The Art Of House Hunting

Armed with your down payment and your pre-approval letter for a mortgage loan, the next step is finding the house that will best meet your family's needs. With realistic expectations, patience and plenty of research, you'll be well on your way.

Once you narrow the search to neighborhoods you like, you'll want to determine the maximum house price you can afford. Even though you're pre-approved for a set loan amount, it doesn't mean you can afford it. You'll want to factor in other expenses, including retirement and college savings, vacations, and home maintenance and repairs, when you calculate how much you can afford for a monthly payment. And don't forget to budget for homeowners insurance and property taxes. There's also homeowner's assocation fees, especially in newer developments.

Next, differentiate your needs versus your wants. You need three bedrooms, but a fourth room would be nice for a play room or guest room. You need a two-car garage, but a larger one would be nice for storage. You need a functional kitchen but want hardwood floors. You need two bathrooms but want a luxurious master suite. You get the picture.

As you begin your house-hunting venture, prepare a checklist. Break it down between exterior and interior characteristics. Make notes on each feature and make notes. Some people give each a 1 to 10 score, which is fine, but the first few houses you see will score differently than the last few because you have many more to compare against. Also, after viewing many homes, the numbers begin to lose meaning.

Some of the exterior features to rate might include size of yard, quality of fence, paint condition, roof condition, window conditions, garage, back yard. When it comes to interior, think about square footage; the floor plan; condition of walls; the size, quality, and functionality of the various rooms and closet and storage space.

Your checklist should also include any other factors you deem important—the amount of traffic, the appearance of the neighborhood, safety in the area, the reputation of local schools, etc.

Here are some other suggestions from industry experts:

•               Take a camera with you to capture an image of each house you look a that makes it to the "maybe" list.

•               Don't make a hasty decision, especially if you feel yourself becoming guided by emotion. Selecting a home takes time, thought and analysis. You should carefully weigh the pros and cons of each house you like.

•               Review your checklist and notes and compare it against your needs, wants and budget.

•               Bring your spouse, friend or family member with you to get a second opinion. They may notice a shortcoming that you've overlooked.

•               Find out how much utilities and maintenance cost.

•               Stay on top of newly listed houses via a Multiple Listing Service on the Internet.

•               Remain in close contact with your agent. This is extremely important if you're in a strong seller's market and/or in which homes that are priced right go fast. You want a good agent who will alert you of new listings and who will show you the houses as soon as they're listed.

•               Be prepared to look at the potential of a house rather than what you see in front of you. Set your priorities and decide what can be sacrificed. It's more important that the layout of the house and the number of bedrooms you need fit your needs and that all major systems are functional versus your dislike for the avocado green carpet or the lack of landscaping. Those types of cosmetic shortcomings can be easily remedied once you buy the house.

If you find a house you like, offer a competitive bid. Keep in mind you'll likely be competing against other offers—especially if interest rates are low and the spring buying season is in full bloom.

And don't forget—once you make an offer, make it contingent upon the findings of a professional home inspection. If any major defects surface, you'll want to have the leverage to renegotiate or back out of the deal completely.

And, of course, give us a call! We’d love to help you with your house hunting.

10 Lessons To Learn As The Housing Market Recovers.

   

Headlines abound: The Housing Bust is over… 

In June, a survey of economists concluded that housing has hit bottom.  Realtors®, homeowners and renters, Americans, and citizens of the world all are sighing with collective relief.  The economy and housing values both have cycles.  It has been more than eighty years since the difference between the top and the bottom was so great.

As Realtors®, we are relieved that we are at the bottom, but we are realistic with the changes in the market and our work.  In the not too distant past, the overwhelming majority of our work was prior to sales agreement, now it can be after.  In that same time, most transactions closed.  The”fallout rate” was nonexistent.  Most sobering is what is now required to get to closing and how many things can derail a transaction for a “willing, ready, and able” buyer.

So we are cautiously engaging the new reality, but first we need to pause.  If we do not learn from history, we are bound to repeat it.  We do not want to repeat the last ten years.  So what are the lessons we should learn?  Here are 10 lessons that come to mind:

1. The economy cannot recover without housing.
2. Everyone needs shelter, but not everyone needs to own their shelter.
3. High homeownership rates are important but they must be sustainable.
4. Home prices go up and go DOWN.
5. The process of purchasing /financing a home is more complicated.
6. Sound underwriting of mortgages is critical.
7. Home equity should not be used for ordinary living expenses.
8. Financial reserves for family, companies, and countries are necessary.
9. Homeowners confidence in the economy is directly related the value of their own homes.
10. The economy is global.

What lessons did the last decade teach you? We would love to know what you learned from the last cycle.

What is important is that we remember what happened as we prepare to write the future.  Most importantly, we should also have a sense of accomplishment that we endured these life lessons.

There are seasons in the weather: spring, summer, fall and winter.  So there are in economic cycles.  It is great to be at the thaw of winter and the budding of spring.

by Ron Phipps, 2012 Immediate Past President, NAR

Some Do's and Don'ts To Help You Get The Job Done!

You may have been putting off a home improvement project, but have now decided that it’s time to buckle down and get the job done. Don’t be like most homeowners that quickly give up on the DIY route as soon as they’re not sure how to accomplish a certain part of the project.

Before you sell yourself short and call in the professionals, consider following some of these simple DIY do’s and don’ts to help make your home improvement project a little more manageable and affordable.

Do recognize your limits:

It’s perfectly OK if you feel you can’t handle the whole kitchen remoddling project by yourself. What you can do though is to identify the components of the project that you feel comfortable doing. You can then get in quotes for the rest of the project.

Simple tasks like painting the cabinets and fitting new cabinet hardware are fun to do and help to bring down the cost of the overall project.

More often than not having the right tools makes the job so much easier. Consider renting the appropriate tools and enlist the help of family and friends for an extra pair of hands.

Don’t Underestimate The Power of Glue:

From installing tile backsplashes and in-wall cabinets to sealing gutters and downspouts, high-performance adhesives are a must-have for every home. The Loctite brand has a wide variety of adhesives that are suitable for multiple DIY projects, including upgrades and repairs. So forget about tossing broken items and consider using a little glue to make the repair.

Do Develop a Mental Picture:

Rushing into a DIY project can really be disastrous and end up costing you more time and money than if you just got someone in to do the job in the first place. Take a little time to really envision what you want and then sit down and plan the project. Is the goal to make your kitchen more modern? Are you looking to maximize space in the bathroom?

Draw up a plan of what the finished project will look like, list tools and materials needed. What order do things need to be done in to finish the project?

Don’t Rush:

We are all familiar with old adage “haste makes waste.” Haste also can be costly. Do your homework before tackling home updates. Decide where to begin and carefully plan each step of the process. This includes taking accurate measurements, using effective tools and comparing prices on building materials.

There is a ton of information available so do yourself a favor and use the Internet, speak to DIY suppliers, visit the library and you’ll quickly be doing professional DIY projects yourself.

Remodeling industry professionals report that between 25 and 30 percent of their work comes from fixing DIY debacles. While there are sure to be a few hiccups along the way, you will discover a new sense of pride and empowerment once your project is completed.

It's A Great Time To Be A Landlord!

Rental Rates Are On The Rise. The rental market appears to be doing more than just sustaining its health. After surveying property managers, TransUnion found that increasing prices aren’t keeping tenants away.

Overall, managers reported they are doing better than the year before and are having an easier time attracting in residents despite the increase in prices.

The credit bureau’s June survey included 1,248 property managers across the U.S. who represented a range of property sizes.

Almost half (48 percent) of the managers surveyed reported rental price increases on the majority of their units since last year in June.

Approximately 44 percent said rental prices remained the same. In TransUnion’s 2011 rental survey, 39 percent of respondents stated that prices increased while 48 percent said prices were the unchanged.

For large properties (more than 200 units), 70 percent of managers reported price increases this year compared to 64 percent last year. Among small property (200 units or less) managers, 46 percent reported price increase from last year, an improvement from 36 percent last year.

“Data throughout the last year has pointed to a healthier rental market, and our survey helps validate the current strength of the rental industry,” said Steve Roe, VP of TransUnion Rental Screening Solutions. “The rise in rental prices, coupled with a decrease in vacancy rates and the ability to attract new residents with less effort are all positive signs for the market and rental property managers.”

Even with rental prices increasing, property managers are having an easier time with finding tenants. Nearly 73 percent of managers said finding residents is not difficult compared to 67 percent last year.

The percent of respondents stating vacancy rates for their properties are between 0 percent and 5 percent increased to 83 percent this year from 81 percent in 2011. When dividing up respondents based on property size, large property managers saw an increase to 64 percent his year compared to 60 percent last year.

In addition, 70 percent of small property managers said their vacancy rates are at 0 percent, which is an increased from 66 percent in 2011.

Even with a healthier rental market, property managers still face the issues with finding quality residents.

Nearly 60 percent of respondents said they are concerned or very concerned with finding reliable tenants.

“Though this number is down from 65% in last year’s survey, it does point to the continued unease about the economy and a lingering question about the ability of tenants to make timely rental payments,” said Roe.

More than half of the respondents (53 percent) said they have had a renter leave the unit with unpaid rent or damages, and about 18 percent said a tenant has done so in the last year.

“Finding reliable tenants is critical as property managers can lose thousands of dollars in rent if a tenant skips out of a rental unit, or if the property manager must take action to evict someone from a unit,” said Roe.

The survey included 1,107 small property managers and 141 large property managers.

DSNEWS.com 6/28/2012

 

5 To-Dos When You and Your Mate Want Different Things in a Home

Early on our real estate careers, we noticed a recurring anthropological event among house hunting couples. They would come into our office and sit down to tell us about what they were looking for in their next home. In about 75 percent of cases where one of them had expressed an interest in a fixer-upper, as soon as the wanna-be-weekend-handyperson excused him or herself to go to the bathroom, their significant other would pull us aside. Then, eyes desperately darting around in a sort of optical Morse code, sweat beads dropping from their brow, they would initiate what we came to call “The Restroom Conversation,” which always went something like this:
“Please help me. I do not want a fixer. My husband/wife/significant other will never do the work. I don’t want to live in an expensive hovel.  SOS!”

The life-changing impact and bank-depleting dollar amount of a home purchase transaction renders it fertile ground for relationship discord. That said, if both sides proceed consciously and with the intention of peaceful resolution, there are strategies that can help make sure the deal closes without destroying the relationship - and without one side being disgruntled that their needs are not being met.

Here are our five techniques for resolving differences of opinion with your loved one when you’re buying a home together:

1. Get everything out in the open. Surely by now you’ve heard the saying about what closed mouths don’t get: fed. You’d be surprised at how many ‘restroom conversations’ culminated in an open conversation in which the fixer-averse member of the couple confessed to their mate that they didn’t share their Bob Vila fantasies for the very first time!

In this way (and many other ways, for that matter), real estate matters can reflect the deeper dynamics of the relationship. People who hate confrontation in the rest of their relationship tend to avoid vocalizing their disagreement with their partner’s real estate opinions, too.  This, in turn, can lead to one person owning and paying for a property they simply dislike, or otherwise failing to have their real estate needs met. Over years of home ownership, this can fester and snowball into a relationship-ruining avalanche of resentment and rage.

If you have a strong disagreement with some of your S.O.’s real estate priorities, make sure you voice them - respectfully, of course. (See #5, below.)  Biting your tongue can be both painful and costly, in the context of a home buying transaction.

2. Prioritize your conflicting wants and needs. Couples with a strong track record of reaching compromises and problem resolution may do this naturally, while newlyweds and other couples who tend to lock horns more frequently will find this to be a new approach. I recommend that each individual buyer sit down and write out their Vision of Home - what they want their lives to look like on a daily basis once they’re in the home they’re about to buy. Who all will live with you? What do you do in your spare time - scrapbooking or yoga or yard work or loafing - and where in or around the house do you do it?  Do you spend your weekends at the home improvement store or hosting brunches?

From there, each person should begin to drill down into how their vision translates into a property. This is the time to get into the nuts-and-bolts stuff: how many bedrooms and bathrooms do you want or need?  Where will this home be located?  Are you wanting a townhome with a zero-maintenance exterior or a sprawling rancher on a few acres?

Once each individual is clear on their wants and needs, the members of the home buying couple should meet up, sit down and review, surfacing where your wants and needs align seamlessly, and also surfacing any disconnects or diverging priorities.  

Then, take some areas of disagreement and prioritize them:  

• Is your desire for a townhouse a deal-breaker, or could you make do so long as the landscaping of a standalone home is low-maintenance or your spouse agrees to handle it?
• Is your mate’s dream of investing sweat equity into a major fixer a must-have, or are they open to seeing other options?

I find it helpful to categorize areas of disagreement in terms of must-haves, would-likes, dislikes and deal-killers. You might find that what seems like the makings of a major dispute ends up being resolved pretty easily once you get clear on how important each of the sticking points is (or isn’t, as the case may be).

3. Bring your agent into the mix.  First, let me be clear: it is not an agent’s job to provide free therapy!  I’m not suggesting that you look to your broker or agent to resolve your relationship differences (though many have extensive experience doing just that, in a home buying context). However, agents know more about the subject matter of your disagreement - homes - than either you or your mate, and an experienced agent might even have worked with other couples through the precise issue or stalemate you’re facing, in the past.  

Letting your agent in on the disagreement and seeking their input can be a powerful step in the right direction of resolving an impasse:

• First off, your agent might know of properties or property types that can resolve your disagreement with little or no further negotiation. They might be able to instantly see some compromises or solutions that you would have no way to even think of!
• Second, your agent might immediately spot how one or both of your impasse-creating needs are infeasible in any event. For example, if you want water views and your spouse wants to live downtown, your agent might know for a fact that neither of these is feasible on your budget!

Agents are great at helping resolve differing house hunt wants and needs by reality-checking both partners with the truths of the market, including surfacing property-based solutions that hold the potential to make both sides happy.

4. View properties that meet either side’s wishes, as well as compromise homes.  You’d be surprised how what we *think* we want in a home, in the abstract, changes up once we’re actually viewing real-life properties in the flesh (or, more accurately, in the brick, mortar and stucco). Buyers with a die-hard commitment to fixing up a property have been known to shift their stance when they actually see the fixers in their area (which may not be discounted as heavily as they expected), or when they see a beautiful, move-in ready property in their price range.

And the reverse is also true: I’ve seen numerous buyers who wanted to do little or no work to their next home become willing to take some work on upon viewing a cosmetically-challenged but otherwise perfect property in the perfect neighborhood - at the perfect price.

My advice to buyers who find themselves at a stalemate with their mate is to split your first couple of showings with an agent roughly equally between homes that:

(a) meet one or the other spouse’s deal-making or -breaking priorities

(b) reflect your best efforts to compromise with the other, and

(c) reflect your agent’s opinion of the sort of property that will support the most prominent features of the lifestyle(s) you each envisioned, whether or not it’s precisely what either of you has described.

This way, you have the best shot at allowing the reality of the homes on your market in your price range resolve the impasse for you, without further fuss or additional ado.

5. Don’t start or engage in power struggles.  Wanna know what happens when people think their needs or concerns are being dismissed, disrespected or minimized?  They get entrenched and oppositional, and power struggles ensue.  In a power struggle, the facts of the situation - the substantive disconnect between two people’s home buying wish lists - becomes completely secondary to the so-called “principle of the thing.”

Once that happens, there’s almost no solution, no compromise, or give-and-take that will satisfy the person who feels their needs are being overlooked. They might agree, begrudgingly, to a property, but express their martyrdom and resentment for years to come. Or they might flat out dig in their heels, being passively or aggressively obstructive to the home buying process by not bringing in documents as needed, making a unilateral purchase on credit or otherwise sabotaging the deal, albeit unwittingly. This is not necessarily intentional game-playing, either; most people who are engaged in power struggles can’t see it while they’re in them.  Only after cooling off, and only in retrospect, can they see the overarching relationship dynamics that got in the way of smart, proactive real estate decisions.

Accordingly, it’s essential that if you and your mate disagree on one or more major points of your house hunting criteria list, you each treat the other’s position respectfully.  Exercise class active listening techniques, like repeating back in your own words what the other person is expressing, so that they see you are paying them the respect of listening, and asking questions to more fully understand why they have the priorities and concerns they do.

At all costs, avoid teasing or ridiculing your mate or their wish list, no matter how frivolous some items on it may seem to you.  Instead, focus on the priorities that you do share, and engage in calm conversations devoted to determining what tradeoffs each of you is willing to make in order to achieve your common goal: a home that works for you both, for your family and for your finances, for the long haul.

Options For Sellers With An Unsightly Next Door Neighbor's Yard

Q: We are getting ready to sell, but the property next door is a junkyard with wrecked cars and trash of all kinds. The county has come out, but nothing much gets done. Do we have any options here? --Teresa P.

A: How frustrating! First, know that you are not overestimating how important the neighboring property's appearance can be to the sale of your home. This is more true now than it ever has been, as today's buyers often view listings on satellite maps and applications like Google Maps' Street Views, which allows them to basically "drive" up and down the street from homes they plan to go see and rule them out on the basis of neighboring homes, before they ever get in the car.

Second, also be aware that you may not be able to fully remedy the situation. You didn't mention what the ownership status of the property is, meaning whether someone actively owns it and lives there in that state, or whether the property is bank-owned or otherwise abandoned. And you did mention that the property is located in a county jurisdiction, implying that it's outside of city limits -- the fact may be that the owners are within their rights to have abandoned/junk vehicles on their property, and that there's not much you can do about it.

As I see it, here are the two major options you have:

1. Be the squeaky wheel with your local government. Basically, keep calling them. And be compelling -- if the place is a health hazard, or you see kids playing on the wrecked cars or vermin scurrying about, say so.

Don't allow them to think this is just an issue of you wanting to get rid of an eyesore.

Studies have shown that blighted properties like this create a habitat for crime and health hazards. So, get very explicit about all the hazards this property's condition is creating AND about what precisely must be done to remedy it, from issuing citations to the owner to a list of cleanup tasks the county can do, like removing cars or debris.

Write and call your county office that has come out before, but also the county public health office, sheriff and any other agency that seems relevant -- including your county commissioner or other elected official. Beware: You will get turned down and passed on before you get listened to. But if you're willing to make the investment in being the squeaky wheel, you might also, eventually, get some grease.

2. Offer to help the owners. It might actually be in your best interests to offer to help the owners have the place cleaned up, either engaging a salvage company that can junk the cars and paying for the place to be cleaned and landscaped or enlisting help from neighbors to do the work yourselves. (Chances are good you're not the only one who is distressed by the state of the place.)

With abandoned or foreclosed properties, I've seen desperate neighbors simply take things into their own hands, go in there and clean the place up; I can't advise you to do this, as it is not your property, and you could potentially have a real problem if you or someone else were injured during the course of the cleanup.

However, if the property has an active or present owner, you'll want to be even more careful about trespassing on it or going there to clean it up yourself or with your neighbors. Often, these sorts of situations arise where the property owner is elderly and afraid, emotionally disturbed or is simply on the defense after years of neighborly scorn for the state of the property.

Take some cookies, knock softly and be very kind if and when you approach a neighbor to offer this sort of help. If you find a salvage yard that will tow the cars and pay the owners for the metal, tell the owners so. Get creative about how you can turn this into a win-win situation, but be safe if and when you actually approach them. They might reject your advances, but they might also see it as the chance they've been waiting for to finally get their property and their life under control.

Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions."