Buying & Selling Homes - 2/11 - Bob Vila

Category: Buying & Selling Homes

Don’t “Fall” Down: Surviving Autumn’s New Real Estate Rules

Whether you're buying or selling, these familiar tips may help you navigate the unfamiliar territory that characterizes real estate this season.

Fall 2013 Real Estate Tips


Well, that didn’t last long. The buoyant housing market of this past spring has already sputtered out, and mounting evidence suggests that autumn won’t go easy on either buyers or sellers. Real estate activity fluctuates in keeping with a slew of factors; in the best times, those factors strike a delicate balance.

Right now, things are a bit off kilter: Mortgage rates are high, and the number of homes for sale is low. New data from the agency Redfin show that in the spring, 50 percent of survey respondents thought it was a good time to buy. Months later, at the beginning of fall, only 25 percent retained a positive outlook.

The only certainty is uncertainty, as the market changes gears again and again over time. Those looking to buy or sell a home this season are wise to ignore countrywide trends. Focus not on what you have no hope of changing, but on those elements that are within your power to control.

Tips for Sellers
Rattled by higher mortgage rates and unexpected fees, buyers are likely to be attracted to any guarantees you can give them. Set a firm move-out date, commit to paying a percentage of closing costs, or promise a sweetener—say, $1,000 towards new appliances. Meanwhile, assure buyers that your house is a solid investment: For instance, create a chart illustrating the stability of home values in your neighborhood over the past several years.

Related: Selling This Fall? Court Millennials and Empty-Nesters

Tips for Buyers
Gain as much clarity as possible as to what closing costs you can expect. The Consumer Financial Protection Bureau provides a comprehensive list that should enable you to generate an accurate estimate. Plus, heed the following best practices and money-saving strategies:

  • Clamp down on spending to insulate yourself from undesirable swings in your credit rating.
  • See if you can combine your auto and home insurance to get a lower rate.
  • Negotiate a lower rate for a midweek move.

Anticipating costs and, when possible, minimizing them affords home buyers a rare bit of breathing room in this unpredictable housing climate.

Quick Tip: House Hunting

When you're out visiting homes on the market, these house hunting tips can help you distinguish between properties with potential and mistakes waiting to happen.

If you’re house hunting, here are some things to keep in mind on your walk-through. Check for structural integrity. Excessive damage could indicate more serious problems. Look for updated wiring and note the age of the heating and cooling system. Look for architectural details that could add value, and check out the condition of the kitchen and baths. If you like the house, get a professional inspection with a written report.

For more on buying and selling homes, consider:

House-Choosing Checklist
5 Pro Tips to Help You Find the Perfect Fixer-Upper
10 Things to Consider Before Buying a Foreclosed Home

Selling This Fall? Court Millennials and Empty-Nesters

Looking to make a quick sale before winter arrives? Target the types of buyers who drive the market in autumn.

Fall Home Selling Tips


If you’re planning on putting your house on the market this fall, be aware that folks at different stages of life enter the market at different times of the year. For example, the lively spring real estate season thrives on families wishing to relocate while their kids are on break from school. Home sales in autumn, however, are driven mainly by millennials and empty-nesters. As we near the end of the summer, many would-be home sellers are wondering whether either of those populations can be counted on to be active in the coming months.

Related: 10 Simple Home Staging Tips Every Seller Should Know

Millennials. What’s keeping millennials from moving out of their parents’ basements? Only money. To scrape up a down payment, young and financially insecure house hunters are likely to seek loans either from family members or the federal government. But are they actually going to obtain those loans?

Watch the stock market for clues. If investment returns are strong, waffling parents might feel rich enough to subsidize their adult children’s dreams of homeownership. Less vulnerable to uncertainty are government home loans, namely those offered by the Federal Housing Administration. As we’ve reported in the past, the FHA makes loans that combine purchase and improvement expenses. Mention those programs in all of the materials you prepare to market your property. Hey, it’s a worth a shot: You might end up informing a potential buyer of something he doesn’t already know.

Here are a few tips to help you court millennials:

• If someone visits your open house with parents in tow, pay as much attention to the parents as you do to the apparent buyer himself.

• Supplement the listing with a document that highlights the amenities that millennials view as must-haves (for example, wireless Internet infrastructure).

• Allow plenty of time for the loan to be approved. The average millennial’s credit history lacks a landlord’s verification of his ability to meet payments.

Empty-Nesters. Having already raised children, empty-nesters understand the value of good school districts, but nowadays they are more interested in amenities that suit their child-free lifestyle. If you have a hunch your house may appeal to empty-nesters, here’s how to play up that attraction:

• Emphasize multipurpose space—for instance, stage one bedroom as a home office-cum-hobby room—because empty-nesters crave flexibility for the future.

• Provide a map to points of interest within walking distance. To the extent possible, aging baby boomers wish to integrate exercise into their daily habits. 

• Showcase quality. Without teenagers around, empty-nesters can enjoy more delicate finishes and fine details, so give them something to brag about. They want to upgrade as they downsize.

Moving? 5 Ways to Minimize Surprise Costs

As if moving weren't stressful enough, it can also carry with it a host of unanticipated costs. Prepare yourself with our rundown of surprise fees and hidden expenses.

Moving Costs


In the weeks before you close on a new house, it’s tempting to think you’ve overcome the most challenging financial hurdles of real estate. The truth is that in the run-up to moving day—and heck, even after you’ve completely relocated—unexpected fees and expenditures can pile up. Here are a few steps you can take to keep costly surprises to a minimum.

1. Protect Your Credit
Moving involves a litany of expenses that can have you reaching again and again for your Visa or MasterCard. Be careful: Eating up your available credit can throw off the assumptions that shaped the terms of your pending mortgage. If you start maxing out your credit cards, your lender might be forced to deem you a greater risk, which could in turn make your mortgage rate go up. So hold off on charging any big-ticket items (for example, new furniture) until after you close.

2. Research Municipal Fees
Believe it or not, some municipalities require a payment from outgoing homeowners, while others slap a fee on those who are just joining the local population. You might even get dinged by both the place you are leaving and the place you are moving to. There’s no way around municipal fees like this, but because they can amount to thousands of dollars, take the time to determine whether you’ll be facing any.

Related: Moving 101: Easy Ways to Make the Most of Any Move

3. Avoid Building Fines
If you’re moving out of a condominium or apartment building, check with the board or management company well in advance of your move. Outgoing occupants are most likely required to follow an established procedure. It’s possible, for example, that your building enforces quiet hours or that moving trucks are permitted to park only in designated spots. Failing to observe the rules could mean a hefty fine, so be sure to find out what the regulations are.

4. Beware of Outstanding Payments 
Directly question the home seller about any outstanding or impending fees, assessments, special taxes, or improvement costs. If there is money owed, it’s not your obligation to pay it—at least not prior to the closing. Settle all questions of debt before taking formal ownership of the property, or else you could be stuck picking up the previous owner’s tab.

5. Expect Mortgage Add-Ons
Thanks to the ongoing realignment of lending norms, the Federal Housing Authority (FHA) has boosted the fees it charges buyers at closing. The FHA guarantees about one-third of mortgages each year, so don’t assume that your new loan is going to resemble your old one. Identify the differences between the two and know what you’re getting into.

Finally, a tip about tips: Don’t forget to have plenty of cash on hand for those folks who will make your life a bit easier as you go about the always-tedious task of moving. Everyone appreciates a little appreciation.

3 Steps to an Easy Mortgage Approval

If you think you'll be in the market for a mortgage in the near future, now is the time to make sure your life and your finances conform to a few commonsense rules.

Getting a Mortgage


Risky practices consigned to the past, mortgage lenders are now returning to applying the same standards that your parents had to meet when they purchased their homes. In this landscape, hewing to three commonsense rules will help you receive swift approval of your mortgage application.

1. Maintain a high credit score. Will you pay the money back? That’s really all the lender wants to know. If you have a solid track record of repaying past loans, then you are likely to repay this one. Each credit reporting agency—Experian, Equifax, and Transunion—calculates your credit score. That figure summarizes your reliability as borrower. The higher your credit score, the lower your mortgage rate. The lower your mortgage rate, the lower your monthly payments. So at least in the context of mortgages, good guys finish first.

2. Prove that you earn what you earn. Traditional employment makes loan officers smile because their ideal mortgage candidate has always had the same job, working for the same employer, and enjoying a yearly raise. That level of stability may seem boring to you, but in the eyes of a mortgage broker, change equals risk. Self-employment, career transitions, or periods of unemployment, therefore, present challenges. None of these make it impossible to secure a mortgage, but you may need to work a bit harder to make your case.

3. Make a juicy down payment. Typically, 10 percent is the minimum down payment required for a mortgage, but if you can swing it, putting forward more than 20 percent gets you off the hook for some exasperating expenses—for instance, mortgage insurance. The business of borrowing money can become pretty complicated, but this part couldn’t be much simpler: The more money you put down, the less risk there is for the lender. The less risk for the lender, the greater your chances of getting a mortgage.

5 Pro Tips to Help You Find the Perfect Fixer-Upper

On the hunt for that elusive diamond in the rough? Real estate wizard Randy Florke shares his top tips on buying a fixer-upper.

As founder and president of The Rural Connection, a real estate company based in Upstate New York, Randy Florke has purchased and restored more than 40 old farmhouses, creating gracious and comfortable homes from these diamonds in the rough. When scouting a property, which qualities catch his eye, and what are the red flags that make him walk away? Read on for pro tips on buying a fixer-upper.


1. Location, Location, Location

Buying a Fixer-Upper - Location


“If a house has an amazing location, there’s almost nothing in the way of renovation hurdles that get in my way,” Florke says. “My dream location is all about privacy. I love a house that’s set back from the road. If it’s also got a great view or a water feature, such as a pond or creek—those are both bonus features.”


2. Budget for Renovation Costs

Buying a Fixer Upper - Budget


“When I first tour a house, I’m thinking about what I’d like to change and what needs to be done,” says Florke. “By the time I walk back out the door, I already have a preliminary idea of what the renovation costs might be.” These costs, Florke continues, have to be factored into your overall budget. If you’re unsure about the costs yourself, ask someone you trust to come along and offer you an honest estimate. “It’s essential that you know what you’re getting into.”


3. Focus on Roofing and Foundations

Buying a Fixer-Upper - Roofing


Issues with roofs and foundations often scare off potential buyers, according to Florke, but if you adore the house, ask a contractor to take a closer look. “I’ve bought many houses with both of these issues,” he says. “Provided the cost to fix them properly is within your budget, it could be a great opportunity.”


4. Know Where to Draw the Line

Buying a Fixer-Upper - Wood Rot


Repairable roof and foundation problems aside, Florke would pass on an old home with termites or significant rotting. “If a roof has been left in disrepair for too long, a house will rot from the inside out. That’s not worth an investment.” But don’t rush to dismiss the land on which the tear-down is sitting. “It you’re in love with the location and your budget allows, you can raze the old house and rebuild a new one in a similar style.”


5. Stay Positive

Buying a Fixer-Upper - Stay Positive


If you’ve found an old home you feel is perfect for you but have reason to believe the renovation costs will not realistically fit into your budget, “walk away,” Florke advises. “There will always be another house to fall in love with.”

A Good School District Is Worth How Much?

All homeowners, even those who aren't parents, benefit from living in a good school district.

House Prices and School Districts


You don’t need children to understand that good public schools support the value of homes in their district. And while higher quality schools usually are accompanied by higher property taxes, homeowners in such districts are eventually “paid back” through a higher home sale price.

Getting paid back sounds great, but how much are we talking about? New research from shows that for entry to a desirable school district, 9% of buyers say they would pay 11% to 20% above budget. Separately, 17% report they’d pay extra to be close enough that their kids could walk to and from school.

Related: 7 Renovation Tips to Boost Resale Value

In the showdown between amenities for adults and education for kids, you guessed it: the kids win. found that 62% of buyers would pass up a home spa if it meant getting into the right school district. 50% would concede easy access to shopping, while 44% would give up space in the form of a bonus room.

If the house you plan to sell is located in a highly coveted school district, do everything in your power to highlight that fact in all of your real estate marketing materials. Many potential buyers are the parents of children currently in the school system, so be sure to get the word out among neighbors and local friends.

If you are buying a home, make use of a search tool that enables you to filter by school district, as district boundaries don’t always align with town, village, and city lines. After all, you cannot assume that your children will be assigned to attend the same school as the kids down the block or even next door.

How To: Attract First-Time Home Buyers

Marketing your listing to millennials? As 20-somethings slowly enter the market for the first time, they bring different priorities than did previous generations of home buyers.

How to Attract First-Time Home Buyers


Millennials can’t seem to catch a break. Saddled with student loan debt and facing some tough employment challenges, 20-somethings today are finding it more difficult than previous generations to get a foot into homeownership. In 2013, first-time buyers have accounted for only 28 percent of home purchases, down from 34 percent in 2012. If you’re selling a house with appeal for younger house hunters, here’s how to make it even more enticing:

Show how it lives smart. Millennials are OK with less space, so long as that space is multifunctional and intelligently organized. If possible, show how rooms can be used in different ways. For instance, move a fold-out sofa into the home office to demonstrate its potential as an occasional guest room.

Wire up. Millennials are said to be a mobile group. At home, that mobility takes the form of a wireless internet connection. Include in your marketing materials an explanation of local internet service quality and costs (and of cell phone reception on your property).

Map out commuting routes and alternatives. Bikes, public transit, and car-sharing services like Zipcar are catnip for millennials, enabling them to minimize day-to-day costs and save for monthly housing fees. Create a map that situates the proximity of your house to available transportation amenities.

Introduce them to the community. In today’s erratic and hypercompetitive market, buyers often parachute into unfamiliar neighborhoods, chasing affordability. Provide background on the features and culture of your neighborhood, since harried buyers may not have time to investigate on their own.

Be ready to respond on a moment’s notice. Millennials are likely to pull up in front of your house and review your listing from the screen of a smartphone. If they want to see your place, they want to see it right away. Be ready to show it at a moment’s notice.

Selling Your House? Help Your Neighbors Help You

Perhaps more than you realized, other homeowners in your neighborhood can influence whether or not you achieve the highest possible sale price for your home.

We’ve all heard the real estate maxim, “location, location, location,” but not everyone fully appreciates how neighbors can affect the perception—and indirectly, the value—of a given property. If you’re in the process of selling your home, here’s how to help your neighbors help you:

Neighbors and Home Value


Be Considerate. Let your neighbors know if and when you are planning to host an open house, as their on-street parking or driveway access could be affected. Give them plenty of lead time, so they can plan accordingly. One peace-making idea is to invite your neighbors for a private pre-showing. Who knows? By request or their own election, they might choose to get the word out on your behalf, whether through social media channels or via old-fashioned gossip.

Consult your neighbors before you begin any pre-sale prep work, especially if that work is to be done on your home’s exterior. Try to minimize any negative effect your home improvement might have on those living nearby. Your porch needs some repair? Schedule the carpenter to come midday during the workweek, when your neighbors are least likely to be enjoying their own outdoor living space. As you set out to sell, the last thing you need is fresh resentment emerging.

Slideshow: 7 Renovation Tips to Boost Resale

Be on the Same Page. Potential buyers may poll your neighbors about touchy topics like the local flood history. It’s smart to inform your neighbors about how you are handling such questions. If you have fixed notorious problems known to your neighborhood, take care to bring everyone up to speed on your home’s current condition. Neighbors may need to be reminded of the investment you’ve put into the place, especially if it has a troubled history (e.g., foreclosure).

Share your pricing rationale with neighbors, and if appropriate, reveal the details of your appraisal. After all, even your most entrenched neighbors will sell their respective homes one day, and that means they are likely to be curious. Since your asking price and sale price will be a matter of public record eventually, there’s no advantage to playing coy.

Last but not least—assuming you can find a sensitive way to broach the subject—consider offering to pay for services, such as dog walking or landscaping, that would offset the effect of your neighbors on the appearance of your own property.

How To: Figure Out What Your House Is Worth

Curiosity is not least among the many reasons you might wish to estimate the value of your home. Fortunately, a number of online tools can help you pinpoint what your property is worth today.

Estimate Home Value


If you’re refinancing or selling your home and wish to find its estimated value, a handful of online tools can help you. While it’s true that a lender will only accept the valuation of a formal appraisal, any of the following sources can give you a pretty good idea of what your house is worth today:

• Chase Bank Home Value Estimator allows you to print out a summary, detailing the different factors that decided the estimated value of your home.

• Property Shark valuations include recent asking prices and a very useful FEMA flood zone map.

• A Zillow “Zestimate” relies on a proprietary formula, which combines public and user-submitted data to estimate the current market value of your home.

• RealQuest is the consumer snapshot version of the industrial-strength data crunched by CoreLogic. (A report costs $49.)

As part of estimating your home’s value, Be sure that any market “comparables” you consider are reflective of the very latest information, and that includes pending sales (transactions that are underway but have not yet been finalized).

Until a sale has been closed and registered in the public property records database—a process that can take eight weeks or more—the are only two ways to obtain specifics on pending sales.

One way is through real estate agents, who have access to pending sales data by virtue of membership to multiple listing services. The second way is to seek out your neighbors who in the process of selling and ask them directly. The latter may seem a tad direct, but it’ll all be a matter of public record soon, anyway!