Crunch Cookbook contains more than 100 recipes and numerous tips for better household budgeting. It is a practical resource for all homes and is an ideal housewarming gift for a new homeowner.

Roth IRA for College Savings: A Great College Investment Vehicle

Roth IRA for College Savings: A Great College Investment Vehicle

If you qualify, earning less than $95,000 for a single filer or less than $150,000 if filing jointly, you likely know the Roth IRA is a great way to save money for retirement. You receive no tax deductions when you fund your Roth account, but your money earns interest tax-free until you retire. Then, if you have owned the account for at least five years and you have reached age 59-1/2, your earnings are non-taxable when you make withdrawals from your savings.

You may not realize that some key features of the Roth IRA and the particulars of college financial aid awards also make the Roth IRA an attractive way to save for your children’s higher education expenses.

You can withdraw Roth contributions at any time

Since you paid federal tax on your contributions at the time you earned them, you can leave your money in your Roth account, earning interest tax-free. Withdraw your contributions when junior enrolls at the university with no tax or penalty and let the earnings rest until you retire.

If you start when your child is still in diapers, you can accrue a tidy sum. The most a couple can invest in a Roth is $8,000 ($4,000 for each spouse). Over 18 years, that adds up to $144,000. Even saving half of that amount, which is a more likely sum for a family that meets the Roth IRA income limits, results in a hefty $72,000.

Roth earnings can be withdrawn without penalty if used for higher ed

Avoid the 10 percent penalty on early withdrawal of earnings from a Roth IRA by using the money for higher education expenses. Remember: withdrawal of contributions are always tax free, but early withdrawal of earnings are subject to federal taxes. Paying taxes on the earnings seems a fair trade off for all those years of tax-free accrual.

Roth IRA avoids the financial aid radar

The formula for determining a student’s and parents’ ability to pay for college usually doesn’t take retirement savings into account. This is where the Roth IRA out performs other college savings plans like the Coverdell Education Savings Account or state 529 options.

Financial aid concerns also reveal the flaw in using the Roth IRA for college savings–distributions from the IRA can count as unearned income and throw a monkey wrench in the following year’s financial aid assessment. The benefits and drawbacks could balance out in the end, however.

Lower income savers get IRS tax credit for Roth contributions

Joint filers with income less than $50,000 receive a tax credit for contributing to any retirement fund. The lower the income, the greater the credit. But even the smallest credit, 10 percent of your contribution that year, is a good return on your investment.

Save for college and retirement in the same account

The Roth contribution limits are likely to continue to increase in future years. Parking both retirement and college savings in a Roth IRA is a one-stop solution for these important financial goals.

Should You Lease or Buy Your Next Car?

Many people are faced with this question when the time comes to get a new car. By some estimates, leasing vehicles has increased 30% in the past 10 years. Leasing is becoming more popular and can be confusing. Both buying and leasing have their advantages and disadvantages and one should be aware of what those are before making a decision. Leasing a car is appealing to many because you get to drive a new car for lower monthly payments than if you bought (or made payments) on the same car. This is because you are only paying for the three or four years (or however long you lease for) worth of depreciation versus paying for the whole car. For this reason, many people choose to lease a more expensive car than they could afford to buy. Another lure of a lease is that in three or four years you are free to turn the car back in, lease another new car, and never get tired of the car you are driving. Leasing may also be advantageous in some instances due to the fact that the IRS allows for more generous write-offs for lease payments than for loan payments on more expensive cars. Also, you may be able to find a great deal on the interest rate for your lease if a dealer is trying to move certain vehicles. Maybe the money you save in that case each month could be used to pay off debt with a higher interest rate. However, the disadvantage of a lease is that at the end of your lease you have no ownership in the car you have been driving for several years. You can purchase the car at the end of your lease if you have the chunk of money needed to do so (not likely if you chose to lease in the first place). My husband and I leased a vehicle a few years back. When the lease was up we were struck with the fact that we had payed all that money for all those months and were just going to hand the vehicle back to the dealer. Instead, we took out a loan to purchase the vehicle, sold the vehicle for more than the amount of the loan, paid off the loan, and had some money “left over”. A lot of work. Another thing to be aware of is that there are penalties you will pay if you fail to meet the conditions of your lease. For example, many leases have mileage limitations on them and if you exceed those miles (usually somewhere around 15,000 miles/year), you will pay for the extra miles you drove. That could add up if you spend a lot of time on the road. Excessive wear and tear on your leased car can also end up costing you extra money.

Education IRAs

Education IRAs

Last month, I briefly explained the difference between the various Individual Retirement Accounts. This time, I have another IRA to tell you about. It is the Education IRA. Education IRAs, for those under age 18, are quite different from other IRAs. For one thing, $500 is the total maximum that can be contributed to an Education IRA. This is in addition to any other IRAs you may have (recall that $2000 is the total that can be contributed to any other IRA or combination of IRAs). A person can also contribute to an Education IRA even if he/she does not have earned income. However, it should be noted that the $500 maximum contribution can be made only if the contributior’s AGI (adjusted gross income) is less than $95,000 for single people or $150,000 for joint filers. Furthermore, the ability to contribute to an Education IRA is completely lost if a single person’s AGI is above $110,000, or $160,000 for joint filers. The contribution is phased out in between those ranges.

As long as the Education IRA’s beneficiary’s higher education expenses (books, supplies, equipment, fees and tuition, and part of room and board if enrolled half time or more) are equal to or more than the Education IRA distribution for the current year, the distributions are tax free. In most cases,a 10% tax is tacked on if the distributions are greater than the qualified expenses. In addition, the beneficiary has 30 days after turning age 30 to use the Education IRA funds.

Obviously, there are other requirements and details which cannot fully be explained here. If you think an Education IRA sounds like something you’d like to invest in, your own research will prove invaluable. Two good places to start are at Kiplinger (http://www.kiplinger.com) and the Motley Fool (http://www.fool.com). Good luck!

Save Some Money at the Grocery Store

Save Some Money at the Grocery Store

When my family began to budget and be more careful with our money after I stopped working, one of the areas we had to hit hard was our weekly grocery bill. It took a little planning and several efforts, but we finally got to the point where we could meet our budget and still have enough food to eat for the week. There are lots of ways to save money at the grocery store, and here are some that worked for us. Each week, I make a menu that includes what we’ll have for dinner each night the next week. This simple step becomes the basis for our grocery list and ensures that we will have exactly what we need and not a bunch of food in the cupboards that I can’t figure out how to put together into a meal (cooking isn’t my strong point). Denise Schofield, in her book Confessions of an Organized Homemaker, goes a step further. She includes “menu selection sheets” in her planning notebook (ie. a Day-Timer planner). These sheets list all of the main dishes she routinely serves for dinner as well as their ingredients. This makes creating a menu, and a grocery list to go along with it, a little easier. I try to include one or two meatless meals and some “cheapie” meals in each week’s menu to help keep us under budget.

Another thing we do before heading out to the store is to check out the food ads for several grocery stores near us. We buy the bulk of our food at a grocery outlet type store (you know, the kind where you bag your own groceries) and then hit one or two other stores for the items on our list that they are having a good sale on. If a store is having a good sale on something not on my list, I may scratch a planned menu item and substitute it with a meal made with the sale item, or I may just purchase the sale item and save it for later use.

Price lists are another good method for finding the best prices at the grocery stores you frequent. With this method, you record the best price you have paid for an item, using grocery store receipts and ads. You can have a separate sheet in your price book for each main category of food you purchase. Take your price book with you to the store and see if you are getting a good deal on an item.

Budgeting With Quicken

Budgeting With Quicken

On the first day of the year, I sat down at my computer and began to put our family budget on the computer. I promised myself I would do that one day and when our new computer came with the necessary software on it, I could find no more excuses. I was a little intimidated but I soon got the hang of it and have come to really like keeping my budget on the computer. If you are considering using budgeting software, read on and maybe your decision will be made a bit easier. As I mentioned, my computer came with the Quicken software. It also came with Microsoft Money. I knew nothing about either one of these programs so I took some time to explore them both. After playing in each program for a while, I decided Quicken seemd a little more like what I was looking for and I liked the way it was set up. The one drawback I found was not having an instruction manual since the software came with the computer. To help with this problem, I began copying the Help Menus as I used them. This way, I could put all of them into a Quicken file and easily refer to them whenever necessary. I also found some articles on using Quicken at www.stretcher.com. You can find all of the articles if you go to the author index and look up Karen Jones. These articles gave me some great ideas for additonal ways to use the Quicken software as well as some tips that I didn’t find in the Help Menus.

Aside from being able to put numbers into the computer and have them “magically” calculated for me, I also like being able to show a transfer of money between my accounts with the click of a button. I am still figuring out all of the features available for tracking investments, but I can tell you that I am looking forward to using the internet and Quicken to instantly update my investments. However, the best part about using budgeting software is being able to create reports that show me where my money has gone and what my monthly/yearly budget looks like.

If you decide to keep your budget on your computer, I must pass on this very important advice. Back-up all of your work! I failed to do this and then had to start all over on our accounts and budget after the hard drive blew up in our computer. Although it was a lesson I learned the hard way, I’m grateful I learned it in February and not in November.

Investing Small Amounts of Money

Most of the people I know, myself included, don’t have thousands of extra dollars hanging around just waiting to be invested. Much of what I have read about investing is aimed at people who have a substantial amount of money to invest. However, limited investing funds should not prevent you from investing. I have come across some great opportunities for investing smaller amounts of money. One valuable resource I have found that is good for both big and small investors is the American Association of Individual Investors. This associaton can help you become informed on topics of your choice and provide you with the help you may need to get started investing. Membership includes numerous benefits, including the AAII Journal, stock reports, and a year-end tax strategy guide. You can find out more about this terrific resource through their website at www.aaii.com.

A great way to purchase stocks with small amounts of money is through Dividend Reinvestment Plans, or DRIPs. You enroll in a plan by first purchasing a single stock in the company you have chosen (many, many companies offer these plans) and then completing the appropriate forms for enrollment. Once you are enrolled, you can make monthly fractional stock purchases with as little as $10, although this amount varies by company. Your dividends, as the name of the plan suggests, will be automatically reinvested for you. After time, your small monthly purchases and your reinvested dividends can add up to a substantial investment. One way to go about becoming enrolled in a plan such as this is through the service provided by Temper of the Times Communications Inc. For a small fee, they will purchase the initial stock for the company you have chosen and complete the paperwork on your behalf to get you into the company’s DRIP. I have used their service and was pleased with the results. It takes 2 or 3 months for the entire process to be completed. You can find out more about this service at the Temper of the Times website, www.moneypaper.com.

Money market funds are another option for investing smaller amounts of money, especially if you are interested in building up your emergency savings fund. A money market fund is a more liquid investment than stocks and earns a better interest rate than the savings account your bank probably offers. Bankrate offers a list of money market funds and compares their different features. You can find them at www.bankrate.com

Teaching Young Children to Manage Money

Teaching Young Children to Manage Money

It’s never too early to begin teaching your children how to manage money responsibly. After all, it is a skill some still struggle to master even as adults. There are some fun things you can do with your preschool-age children to help them become money smart.

One of the obvious things you can do is to give your child an allowance. There are a lot of different opinions about when and how to do this. I think a child is ready for an allowance as soon as she shows an interest in money and how it works. For this reason, my daughter started getting her allowance at about age 3 1/2. I give her one dollar for each year of her life, so she began by getting $3 per week. When she gets her allowance, one-third of it goes into a spending jar (which can be spent immediately), one-third of it goes into a short-term savings jar (to be saved for larger purchases), and one-third of it goes into a long-term savings jar (to be put in the bank). This has worked well and my daughter has been able to see her money add up and plan some of her own purchases. I recently heard this system explained with a giving jar (to be given to charity or other gifts) instead of a long-term savings jar.

Another way to help your preschooler learn about money is to let her earn some extra money, perhaps even above and beyond any allowance. Even young children can do this on occassion by performing extra chores or helping to pet sit for a neighbor who is gone, for example. You could even devise a list of extra chores and what each will pay. This money can then be added to your child’s savings jar.

When your child has some money in her possession, the next logical step is to set up a simple budget/savings plan. If you use the savings jar, you can help your child make a list of the things she wants to purchase with her money. Then help her prioritize this list so she can see what she is saving for. You can even cut out a picture of the item and tape it to the savings jar as a visual reminder. As your child sees more things she wants, help her add them to her wish list and reprioritize the list. With young children it is probably a good idea to aim for purchases that can be made after saving for only 3 to 6 weeks, so as not to lose their interest.