Educating Licensees and Rent Vs. Buy

Hey Cora:  I heard that Real Estate Licensees have to take a bunch of classes to renew their licenses, is that true? Justin Curious

Dear Justin, yes, it is! In fact, we have to take 20 hours of continuing education every renewal cycle, which is every 2 years. These classes must be approved by the state and have a state approved instructor as well.

Usually licensees can get their classes as various conventions – some in state and some out of state.  There are 8 hours of required state classes, these cover contracts, real estate law, consumer protection, fair housing ethics, disclosures, and a myriad of other topics.  The other 12 hours are electives.  There are many, many, many classes for electives.  These range from Title Insurance, Negotiation, Time Management, Customer Service, Property Management, Commercial Leasing – so many subjects – there are hundreds!  We can choose what, of those electives we want to take.

The other part is that we can choose our instructors.  Some are local instructors and others travel here to teach.  We also have designations that we can achieve.  The National Association of Realtors has so many designations and most of us are anxious to take those classes and wear those designations proudly! One of the many benefits of being a member of the National Association of Realtors and certainly, when you choose to buy or sell, it’s important that you choose a Realtor to help you.

So, to recap, State of Alaska Real Estate Licensees must renew their licenses this January, 2018.  Most of us enjoy taking our classes and usually obtain more than the 20 hour minimum – it’s all part of loving the work.

Hey Cora: I am trying to decide if I should buy a home or just rent.  I am only here for two years and not sure what the best move would be.  Les Decided

Dear Les: A few years ago, I would have said buy something! However right now, it’s a conundrum!  It would depend on the following things:

• Location, of course
• Uniqueness of the home
• Price range
• Price of rents in the area in which you want to live

The location is always key.  If you are new to the area, let your Realtor know that you will only be here for 2 years.  They should know where to direct you.  What you want to do it to be able to sell the house without having to come to closing with funds.  It’s simple math really.

If the home is too unique, it probably will not sell quickly.  It needs to appeal to a broad range of potential buyers when you are ready to sell.  So don’t get your heart set on something out of the ordinary, keep it simple and appealing to largest crowd.

The price range needs to stay pretty close to the “average price range” for the area.  Like right now, in the valley, the average price is $268,000.  You would want to stay right around that average.

What could you rent a house for?  Let’s say you want a 3 bedroom 2 bath with at least a 2 car garage.  Let’s say the rents would be $1,650 per month including renters insurance.  To purchase a home at $250,000 with the same amenities, your payment with property taxes and insurance would be a little less than $1525.00 per month.  If you rent and live in the house for 24 months, you would spend $38,400 in rents for that 2 years.

If you buy and then sell in 2 years, you would have paid about $8250.00 down on your balance if you make regular payments.  So, if you put nothing down on your home loan, your balance would be around $241,750.00.  That would mean that you would have to sell the house for $262,000 to break even at closing and that would mean that you lived free of charge for those 24 months, accept, of course for any repairs and maintenance on your home.  (I am not including closing costs, just because it can very so much)

So, looking at the math, it would be cheaper in the 24 months to purchase than to rent.  But you must run these numbers with your Realtor – this was based on an interest rate of 4% and of course that would change everything!  Remember, the 4 things: Location, uniqueness, price range, rents.  This will help you make a decision.

Call me if you need help with this  907-982-5700 and I’ll walk you through it all.