7 Compromises You Should Never Make When Buying a Home

| Sep 21, 2017

Every successful home search begins with a wish list. Armed with your inventory of must-haves, you’ll know how to focus your search and recognize a potential home that isn’t worth your time.

Still, there’s a strange thing that seems to happen when you’re deep in the trenches of house hunting: The more you look, the longer that wish list seems to grow. But sooner or later, you have to own up to the fact that you can’t have everything—it’s inevitable that you’ll make some compromises somewhere.

And, in these days of tight inventory and cutthroat competition from other buyers, you might feel forced to waver far afield from your hallowed wish list in order to land a home.

That’s OK—it’s important to be flexible. But there are a few times when you absolutely should draw the line. Here are seven areas where you’ll want to dig in your heels.

You have never swung a hammer, have a phobia of power tools, and always pictured yourself in something new and shiny. But that doesn’t mean you won’t fall in love with a charming, century-old farmhouse that needs a ton of work. Now’s when you have to decide: Are you up to the financial and emotional challenges of taking on major renovations?

“There have been times when I’ve said to clients, ‘after being with you for a week, I really think we need to look at new construction,'” Kessler says. Many of those clients, he adds, were later grateful for the course correction, saying, “We would never have been able to enjoy ourselves in [an older] house.”

2. A good school district

Even if you don’t have children, you should make sure the house you’re eyeing has desirable schools nearby, says Tina Maraj, a Realtor® with Re/Max North Orange County in Fullerton, CA.

Does it matter if you’re not looking to have a few kids? Well, things can always change. But even if they don’t, good schools typically translate to a higher resale value—potential buyers with families will want to be in the right district.

Just make sure to do your research and determine where the home sits in relation to the school district boundaries.

“Often agents will advertise a property as being near such-and-such school area, but not necessarily specify the district, which can be very confusing,” Maraj explains. “It can be a real eye-opener if a buyer closes and they’re on one side of a main street that is the dividing line between the top-rated and the lowest-rated high schools.”

Go to the school district’s website to get a map of the district boundaries.

3. The floor plan

Does the home fit your minimum criteria in terms of number of rooms and the flow of the main living areas? If not, cross it off your list, says Sarah Garza, a Realtor and military relocation specialist with Trident Homes Realty in Arnold, MD.

Garza can share some personal cautionary tales: A military spouse, she’s moved 12 times in the past 20 years, buying and selling nine homes in the process.

“I regret that I compromised on layout in the past,” she says. “When I really needed four bedrooms, I’ve gone to three and then wished I hadn’t.”

Sure, you can add on. But don’t use that option as a fallback, Maraj warns.

“You can change a layout to make it an open floor plan, but it’s a lot more difficult to change the bedroom and bathroom count,” she says. “In the long run, you could end up having a lot of problems and taking on a really big financial undertaking.”

4. The neighbors

During your search, don’t just focus on the house you’re interested in—check out the neighboring homes as well, Maraj says. Are the properties well-kept, or candidates for an episode of “Hoarders”?

The condition of the properties around you can affect your future resale value. And they can just plain drive you crazy. Make sure you look—and listen—any time you visit your prospective home.

“You can’t change the house in front of you or to the side of you,” Maraj cautions. “And if there’s a barking dog every time you’re viewing the property, that’s another thing that you absolutely cannot change.”

5. Your budget

You’ve probably already determined how much you’re willing to pay for a home—and you shouldn’t budge on that number. But you should also dig in your heels on the additional costs beyond the sticker price. That means setting a budget for your monthly payments, HOA dues, utility costs, and real estate taxes—and sticking to it. (Hint: You want to do this before you start looking at homes, and definitely before you start making offers.)

Yes, a lender will give you a pre-approval and tell you how much house you can afford. But this is just one piece of the puzzle, and the costs of homeownership can still land you in a mountain of debt if you’re not careful, Kessler points out.

“I try to do a lot of pre-planning with clients about what can they really afford, as opposed to what the bank tells you,” Kessler says. “You never want to be house poor.”

6. Commute time

If you’ve already determined that you’re willing to take on a 30-minute commute, don’t allow yourself to be swayed into anything longer, Garza says.

“Sometimes buyers fall in love with all the shiny bells and whistles of a house that’s an hour away from work, and want to compromise on what they’ve told me from the beginning,” she notes. “I tell them, ‘I know it doesn’t matter right now because you really love this house, but that’s two hours every day that you’ll be sitting in the car and not enjoying your house. Is that worth it to you?’”

She adds: Until you’ve actually driven the route to and from your potential home and your office, at the times you’ll be commuting, you should never consider compromising.

In some large cities, being just a few miles from the highway can tack on an additional hour of commuting. Could you handle that after a long day in the office? Think carefully before making the sacrifice.

7. Parking

Speaking of your car, if you own one (or two), you absolutely want a guaranteed spot to park, whether that means an enclosed garage, a driveway, or assigned parking.

“There are many communities that now restrict outside parking, guest spaces, and overnight parking, which could be a real homeowner nightmare if you have to fend for yourself,” Maraj says.

To avoid frustration after you’ve closed a deal, stick to your guns about the things that are most important to you while making your choice, and ignore the rest of the noise.

“Copyright National Association of REALTORS®. Reprinted with permission.”

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9 Things Real Estate Agents Wish You Knew About Selling Your Home

| Sep 20, 2017

When it comes time to sell your house, having a great listing agent is one of the keys to making it happen. And yet, the agent can’t do it all—your help is needed. Help your agent help you!

Ideally, you will have an open, honest relationship with your listing agent. But even then, there are some things your agent might be reluctant to tell you. Whether to spare your feelings or because he assumes you already know, here are some things your listing agent wishes you knew. Listen up and learn!

1. Your stuff is lovely, but…

“While your home may be beautifully decorated, it still looks like your home, not the buyer’s,” says Teresa Stephenson, vice president of residential brokerage at Platinum Properties in New York.

In particular, clutter can make a home feel cramped and leave a bad first impression.

2. Stop hiding things from me

Leaky faucets? Termite infestation? An air conditioner that barely blows cool air?

“Don’t keep any of your home’s flaws from your agent because you are scared it might hurt your sale,” says Karen Elmir, founder and CEO of the Elmir Group in Miami.

Remember, your listing agent is on your side and knows what must be fixed or what can slide—so go ahead and share the good, the bad, and the ugly. Whatever you hide from an agent could rear its head as a nasty surprise later.

3. You need to fix a few things

Katie Messenger, a Realtor® with Bello Dimora Real Estate Network in Kentucky and Cincinnati, wants clients to know they might have to spend a few bucks to make their house look its best.

“Replace the trim the dogs scratched up. Clean the scuff marks off the walls. Power-wash the algae off the vinyl siding,” she says. “To you, it’s totally normal because you’ve lived with these issues for years. To buyers, these will look like expensive repairs, which means they’ll have to lowball you, or not make an offer at all, because your house ‘needs a lot of work.’” Even if it actually doesn’t.

4. Your remodeling might not pay off much

Blood, sweat, tears, and a heck of a lot of cash might have gone into your remodeling projects, but that doesn’t mean there’s a guaranteed payback for any of it, as illogical as that might seem.

“An ROI, or return, on a home’s upgrades does not necessarily increase value,” says Michael Kelczewski, a Realtor with Brandywine Fine Properties Sotheby’s International Realty in Delaware and Maryland.

It largely depends on what kind of home improvement you do; here’s a list of some common renovations with their return on investment.

5. Be nice: Don’t overprice!

While listing at a high price and then coming down as necessary seems like the best way to avoid leaving any money on the table, you could actually be shooting yourself in the foot.

“If you overprice your home, buyers may not catch that, but buyer’s agents will,” points out Doc Reiss, managing broker at Town & Country Real Estate in Port Angeles, WA. “When a home is overpriced, buyer’s agents will either avoid bringing their buyers or, worse yet, they use it as an example to sell another property: ‘See how much nicer this one is for the price than the last one we saw?’”

6. Cleanliness really does count

Do people really not clean their house before it’s shown to potential buyers? Yep.

Andrew Mak, an agent with Corcoran in New York, says things like a greasy stove, dust on the floors or furniture, and unkempt bathroom fixtures like the shower, sinks, and toilets are noticed most during a showing.

“The kitchen and the bathroom are the two main areas where cleanliness—or lack thereof—is most obvious,” says Mak. Gross. (You did want to sell this house, right?)

7. Have some patience

Yes, we know you thought your beautiful house would fly off the market the moment it hit, but that’s not always the case. In fact, realtor.com data show that homes sit on the market for an average 66 days.

“The real estate process is a long process from showings to inspections to negotiations,“ says Kelczewski. “Be patient! Persevering leads to success.”

8. Don’t hurt the messenger

“When I present a lowball offer, a long list of repair items, or a low appraisal, I am just relaying information from another party,” Messenger says. “I know it’s an emotional and sometimes frustrating process; however, I am not the one writing ‘insulting’ offers, performing home inspections, or appraising the home.

“I am a representative of your best interests, so know that I am always in your corner to fight for what makes the most sense for you—not all of the other parties involved in a real estate transaction,” she says.

9. Selling your home isn’t a spectator sport

“Some sellers don’t realize that hiring a real estate agent doesn’t mean they get to sit back with a bag of popcorn and watch the home sale unfold,” says Jonathan Self, a Realtor with Center Coast Realty in Chicago.

“Selling a home is a team effort, even when you hire a real estate agent. If you can keep your home clean and tidy and arrange for someone to dog sit during showings, I can be 100% focused on selling your home for top dollar. That cooperation and partnership makes it much easier for me to do a good job for you.”

“Copyright National Association of REALTORS®. Reprinted with permission.”

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What “Great Bones” Really Means

Daily Real Estate News | Tuesday, September 12, 2017

“This house has great bones.” As a real estate professional, you’ve heard the phrase countless times. You’ve probably even uttered it more than once. But what do we really mean when we say a house has great bones?

It’s a feature that all buyers want, but few can define. Understanding how to identify qualities that add up to the coveted “great bones” feeling can help you set your listing apart.  Recently, Architectural Digest’s Lindsey Mather asked a handful of designers to get specific about the qualities that give a home this elusive quality.  Here are a few distinct items to look for:

Good flow: Check how it feels to simply walk through the home. Do the rooms make sense next to each other, or do they seem choppy or lopsided? Alabama decorator William McLure says architects and designers often rely on symmetry and mirrored design elements to offer a feeling of balance to residential spaces. “It makes the layout of the house not look like an afterthought,” he says. “You want rooms that look well planned and that structurally make sense.”

All the little things: Here’s where your macro lens comes in handy: The intricate details and architectural features that make a listing stand out in the eyes of buyers are often too small to see in a wide-angle property tour photo. Fancy plaster, original fireplaces, bespoke ceiling beams, thick moldings, and vintage lighting and hardware are all worth the time to fawn over in your listing descriptions. Also, any windows that are out-of-the ordinary can really help a place stand out as different.

Plenty of headroom: Sometime we use “good bones” to refer to elements that are hard to change, according to New York–based interior designer Alyssa Kapito. “A room or a house with great bones for us has high ceilings, tall windows, and is generally well proportioned,” she says. “Everything decorative can be rather easily switched, but it’s quite difficult and expensive to get those three items on your checklist if they aren’t already there.” Make sure you check for drop ceilings, though. Good bones sometimes hide under tiles and panels.

When You’re Buying a Home, Look for These 4 Signs,” Architectural Digest (Aug. 9, 2017)

“Copyright National Association of REALTORS®. Reprinted with permission.”

 

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A Sign That More Housing Inventory Is Coming

Daily Real Estate News | Monday, September 11, 2017

Homeowners who have decided to stay put in their current properties may soon be ready for a move, helping to relieve stubbornly tight housing inventory. The evidence is in Fannie Mae’s latest Home Purchase Sentiment Index, in which the number of consumers who say now is a good time to sell a home neared an all-time high. The index—which is a measure of about 1,000 consumers’ attitudes toward housing—rose 1.2 points in August to a reading of 88, reflecting a year-over-year jump of 21 percentage points in the number of consumers who looked favorably on selling. The August reading is just shy of the index’s record high of 88.3, set in July.

Meanwhile, the number of consumers who say now is a good time to buy dropped 5 percentage points in August to a new survey low for the second consecutive month. The number of those who look favorably on buying is down 16 percentage points year over year, Fannie Mae reports.

“In the early stages of the economic expansion, homeselling sentiment trailed homebuying sentiment by a significant margin. The reverse is true today,” says Fannie Mae chief economist Doug Duncan. “The net ‘good time to sell’ share is now double the net ‘good time to buy’ share, with record-high percentages of consumers citing home prices as the primary reason for both perceptions. Such a sizable gap between selling and buying sentiment, if it persists, could weigh on the housing market through the rest of the year.”

Here are some additional findings from Fannie Mae’s August sentiment index reading:

  • 36 percent: Consumers who say now is a good time to sell, an uptick of 8 percentage points from July.
  • 18 percent: Consumers who say now is a good time to buy a home, a new survey low.
  • 48 percent: Americans who say home prices will rise, up 1 percentage point month over month.
  • 74 percent: Consumers who say they are not concerned about losing their job, a 1 percentage point drop in August.
  • 16 percent: Americans who say their household income is significantly higher than it was 12 months ago, unchanged from July.

Source: Fannie Mae

“Copyright National Association of REALTORS®. Reprinted with permission.”

 

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Myths Sellers Believe About Pricing Their Home

Daily Real Estate News | Thursday, September 07, 2017

Many home sellers succumb to myths about home pricing that don’t match the reality of the housing market. Realtor.com® recently highlighted several of those common pricing myths, including:

You won’t always make money on the sale of a home.

Home sellers shouldn’t always assume they’ll walk away with a profit. The National Association of REALTORS® estimates home prices will increase 5 percent by the end of this year. That said, 23 markets have seen the cost of single-family homes decrease in recent months, NAR reports. Sellers’ return greatly depends on their location and how much they paid for the home when they purchased it.

A high home price will net you more in the end.

Sellers may be tempted to set a higher price to see if they can actually get it. “While the payday might sound appealing, you’re actually sacrificing your best marketing time in exchange for the remote possibility that someone will overpay for your home,” Kathleen Marks, a real estate professional with United Real Estate in Asheville, N.C., told realtor.com®.

Overpricing a home from its initial listing isn’t easily fixed by lowering the price on it, either. Buyers may presume something is wrong with the home if they see it linger on the market or have multiple price reductions.

Setting a low price initially means you won’t make as much money.

Pricing a home on the low end can actually pay off. Low-priced homes tend to prompt greater interest among buyers. That could result in a bidding war, which could increase the home’s price way past the listing price.

Sellers can add renovation costs to the price.

Just because you completed a renovation of your kitchen or outdoor deck does not mean you can recoup every dime of that investment at resale. Some renovations may help you to increase your home’s value. Sellers, however, rarely will recoup the entire cost from a renovation. Sellers, on average, see a 64 percent return on every dollar they spend on home improvements, according to realtor.com®. But the profit can drastically vary by the type of remodeling project.

Source: “7 Pricing Myths to Stop Believing if You Ever Hope to Sell Your House,” realtor.com® (Sept. 7, 2017)

“Copyright National Association of REALTORS®. Reprinted with permission.”

 

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Flooded Homes Can Be Fixed But…

Daily Real Estate News | Wednesday, August 30, 2017

As Hurricane Harvey moves off the coastline of Texas, it’s leaving massive flooding in its wake that has destroyed homes and businesses.

Until the floodwaters recede, cleanup efforts are mostly on hold. But remediation companies say they’re ready to jump into action as soon as they’re able. In preparation for the undertaking, here are a few important items to share about repairing a flooded home, compiled by realtor.com®.

Time is of the essence.

A home that has been flooded does not need to be torn down, but the water does need to be removed quickly. Truck-mounted vacuums with 2,000 horsepower and dehumidifiers can extract moisture from furniture, hardwood, tile, and Sheetrock. But Robyn Kent, a claims administrator at Dalworth Restoration in Euless, Texas, says the most important element is getting it cleaned up quickly: “Closer to the three- to five-day mark is when it becomes questionable, since by then, all the materials have become fragile.”

Mold is the real issue.

“One of the biggest problems—especially in Houston in the summer—is going to be mold,” Tyler Drew, a Los Angeles real estate professional and investor, told realtor.com®. “The longer a house sits with water, the worse the mold infestation. Affected areas have to be removed, the wood and concrete treated with anti-mold agents, and all of this has to be done after the house is sealed, in order to prevent the infestation from spreading and sickening people.”

Repair costs can escalate.

“Drying off a 2,000-square-foot house in normal conditions may cost more than $2,500, while in situations like Harvey is producing, the job scope expands quickly—and so will costs,” says Peter Duncanson, director of operations and safety with ServiceMaster Restore. Flood insurance may cover the cost of repairs, but it depends on what type of insurance the owner has. Standard homeowner’s insurance policies don’t typically cover flooding inside a home, and many in Houston don’t have flood insurance.

Source: “5 Surprises About Fixing a Flooded Home,” realtor.com® (Aug. 29, 2017)

“Copyright National Association of REALTORS®. Reprinted with permission.”

 

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More Owners Are Using Their Equity Again

Daily Real Estate News | Tuesday, August 29, 2017

Home prices continue to rise and more homeowners are tapping into their home equity, making home equity lines of credit and cash-out mortgage refinances popular again.

Home equity line originations jumped 8 percent to nearly $46 billion in the second quarter. That is the highest level since 2008, according to data from Equifax, a credit reporting firm. Cash-out mortgage refinances reached $15 billion, a 6 percent increase from a year ago, according to Freddie Mac.

“If customers feel like their home values are stable or increasing, and if they feel like their job prospects are good—that they will have the ability to pay back a loan they take—then they will start to take out more home-equity lines,” says Mike Kinane, head of U.S. consumer-lending products at TD Bank. “This is what we are starting to see.”

The median sale price of an existing home surged to $263,800 in June, a new record high, according to the National Association of REALTORS®. Sales prices are up 40 percent from $187,900 at the start of 2014.

Lenders say they’re being more cautious in how they are issuing HELOCs nowadays, much moreso than in the housing bubble days, when consumers took equity out of their homes at a record pace.

“We continue to watch what’s going on and the way it’s being done, but it’s much different from before the crisis,” Tom Wind, head of U.S. Bancorp’s home mortgage division, told The Wall Street Journal. Lenders say more owners are using these loans to take on renovations or consolidate debt, which are considered investments rather than luxuries.

Beyond rising home prices, low interest rates on home equity lines of credit are making them a more attractive option, too. The average interest rate was about 5.6 percent, according to Bankrate.com. Credit cards average 16.7 percent.

As the housing bubble showed, there are risks to these types of loans. Cash-out refinances can extend the length of a mortgage and cost a borrower more in interest over the life of the loan. If home prices do fall, a borrower could become overextended and be at risk of owing more on their mortgage than their home is currently worth.

Regardless, home equity lines of credit are hardly at levels like the boom days and owners are taking them out more cautiously.

As of early August, U.S. banks held about $387 billion in revolving home equity loans, which is still down more than 35 percent from a peak of about $610 billion in early 2009, according to the Federal Reserve.

Source: “Tapping Your Home Equity for Cash Is Big Again,” The Wall Street Journal (Aug. 28, 2017) [Login required.]

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3 Remodeling Mistakes That Hurt Resale Values

Daily Real Estate News | Monday, August 28, 2017

“Projects that take a home significantly beyond community norms are often not worth the cost when the owner sells the home,” says Scott Robinson, president of the Appraisal Institute. “If the improvements don’t match what’s standard in a community, they’ll be considered excessive.” Lifestyle website CheatSheet.com highlights a few renovation mistakes that could inadvertently lower a home’s resale value.

  1. Letting minor damage go unfixed. To better protect your investment, touch up chipped paint, repair leaky faucets, and remove carpet stains. “Your home has to look better on the day of the open house than it’s ever looked before,” says Steve Clark, a real estate professional in Los Angeles. “If the back door is covered in scratch marks from the dog, you have to fix that.”
  2. Failing to remove trees that pose safety hazards. Though trees can be a selling point, they need to be well-maintained and planted in the right spot in order to boost the value of a home. Trees planted too close to a house could pose a fire hazard, or the tree’s root systems could damage the home’s foundation. A tree planted in the right spot could not only be aesthetically pleasing but also potentially lower energy bills.
  3. Garage conversions. A quarter of Americans say their garage is too cluttered to fit their car inside, according to a survey by Gladiator GarageWorks. So some homeowners may decide to convert the garage into a bedroom or den—but that could be a big mistake at resale. While it may earn extra square footage, these spaces tend to be poorly insulated. Also, buyers may prefer the covered parking space instead.

“Copyright National Association of REALTORS®. Reprinted with permission.”

 

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Inventory Relief for Desperate Buyers?

Daily Real Estate News | Friday, August 25, 2017

If your buyers have been frantically searching for a home as the inventory crunch grows tighter, some relief may be on the way. It’s a challenging environment, with homes in July selling at the fastest pace this year, prompting “desperate buyers to bid up prices and move quickly to close,” according to realtor.com®’s monthly housing report.

Additionally, realtor.com® reports that homes sold at a record pace in August, as listings moved off the market 8 percent faster than they did a year ago. The median time on market for realtor.com® property listings in August was 66 days—six days shorter than a year ago. “The overall housing market remains deep into shortage mode, even as we reach a seasonal high number of homes for sale,” says Javier Vivas, realtor.com®’s manager of economic research.

But by the end of the month, August may show 500,000 new listings, which would mark the largest yearly gain in new inventory since March 2016, realtor.com® predicts. While that would give buyers more options to choose from, the new listings likely won’t be any kinder to their budget. The listings are expected to be larger homes at higher costs, realtor.com® notes.

“This sets up what could be an extended and frustrating fall homebuying season for first-time buyers, and it marks what could be the start of some relief in the mid-to-upper tier,” Vivas notes. The median list price in August was $275,000, a 10 percent increase from a year ago, realtor.com® reports.

Source: “America’s 20 Hottest Real Estate Markets for August 2017,” realtor.com® (Aug. 24, 2017)

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