13 secrets from real estate insiders

When a property turns hot — whether it's a beachfront property or downtown — it sizzles. Real estate agents and industry insiders know these and other secrets that often escape public notice.

When it comes to buying and selling a property, you want to make sure you get the best deal possible. Here are 13 real estate tips straight from the pros.

1. Boost Your Appraisal With Smart Preparation

For all their numerical exactitude, appraisers are people, too, and certain things will turn them off like strong odors from pets and cigarettes. So eliminate lingering scents and "get rid of all the clutter in your home," said Jonathan Miller, a longtime appraiser in New York. "It makes the home appear larger."

2. Sell Your Home Faster With a Home Tour Video

"More than 80 percent of all buyers now find their homes online, so when you have a YouTube video that comes up on Realtor.com, that's huge," said Ben Salem, who owns Ben Salem Properties in Beverly Hills, Calif. "The best part is that you're one click away from showing it to the whole world."

Salem has a series of home tour videos on his website. Catchy music and sharp camera work helps, too. It might cost a few hundred bucks but can be worth the investment.

3. Know Which Home Additions Add Value

Some additions and home improvements add value to your home while others don't. Zillow lists some of the best returns on investment. They include an added attic bedroom, which returns 93 percent of the $39,000 price tag; a basement remodel, which returns 90 percent of $51,000; and a mid-range major kitchen remodel, which returns 91 percent of $44,000.

But some fare worse. A garage addition returns only 64.7 percent of its cost and a home office renovation returns 72.6 percent.

4. Talk Your Way Into a Quicker Sale

Sometimes the appeal of your home will come down to talking up your community's stellar points, from excellent schools to ample green space and nearby entertainment. People looking at your home might not realize these advantages right away, and even your real estate agent might miss some, so be sure to highlight them.

To start, make a checklist of recent exciting developments you've seen, including upscale restaurants, museums, parks and other amenities.

5. Avoid a Home Equity Loan by Selling Off Some Equity

An alternative to taking a home equity line of credit, or HELOC, is a model that Equity Key has developed. It allows homeowners to sell off part of their equity without assuming debt. If home prices go up, for example, then Equity Key and the homeowner share in the gains. If home prices go down, the company assumes all the risk up to the amount paid.

"We're taking market risk alongside the homeowner," said Jeffrey Nash, Equity Key's cofounder and managing director. "If things are bad, we'll take all of the hits and if things are good, we'll share in the gain."

6. Turn Your Home Into a Trust and Save on Taxes

The federal estate tax exemption, the amount an individual can leave to heirs without paying federal estate tax, is $5.43 million for 2015. It will go up to $5.45 million in 2016.

With a Qualified Personal Residence Trust (QPRT) you can gift up to two homes, in most cases to children, yet continue living in your home while avoiding federal estate taxes. With a QPRT, you set up an irrevocable trust yet retain the right to use the home for a pre-determined term. Ten years is typical but your trust can run for 40 years.

Once the term concludes, the grantor then pays rent to the trust. The beneficiaries become landlords and open a brokerage-type vehicle to receive payments titled to the trust. There's no income tax on those payments, a big plus for the beneficiaries.

7. Auctioning Your Home Could Be a Smart Option

With real estate in high demand in areas from Palo Alto, Calif., to Chicago's North Center neighborhood, smart homeowners can actually start a bidding war for their properties. "The most compelling reason for an auction is that a seller can decide when their property will be sold, instead of leaving it to the vagaries of the market, and specifically what date," said Rick Levin, president of Rick Levin and Associates, a Chicago-based real estate auction firm.

"And right now, demand is greater than supply for many homes in many parts of the country," he said. "So you get many types of bidders fighting for the home and driving the price higher until it sells."

8. Study the Cap Rate for a Property's Overall Value

Two properties in different cities that generate the same income might not represent the same value. So if you're investing in real estate, then the capitalization rate — or cap rate — helps you to determine how much your assets are really worth. The cap rate is determined by dividing the net operating income into the property value. So a property making X amount in New York will yield a low cap rate (because property values are high) compared to one making the same amount in Poughkeepsie, N.Y.

"This is because an area like Manhattan has a much larger population, has a more robust infrastructure setup, including transportation options and local businesses, and frankly is the place to be," said David Behin, CEO and co-founder ofCityFunders, a New York-based crowdfunding site for real estate. "It is a trophy city whereas Poughkeepsie is not."

9. Look Into Turnkey Real Estate as a Money Maker

Many investors don't understand or even know about this potentially profitable sector. In essence, a turnkey property transaction is where the investor buys a fully vetted, redeveloped, managed property that has a tenant. The idea here is to buy into a slice of real estate and a market, where a long-term buy-and-hold strategy is possible, meaning you can hold onto the purchase and expect rising property values. Be prepared also to handle property management or hire someone to do it for you.

10. Your Principal Residence Is No Investment

While your home might go up in value, it could also go down. Rich Arzaga, the founder and CEO of Cornerstone Wealth Management in San Ramon, Calif., examined 250 properties around the U.S. and went through close to 40 client files to project the financial impact of owning real estate versus liquidating it.

He found that "100 percent of the time it was better to rent rather than own," he said. Here's why: The carrying costs, or expenses needed to maintain the asset, range from property taxes and home insurance to emergency repairs and renovations. In a rental situation, the landlord covers those costs, leaving the occupant free to invest revenue in other areas. The wisdom here is to buy a home to enhance your quality of life, not your portfolio.

11. Home Equity Lines of Credit Might Never be Cheaper

In the waning days of November, a future rate hike seems fairly certain. Federal Reserve Chairwoman Janet Yellen recently indicated that the Fed still intends to raise its benchmark rate this year. So if you're going for a home equity line of credit, now's the time to do it.

"I'm a big fan of home equity loans when used responsibly," said Bijan Golkar, vice president and senior advisor of FPC Investment Advisory in Petaluma, Calif. "Many people have most of their wealth trapped in their main home. Having a HELOC allows you to have quick access to capital and you can normally write off the interest on your taxes."

12. Mezzanine Debt Can Get You in on the Ground Floor

If you're in a position to finance a building project, "mezzanine debt nowadays is a smart way to get in line to take over property in the event of a default," Behin said.

Mezzanine debt represents another layer of lending over and above the primary mortgage or construction loan equity. It is typically more expensive to the borrower because of the increased risk to the lender associated with this structure. "As is the case with any investment, the higher the risk, the higher the potential return," Behin said.

"When a company takes on mezzanine debt to fund, say, construction on a building, the building is not the collateral, but rather, ownership interest in the company is — and the lender can take that from you. If you feel confident in the business plan as well as with the sponsor of the project, mezzanine debt is a great way to get a high return and at the same time increase your chances of participating in a property takeover," he said.

13. A 15-year Fixed Mortgage Monthly Payment Isn't Much More Than a 30-Year Loan

Interest rates are generally lower on 15-year fixed-rate loans. A lower interest rate, and less interest to pay overall, makes the cost difference between that loan and a 30-year loan less than you might think in a monthly payment. For instance, in mid-November the interest rate was 2.96 percent on a 15-year loan in Illinois versus 3.86 percent for a 30-year term.

A $100,000 mortgage at 30 years and the above interest rate will cost you $460 a month; the 15-year mortgage is $689 a month. Yet $220 a month is roughly $7 a day — not a high price to pay to shave 15 years off a mortgage.

From GoBankingRates.com