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Bad Real Estate Lessons You’ve Learned From Watching HGTV

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You probably wouldn’t watch “The Big Bang Theory” to help you land a job as a physicist or watch an episode of “Game of Thrones” instead of studying for a medieval history test. But somehow, everyone seems to think it’s perfectly fine to use HGTV as a how-to guide to buy and sell a house.

Anecdotally speaking, many real estate agents will tell you that just as attorneys have reported juries being influenced by watching “Law & Order,” there is an HGTV effect in the real estate industry. Many buyers and sellers who watch the basic cable television network come away with unrealistic expectations.

So if you’re thinking of buying or selling a home, and you’re wondering what bad lessons you may have picked up from HGTV, try to shake off some of these beliefs.

The wrong lesson: You’ll find your dream home by looking at just three houses

Actually, sometimes in real life, you may have to look at 20 houses before you find one you like. Or more. Much more. The HGTV series “House Hunters” is infamous for focusing on buyers looking at three houses.

“You don’t always find your dream home only after touring three houses. Despite reality TV regularly showing three houses, then boom, they were all moved in, it does not happen like that in real life,” says Chantay Bridges, a real estate agent in Los Angeles who owns Real Estate Professionals World Enterprise Marketing.

“The HGTV hype is real.”

– Elizabeth Ann Stribling-Kivlan

Ralph DiBugnara sees similarly impatient buyers on the East Coast. DiBugnara is the president of Home Qualified, a web series about issues within the real estate industry, and vice president at Residential Home Funding, a mortgage company with locations throughout New Jersey.

He thinks HGTV does offer a service to viewers in terms of general education on homebuying, but he has noticed that buyers seem to think they’re going to not have to look at many properties.

“The problem is that in a 30-minute or hourlong show it is impossible to show what really goes into finding and then buying a home,” DiBugnara says. “One of the biggest issues in our current real estate market is the length of time it is taking to find a home.”

So how long does he say it may take? (Spoiler: You’re not going to like hearing this.)

“Presently, with the lack of homes for sale, as a national trend, it has become very common for it to take greater than a year for a buyer to find a home and sign a contract,” DiBugnara says. “This means a lot of hours scouring the internet and even more time spent going to see homes and open houses on weekends.”

“You have to weigh every home, every scenario with your reality,” Bridges says. “Does the location work in conjunction to your job? Are the school districts a fit? Is the amount of [renovation] work worth the price tag? If the shoe doesn’t fit, then you have to keep looking until your prince property comes.”

The wrong lesson: Even if a house is expensive, you can probably find a way to buy it

OK, some HGTV shows do address the fact that people have a budget and that homebuyers don’t have an unlimited amount of money. But some real estate agents feel like these shows nevertheless give many viewers an unrealistic idea of what they can afford.

Lauren McKinney just started Gold Leaf Realty & Development and she also works for Judd Builders, a custom homebuilder in Asheville, North Carolina. She says that “the biggest misconception I see as a result of people watching HGTV shows is that it skews their idea of what things should cost. Whether it’s an existing home that needs to be remodeled or they’re buying a lot to build a new home, they think they can pay prices similar to Waco, Texas, where ‘Fixer Upper’ is filmed and where the market is completely different and building and labor costs are much lower.”

McKinney has a point. According to BestPlaces.net, the median home cost in Waco is $110,400. In Asheville, it’s $272,500 ― a 146 percent jump.

“Our market in Asheville … is hot because of an influx of people moving here and tourists discovering our mountain town and planning to move here,” McKinney says. “They are shocked to hear costs here because they see a full house remodel on a $50,000 budget on HGTV. It makes our sales pitch a little harder and as a Realtor, I’ve probably lost sales because I’m honest about the cost to remodel in Asheville.”

The wrong lesson: If the faucets or countertops aren’t up to snuff, you should walk away from the house

You may want to rethink that mentality, says Elizabeth Ann Stribling-Kivlan, president of New York City-based real estate brokerage Stribling & Associates.

“The HGTV hype is real,” she says, “and can be detrimental for both buyers and sellers. While these home improvement shows are entertaining, they create this idea that properties need to be perfect in order to sell.”

Stribling-Kivlan says she has seen buyers approach properties with “incredibly lofty expectations,” and so they pass on wonderful houses because the layout of one room isn’t quite right.

Karen Szala, a real estate agent with Coldwell Banker in Washington, D.C., sees the same phenomenon.

“Buyers should look beyond superficial things like countertops and old appliances ― these can be easily replaced and are relatively cost-effective. There’s a reason people say to buy the worst place on the best block. Nothing is perfect, and no renovation is instantaneous — even though HGTV says otherwise,” she says. “Buyers are often all flash and no structure anymore. They will ignore old HVAC systems for new countertops and cabinets.”

The wrong lesson: Fixing up a home can be done pretty quickly

The reality shows make it pretty clear that renovations take a lot of work, but they can make it seem as if this can be done pretty quickly. And … uh … no.

Julie Eaton owns Eaton Realty Advisors in Newport, Kentucky, and says that if you’re thinking of purchasing a dilapidated home and then fixing it up based on what you’ve seen on the HGTV network, be careful.

“I’ve probably lost sales because I’m honest about the cost to remodel.”

– Lauren McKinney

“It will take you three times longer than quoted and cost you a lot more than you think,” Eaton says, and then she cites advice often shared on “Fixer Upper”: “‘Buy the worst house in the best neighborhood.’ The dumbest advice I have ever heard, in my opinion.”

Eaton says the problem with a lot of reality TV shows is that by the time these shows start filming, they’re already six months into the process and project.

“They already have their permits, contractors and suppliers lined up and committed,” she says.

Bridges says the same and also points out that not everybody should buy a house that needs a lot of renovations.

“Everyone is not cut out to fix, flip and turn a property from goo to gold,” she says. “Not only are we not all fit for it, nor do we all have the time and patience. On TV they may give themselves a 90-day timeline to have it all done, but in real life even with a small crew, you could find yourself still making updates a year later.”

Bridges also points out that on TV, contractors are completely dedicated to the homebuyer or seller and their project. But in real life, she says, many contractors work multiple jobs at the same time.

“There are even some that begin a job, take a deposit and never return,” she adds. “The reality is, there can be a lot of delays, bumps in the road and surprises when attempting to tear down a house and put it back together again. You just may not be cut out for it.”

Szala concurs. “So many buyers think that they can be ‘flippers’ and renovate homes. It sometimes falls on deaf ears the great time and expense it takes to renovate a home, especially a historic home. These shows make it seem like you get the house and start swinging tools around, which is painfully untrue to the heart and pocketbook.”

“Many buyers have purchased furniture for the homes they imagine themselves owning and then want to fit huge farmhouse tables into small D.C. row homes, and are very shocked that homes built in the early 1900s can’t accommodate Joanna and Chip Gaines styling,” Szala says, referring to the stars of “Fixer Upper.”

But, hey, if you’re an HGTV junkie, don’t feel bad. The shows are entertaining, and they can teach people some things about homebuying and selling. And even if you do make some mistakes from watching HGTV, it isn’t like you’re hurting anyone. Just don’t start offering friends and family members medical advice based on what you’ve been picking up while watching “Grey’s Anatomy” or reruns of “Scrubs.”

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4 things kids need to know about money

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(NC) Responsible spending includes knowing the difference between wants and needs. Back-to-school season, with added expenses and expectations around spending, is the perfect time to not only build your own budget for the year ahead, but also to introduce your own children to the concept of budgeting.

The experts at Capital One break down four basic things that every child should know about money, along with tips for bringing real-life examples into the conversation.

What money is. There’s no need for a full economic lesson,but knowing that money can be exchanged for goods and services, and that the government backs its value, is a great start.
How to earn money. Once your child understands what money is, use this foundational knowledge to connect the concepts of money and work. Start with the simple concept that people go to work in exchange for an income, and explain how it may take time (and work) to save for that new pair of sneakers or backpack. This can help kids develop patience and alleviate the pressure to purchase new items right away that might not be in your budget.
The many ways to pay. While there is a myriad of methods to pay for something in today’s digital age, you can start by explaining the difference between cash, debit and credit. When teaching your kids about credit, real examples help. For instance, if your child insists on a grocery store treat, offer to buy it for them as long as they pay you back from their allowance in a timely manner. If you need a refresher, tools like Capital One’s Credit Keeper can help you better understand your own credit score and the importance of that score to overall financial health.
How to build and follow a budget. This is where earning, spending, saving and sharing all come together. Build a budget that is realistic based on your income and spending needs and take advantage of banking apps to keep tabs on your spending in real-time. Have your kids think about how they might split their allowance into saving, spending and giving back to help them better understand money management.

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20 Percent Of Americans In Relationships Are Committing Financial Infidelity

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Nearly 30 million Americans are hiding a checking, savings, or credit card account from their spouse or live in partner, according to a new survey from CreditCards.com. That’s roughly 1 in 5 that currently have a live in partner or a spouse.

Around 5 million people — or 3 percent — used to commit “financial infidelity,” but no longer do.

Of all the respondents, millennials were more likely than other age groups to hide financial information from their partner. While 15 percent of older generations hid accounts from their partner, 28 percent of millennials were financially dishonest.

Regionally, Americans living in the South and the West were more likely to financially “cheat” than those living in the Northeast and Midwest.

Insecurity about earning and spending could drive some of this infidelity, according to CreditCards.com industry analyst Ted Rossman.

When it comes to millennials, witnessing divorce could have caused those aged 18-37 to try and squirrel away from Rossman calls a “freedom fund”.

“They’ve got this safety net,” Rossman said. They’re asking: “What if this relationship doesn’t work out?”

As bad as physical infidelity

More than half (55 percent) of those surveyed believed that financial infidelity was just as bad as physically cheating. That’s including some 20 percent who believed that financially cheating was worse.

But despite this, most didn’t find this to be a deal breaker.

Over 80 percent surveyed said they would be upset, but wouldn’t end the relationship. Only 2 percent of those asked would end the relationship if they discovered their spouse or partner was hiding $5,000 or more in credit card debt. That number however is highest among those lower middle class households ($30,000-$49,999 income bracket): Nearly 10 percent would break things off as a result.

Roughly 15 percent said they wouldn’t care at all. Studies do show however that money troubles is the leading cause of stress in a relationship.

That’s why, Rossman says, it’s important to share that information with your partner.

“Talking about money with your spouse isn’t always easy, but it has to be done,” he said. “You can still maintain some privacy over your finances, and even keep separate accounts if you and your spouse agree, but you need to get on the same page regarding your general direction, otherwise your financial union is doomed to fail.”

With credit card rates hovering at an average of 19.24 percent APR, hiding financial information from a partner could be financially devastating.

But, Rossman adds, it’s not just about the economic impact but also the erosion of trust.

“More than the dollars and cents is that trust factor,” he said. “I think losing that trust is so hard to regain. That could be a long lasting wedge.”

Kristin Myers is a reporter at Yahoo Finance. Follow her on Twitter.

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7 Examples Of Terrible Financial Advice We’ve Heard

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Between television, radio, the internet and well-meaning but presumptuous friends and family, we’re inundated with unsolicited advice on a daily basis. And when it comes to money, there’s a ton of terrible advice out there. Even so-called experts can lead us astray sometimes.

Have you been duped? Here are a few examples of the worst money advice advisers, bloggers and other personal finance pros have heard.

1. Carry a balance to increase your credit score.

Ben Luthi, a money and travel writer, said that a friend once told him that his mortgage loan officer advised him to carry a balance on his credit card in order to improve his credit score. In fact, the loan officer recommended keeping the balance at around 50 percent of his credit limit.

“This is the absolute worst financial advice I’ve ever heard for several reasons,” Luthi said. For one, carrying a credit card balance doesn’t have any effect on your credit at all. “What it does do is ensure that you pay a high interest rate on your balance every month, neutralizing any other benefits you might get from the card,” Luthi explained. “Also, keeping a 50 percent credit utilization is a surefire way to hurt your credit score, not help it.”

Some credit experts recommend keeping your balance below 30 percent of the card limit, but even that’s not a hard-and-fast rule. Keeping your balance as low as possible and paying the bill on time each month is how you improve your score.

2. Avoid credit cards ― period.

Credit cards can be a slippery slope for some people; overspending can lead to a cycle of debt that’s tough to escape.

But avoiding credit cards on principle, something personal finance gurus like Dave Ramsey push hard, robs you of all their potential benefits.

“Credit cards are a good tool for building credit and earning rewards,” explained personal finance writer Kim Porter. “Plus, there are lots of ways to avoid debt, like using the card only for monthly bills, paying off the card every month and tracking your spending.”

If you struggle with debt, a credit card is probably not for you. At least not right now. But if you are on top of your finances and want to leverage debt in a strategic way, a credit card can help you do just that.

3. The mortgage you’re approved for is what you can afford.

“The worst financial advice I hear is to buy as much house as you can afford,” said R.J. Weiss, a certified financial planner who founded the blog The Ways to Wealth. He explained that most lenders use the 28/36 rule to determine how much you can afford to borrow: Up to 28 percent of your monthly gross income can go toward your home, as long as the payments don’t exceed 36 percent of your total monthly debt payments. For example, if you had a credit card, student loan and car loan payment that together totaled $640 a month, your mortgage payment should be no more than $360 (36 percent of $1,000 in total debt payments).

“What homeowners don’t realize is this rule was invented by banks to maximize their bottom line ― not the homeowner’s financial well-being,” Weiss said. “Banks have figured out that this is the largest amount of debt one can take on with a reasonable chance of paying it back, even if that means you have to forego saving for retirement, college or short-term goals.”

4. An expensive house is worth it because of the tax write-off.

Scott Vance, owner of taxvanta.com, said a real estate agent told him when he was younger that it made sense to buy a more expensive house because he had the advantage of writing off the mortgage interest on his taxes.

But let’s stop and think about that for a moment. A deduction simply decreases your taxable income ― it’s not a dollar-for-dollar reduction of your tax bill. So committing to a larger mortgage payment to take a bigger tax deduction still means paying more in the long run. And if that high mortgage payment compromises your ability to keep up on other bills or save money, it’s definitely not worth it.

“Now, as a financial planner focusing on taxes, I see the folly in such advice,” he said, noting that he always advises his client to consider the source of advice before following it. ”Taking tax advice from a Realtor is … like taking medical procedure advice from your hairdresser.”

5. You need a six-month emergency fund.

One thing is true: You need an emergency fund. But when it comes to how much you should save in that fund, it’s different for each person. There’s no cookie-cutter answer that applies to everyone. And yet many experts claim that six months’ worth of expenses is exactly how much you should have socked away in a savings account.

“I work with a lot of Hollywood actors, and six months won’t cut it for these folks,” said Eric D. Matthews, CEO and wealth adviser at EDM Capital. “I also work with executives in the same industry where six months is overkill. You need to strike a balance for your work, industry and craft.”

If you have too little saved, a major financial blow can leave you in debt regardless. And if you set aside too much, you lose returns by leaving the money in a liquid, low-interest savings account. “The generic six months is a nice catch-all, but nowhere near the specific need of the individual’s unique situation… and aren’t we all unique?”

6. You should accept your entire student loan package.

Aside from a house, a college education is often one of the biggest purchases people make in their lifetimes. Often loans are needed to bridge the gap between college savings and that final tuition bill. But just because you’re offered a certain amount doesn’t mean you need to take it all.

“The worst financial advice I received was that I had to accept my entire student loan package and that I had no other options,” said Gina Zakaria, founder of The Frugal Convert. “It cost me a lot in student loan debt. Now I tell everyone that you never have to accept any part of a college financial package that you don’t want to accept.” There are always other options, she said.

7. Only invest in what you know.

Even the great Warren Buffett, considered by many to be the best investor of all time, gets it wrong sometimes. One of his most famous pieces of advice is to only invest in what you know, but that might not be the right guidance for the average investor.

In theory, it makes sense. After all, you don’t want to tie up your money in overly complicated investments you don’t understand. The problem is, most of us are not business experts, and it’s nearly impossible to have deep knowledge of hundreds of securities. “Diversification is key to a good portfolio, and investing in what you know leads to a very un-diversified portfolio,” said Britton Gregory, a certified financial planner and principal of Seaborn Financial. “Instead, invest in a well-diversified portfolio that includes many companies, even ones you’ve never heard of.”

That might mean enlisting the help of a professional, so make sure it’s one who has your best interests at heart.

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