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Quality Agent Can Be Crucial

Smart Moves by by Ellen James Martin
by Ellen James Martin
Smart Moves | December 12th, 2012

More than a million real estate agents belong to the National Association of Realtors (www.realtor.org), but a number have become inactive in recent years.

"The bad real estate market knocked out many bad agents," says Karen Rittenhouse, author of "The Essential Handbook for Selling a Home," and owner of a realty firm.

She recommends that home sellers search for an agent who is "energetic, motivated, self-starting and go-getting." Also, look for someone familiar enough with your area to recommend a list price that's neither too high nor too low.

"Pricing a house right is 90 percent of the battle to getting it sold," says Rittenhouse.

Although many sellers take a casual approach to choosing a real estate agent -- picking a friend or relative at random -- she suggests a more methodical method.

"You have a huge amount of money at stake when you sell your house and a strong agent can make a meaningful difference," she says.

Here are a few tips for sellers:

-- Interview agents thoroughly.

Home sellers are routinely advised to interview at least three agents. But Rittenhouse says most sellers hire the first agent they call and do a cursory interview at most.

"You need to interview at least three agents and go in-depth with your questions. Take the process as seriously as if you were hiring a nanny to care for your kids," she says.

-- Seek a straight-talker.

Michael Crowley, a veteran real estate broker who works solely with home buyers, says an all-too-common mistake involves putting an overly high starting price on a property to "test the market," and then taking the price down peg by peg until the place sells.

"Overpricing costs you in the end. By asking too much at the beginning, you actually lengthen your selling time and probably reduce your net proceeds," he says.

Crowley cautions sellers to be wary of any agent who proposes a price substantially higher than that recommended by the other agents they've interviewed.

Also, Crowley says you should be wary of any agent who glosses over the repairs and upgrades needed to make a house saleable for the best possible price.

"If your carpet is ragged around the edges, and the agent doesn't tell you it needs replacing, watch out. He's just telling you what you want to hear, not what you need to know," Crowley says.

-- Select an agent to help with mortgage snags.

Because so many mortgages have gone into foreclosure in recent years, it's understandable that lenders are nervous about making new loans. Also, they're facing increasing scrutiny from government regulators.

"There are now many more roadblocks before anyone can get a mortgage to the finishing line," Rittenhouse says.

Before the economic downturn, home sellers and their agents didn't need to fret much about whether the buyer's loan was approved. But now the lending process is so tricky that a listing agent may also need to get involved.

"A knowledgeable seller's agent who has mortgage contacts can help clear obstacles to get an endangered transaction through," Rittenhouse says.

Be sure to ask your prospective agents to tell you how they handled mortgage snafus when they arose in the past.

-- Choose an agent who's an effective negotiator.

As a real estate investor who is continually buying and selling property, Rittenhouse knows how much skill is involved in doing deals.

"Whether you're on the buyer's or seller's side of the table, there's a tremendous amount of negotiation that goes on," she says.

Housing bargains are harder to find than they were just a year or two ago. Still, many would-be homebuyers, as well as investors, continue to troll for deals. And these so-called "bottom fishers" are likely to offer a first bid well below the true market value of your property.

Sellers were once advised to merely dismiss such "lowball offers." But if you live in a neighborhood where the supply of homes still exceeds demand, you may want to think twice. And a listing agent who is persuasive can sometimes bring a lowball bid up to a realistic level through skillful counteroffers.

As Rittenhouse says, one effective way for the listing agent to shape a strong counteroffer is with a comparative analysis of recent sales of similar homes in the same neighborhood.

Rittenhouse says savvy listing agents know to attach a written analysis of neighborhood values to any counter offer they submit on behalf of clients.

-- Pick an agent with good interpersonal skills.

Crowley says many people underestimate the importance of choosing an agent whom they find personable. Yet it can be very awkward and uncomfortable to go through the entire selling process with someone you dislike.

Also, as Crowley notes, hiring a listing agent who's on favorable terms with others in the local real estate community can hasten your sale. That's because real estate is a cooperative field, and your home is likely to be shown to more prospects if your agent is well liked by peers.

"Make sure you find an agent who's popular with other agents," he says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

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How to Trade Up and Not Lose Out

Smart Moves by by Ellen James Martin
by Ellen James Martin
Smart Moves | December 5th, 2012

Do you hanker to trade your modest home for a majestic manse with a regal entrance, tall ceilings, a gourmet kitchen, five bedrooms, and a circular driveway out front?

If so, real-estate experts say you shouldn't expect the kind of discount you might have obtained just a year or two ago. But you can still do well on an upper-end home purchase in 2013.

Granted, many sumptuous properties are no longer available at the fire-sale prices of a few years ago. But buyers of high-end real estate can still get plenty for their money, says Karl E. Case, an economics professor emeritus at Wellesley College and co-founder of the Standard & Poor's/Case-Shiller indices, which track home price trends throughout the country.

"Interest rates are wonderfully low now, which means you can get a lot for your monthly mortgage payments. And if you buy a house you love, one real return on investment comes from the pleasure of living there," he says.

Case says that inventories are becoming very tight in many popular communities in the upper end of the price spectrum.

Why are grand houses currently in short supply in some areas? Case says one reason is that a large segment of the baby boomers have yet to downsize.

"Rather than sell during the recession, many redid their big houses. Because they improved for the long haul, they're staying put and not selling, at least in the near term," Case says.

Another factor limiting the supply of trade-up properties is that relatively few new houses were constructed during the economic downturn, Case says.

The growing shortage of high-end homes means that interested buyers may not be able to command the same level of leverage they did during the recession. But as a move-up buyer, you'll still fare well if you take a strategic approach.

Here are a few tips:

-- Seek out highly motivated sellers.

Though it may come as a surprise to some, the owners of upscale homes are no different from any other sellers -- some are a lot more driven than others, says Dorcas Helfant, a real estate broker and former president of the National Association of Realtors (www.realtor.org).

Hurried sellers, who may be moving due to a major lifestyle change such as a career shift or a divorce, are much more likely to negotiate in earnest.

"With inventories starting to shrink, sellers are more confident. Some are getting multiple offers. But even in these neighborhoods, you still have better odds of negotiating with sellers who are motivated to move," Helfant says.

If you politely question sellers on their reasons for moving, many will give you or your agent candid answers.

Helfant says it's often pointless trying to negotiate with sellers who convey a carefree attitude about their timing. You're much more likely to strike a favorable deal with people who must move.

-- Don't rule out properties that have gone "stale."

On occasion, genuinely motivated sellers hold out longer than they should, reducing their overly high list price only after desperation sets in.

"Even in premium neighborhoods, people who overshoot on price and then fail to sell for many months can be forced to drop their price below market value after buyer interest drops off," Helfant says.

Their problem is that homes that linger too long on the market become stigmatized.

"It can take a while for some otherwise motivated homeowners to realize they've been asking way too much. But if you're willing to wait, you might be rewarded for your patience," Helfant says.

-- Make your offer as clean as is possible.

Helfant tells the true story of some clients who traded up from a mid-sized bungalow to an impressive colonial. They were successful in obtaining $50,000 off the price for a fairly valued property because they wrote a "clean contract" on the place. They offered cash and promised to close in 30 days.

Why was the offer so appealing to the owners? Because they were under deadline pressure to move across the country for a job transfer and needed a sure-bet sale in a hurry.

"Motivated sellers are sometimes highly responsive to a bid that makes it easy and quick to close," Helfant says.

-- Consider making a counteroffer if the market warrants it.

Multiple offers are now more common than they were a year or two ago. But there are still neighborhoods, including high-end ones, where buyers continue to rule. Helfant says you can usually be more aggressive when negotiating with sellers in an area with lots of homes for sale.

Obviously, those seeking to buy a large or luxurious home have the most to gain on a percentage basis from tough negotiating.

-- Keep your eye on your ultimate goal.

Among those hoping to take advantage of low mortgage rates are older people who want what Helfant calls their "last-hurrah house." Such buyers often want such luxury features as elaborate gardens, at-home fitness centers and large, customized garages to house motorcycles and sports cars.

Getting a good deal is always a plus for homebuyers. But for older buyers, acquiring the exact place they want -- whether a country estate or a downtown loft -- can be even more important.

"Remember when you trade up, you're buying for lifestyle. You're looking for that perfect location, that perfect view or that perfect refuge from the world where you can find peace. So it's more than just the price that counts," Helfant says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

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Fix Your House Without Breaking Your Sanity

Smart Moves by by Ellen James Martin
by Ellen James Martin
Smart Moves | November 28th, 2012

Are you planning to sell your home in the new year? If so, real estate specialists say it's crucial that you do all the repairs and improvements needed before your property hits the market. That means fixing every leaky faucet, gash in the walls and shaky stair railing.

"These days, buyers have less and less tolerance for houses with problems. They want instant gratification. They don't want to move in and have to wait weeks or months to get a house up to standard," says Sid Davis, a longtime real estate broker and author of "A Survival Guide to Selling a Home."

Davis says it's never too early for sellers to get serious about home repairs and cosmetic improvements. But as he notes, finding competent and reliable contractors can take time -- especially now that a housing recovery is underway.

Though spending on home improvement dipped steeply in the aftermath of the recession, the outlook for the remodeling industry is now more positive, according to Harvard University's Joint Center for Housing Studies. For the first half of 2013, it projects double-digit growth in home-improvement spending.

Davis recommends extreme caution when hiring contractors for pre-sale work. Here are a few pointers:

-- Request contractor referrals through your listing agent.

For their clients' use, many established agents maintain lengthy lists of contractors, ranging from carpet cleaners to air-conditioning repair services. Such a list can be a valuable starting point for home sellers, says Eric Tyson, a personal finance expert and co-author of "House Selling for Dummies."

"Agents have a lot of pull with contractors, because they can send them lots of work over time. So the contractors know they'd better not mess around or delay the jobs an agent sends them," Tyson says.

But he says you "shouldn't take as gospel" the positive experiences your agent has had with any given contractor.

"The contractor may have slipped in the quality of his work or gotten too busy. So you'll still need references for every contractor you hire for a major project and also get at least three bids," Tyson says.

-- Make sure all your questions are answered before hiring a contractor.

"To be sure a contractor is organized and on time, you've got to meet with him before hiring him. A face-to-face meeting helps rule out sloppy or disorganized people," Davis says.

To ensure you don't get squeezed out of a contractor's schedule by a larger job, he says you'll want to find out whether the company is overbooked. You also need to know who will perform the work.

-- Insist that the contractor's promises are put in writing.

Davis says that those who know a contractor well often make the mistake of counting on verbal guarantees. But he says there's no substitute for a written contract that provides details on all aspects of the job, including price, timing and scope.

"Without a written agreement, you'll never get anywhere in small-claims court if the contractor turns out to be a con man. So unless it's a very small job -- like a plumber replacing a faucet or an electrician fixing a light fixture -- you'll want to have everything in writing," Davis says.

Davis also recommends you include in your agreement language indicating that the firm carries all the proper insurance coverage on its employees and subcontractors.

"Suppose one of the workers falls off a ladder and gets badly hurt. Without insurance, you could be held to blame and face a major lawsuit. Remember that any good contractor will carry insurance and be happy to show you documents to prove it," Davis says.

-- Don't let your contractors cut corners on government requirements.

Not all home repairs or upgrades require government permits to ensure compliance with local codes. For instance, your electrician probably won't need government oversight to change a light fixture and your plumber likely won't require it to replace a broken water heater.

But in many areas, major projects may be held to a higher standard. Examples could include the installation of a new bathroom or deck.

Perhaps you think you'll get a better price from a contractor who asks to circumvent government requirements. But as Davis says, skirting the law can be risky, especially for homeowners with plans to sell.

"It can come back to bite you if your contractors fail to get the proper permits for big jobs. That's because your buyer's mortgage lender may demand to see those permits for any major work you've done," he says.

-- Refuse to pay for the entire project at the outset.

It can be perfectly legitimate for a contractor performing a major project to ask for a partial payment at the front end, particularly if substantial material costs are involved.

For example, you could be asked for a down payment on a roofing installation job to pay for the purchase of shingles. And a house painter might reasonably request that you pay for paint, rollers and brushes before the work begins.

But Davis warns against covering the full cost of any work -- including all labor costs -- before it's completed. Those who pay for the whole job at the outset lose all the leverage they'll need later if the contractor fails to complete the work as promised.

"In most cases I recommend that people pay no more than 10 percent of the labor costs at the beginning. Good contractors have credit lines. They don't need your advances to get a job rolling," he says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

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