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Selling With Sizzle

Smart Moves by by Ellen James Martin
by Ellen James Martin
Smart Moves | March 20th, 2013

In many neighborhoods, the home sale market is stronger than at any point in the last five years. Still, some houses that should sell easily continue to languish unsold for a lengthy period.

What's the problem? Mark Nash, a real estate broker and author of "1001 Tips For Buying and Selling a Home," says too few sellers grasp the need to fully prepare their property for market.

Through his more than 20 years in real estate, Nash says he's observed that many homeowners object to the hard work needed to put their property in excellent condition.

Nash says most homebuyers will rule out any property that appears crowded or poorly kept. Everything must be in pristine condition.

"Buyers are fussier than ever, and with good reason. With memories of a tough real estate market still fresh in their minds, they don't want to take any chances," Nash says.

Here are five essential steps for a better property sale:

-- No. 1: Buy a paintbrush and get busy.

To show well, most properties need a cosmetic redo that involves extensive painting.

Of course, you can always hire professional painters. But Nash says many homeowners are fully capable of doing interior painting themselves.

"The secret is in the prep work. If you're a good painter and have the time and inclination to do all the necessary preparations, you can save a lot of money," he says.

Nash recommends that do-it-yourself painters seek guidance from a local paint or home store, which can help with color selection.

When it comes to technique, the websites of major paint companies, such as Benjamin Moore, Duron and Sherwin-Williams, can also be helpful.

-- No. 2: Find others who'd appreciate your superfluous belongings.

As real estate agents know, a cluttered home shows poorly. But many homeowners have difficulty dispensing with serviceable items they no longer use. However, they're more willing to let go of excess belongings if they know someone else will use them.

You can give your extra items directly to a charity such as Goodwill or the Salvation Army. Or you can find willing recipients through online recycling services. One such program is The Freecycle Network (www.freecycle.org), which helps people "gift" items to others in the same area. (Membership is free and also allows you to pick up items from others who live nearby.)

Of course, to clear out a property it's inevitable that some items that can't be given away must be tossed out.

-- No. 3: Place excess furniture in storage.

Sid Davis, a real estate broker and author of "A Survival Guide to Selling a Home,' says nearly all sellers have much more furniture than they should to present their property well.

To make a dining room seem larger, he counsels sellers to remove extra leaves from their dining table and to leave only four chairs. Also, remove any bulky china cabinets.

In addition, remove all but a few pieces of furniture from your living room or den. Davis recommends you pare down to a single sofa, a couple of end tables and lighting. If possible, you should also remove a large-screen TV.

Ideally, you'll place any huge pieces of furniture into a storage unit until your sale goes through. One alternative is to store these in your garage until you move.

"Buyers are more forgiving of a garage that's crowded than any other area of the house," Davis says.

-- No. 4: Review the track record of any agent you're considering.

Davis urges sellers to take the time necessary to find the best possible listing agent. And he says statistical measures are often helpful as you seek to determine if a listing agent performs well for clients.

Ask the agent for a printout on his or her sales performance over the past six to 12 months. For each sale listed, make sure the printout shows how many days it took to sell the property ("days on market") and how well the owners did at closing ("list-to-sale price").

But Davis says statistics alone don't give you the whole story.

"You also need to check references, a step most sellers don't take because they're afraid of calling up perfect strangers," he says.

-- No. 5: Make sure other agents in your area know about your place.

Davis says open houses help the agents who run them to find new clients. But he believes they're less valuable to the homeowners whose property is on display.

"Most people who come to open houses are curious neighbors who just want to compare their house with the one up for sale," he says.

Fred Meyer, a veteran real estate broker who sells property near Harvard University, says that what's known as a "broker's open" is more useful to sellers. This is an event designed to draw in real estate professionals from the surrounding area.

Meyer says the big plus of a broker's open is that it increases the exposure given to market-worthy properties.

"If the other agents visit your house and like it, they'll influence their clients to also come by and take a look. Remember, agents have a lot of pull in deciding which properties are seen by serious buyers," he says.

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

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How to Rent Without Headaches

Smart Moves by by Ellen James Martin
by Ellen James Martin
Smart Moves | March 13th, 2013

Many homeowners resist the idea of renting out their property. They fear that the place they've nurtured for years will be badly damaged. Plus, they worry the tenants will default on rent -- forcing them to court to collect what's due.

But Sid Davis, a veteran real estate broker who's owned many rental properties, says the positives of a temporary rental can sometimes outweigh the negatives, especially for homeowners who are unsure whether a move they're making will work out.

"With rising real estate prices in most areas, the costs of moving back could be a lot higher than the costs of keeping that home until your plans gel," Davis, the author of "A Survival Guide to Buying a Home," says.

Retirees who'd like to try out a new location before making a permanent move could also benefit from renting.

"Lots of folks like the concept of moving to a balmy area for retirement. But as enticing as that sounds, they're not certain they'll like leaving friends in their old neighborhood. In that case, they could be better off renting out the old house and also renting an apartment in the new area until their plans are less fuzzy," says Leo Berard, a real estate broker and charter president of the National Association of Exclusive Buyer Agents (www.naeba.org)

"Renting lets you keep your options open about when and where you'll settle down," says Mark Nash, a real estate broker and author of "1001 Tips for Buying & Selling a Home."

Nash urges homeowners to exercise caution before renting out their home. Here are a few pointers for would-be landlords:

-- Investigate the realities of your local rental market.

If the stock of available rentals in your neighborhood outstrips demand, depressing the rental income you could collect, renting instead of selling might not be the best option, Berard says.

As he notes, most large realty firms have rental departments that can help you assess the relative strength of your local market. Agents who list many rentals on the Multiple Listing Service can quickly estimate how much rental income your property could command.

Advertising (online or in print) can also help, Berard says. Survey the ads to see how numerous they are for your type of property (single family, townhouse or condo-apartment) and to gauge the going rents.

-- Factor in the financial implications of renting your home.

When assessing the financial impact of converting your place to a rental, even a temporary one, Nash says you should be sure to factor in home maintenance expenses.

"Upkeep can be a big item. Suppose, for example that your tenants have a major plumbing problem at 3 a.m. At that hour, calling in a plumber could be really pricey," he says.

You'll also want to consider the tax implications of renting out your home. To do so, Nash recommends you call an accountant for advice.

-- Anticipate the need to empty your home of renters before you sell.

Do you intend to rent out your place temporarily with the expectation that you'll probably sell in the future? If so, Davis says you should be aware that it can be tricky trying to sell a home when it's occupied by tenants.

To avoid this problem, Davis recommends you plan to have your property vacated for at least a month before it hits the market. That way you'll have time to paint, clean and do repairs before it's available for showings.

-- Look into professional management for your rental property.

If you're moving far away, you may worry about managing your rental. In such cases, Nash says it could be sensible to consider engaging a professional manager to oversee the property, which would spare you the onerous tasks that come with being a landlord.

He says the sole downside of hiring a good rental manager, who's best found through personal referrals, is that it will cut into your rental income. That could pinch your budget if you're operating with a narrow profit margin.

-- Try to damage-proof your property before your tenants move in.

"Psychologically, as well as financially, people still have an umbilical cord attached to a property they own while tenants are living there," Davis says.

No one can guarantee that your home won't sustain serious damage while a rental. But you can minimize the risk with what Davis calls "preventive decorating."

"Before your tenants move in, repaint your walls with easy-to-clean semi-gloss paint. Seal your hardwood floors with two or more coats of protective coating. And replace valuable light fixtures with less expensive ones," he says.

Davis urges you to be selective in hopes of finding tenants who are tidy.

"One way to screen is to glance into the renters' car to see if it's clean and free of junk. That can tell you a lot about their lifestyle," he says.

As one predictor for whether the tenants will pay their rent as promised, he recommends that landlords seek to rent to those who've held jobs for a lengthy period.

"People who are protective of their jobs won't risk getting dragged to court over lost rent. They know that employers take a dim view of people whose wages are garnished for bad debts," Davis says.

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

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Thinking Big When Buying

Smart Moves by by Ellen James Martin
by Ellen James Martin
Smart Moves | March 6th, 2013

As real estate recovers in many markets, more homebuyers are once again hankering for that supersized house with the circular driveway.

"With foreclosures on the wane and the economy shifting back, the bigger-is-better mentality is also coming back," says Mary McCall, a real estate broker and president of the Council of Residential Specialists (www.crs.com).

If they can afford it, McCall says many people now opt for a house with more than 5,000 square feet of living space, and an assortment of amenities.

Eric Tyson, a personal finance expert and co-author of "Home Buying for Dummies," says some older buyers still want to actualize a long-standing wish for a very spacious home, regardless of its practicality.

However, in most cases people have well-defined reasons for wanting an exceptionally spacious house, according to Tyson.

He and his wife, who have three high-school-age children, both work from home. To accommodate their lifestyle, they purchased a 5,500-square-foot house when their offspring were small.

Although many baby boomers are willing to shoulder the expenses associated with literally living large, real estate specialists say younger people have other housing priorities beyond sheer size.

"The younger generation cares a lot about its carbon footprint. For them, it's just not fashionable to be an energy glutton with a humongous house," says Jane Fairweather, a veteran real estate broker.

Also, she says many young couples with children are unwilling to move to an outer-tier suburb to obtain a super-large house, assuming that purchase means a lengthy, grueling commute for one or both parents.

Are you contemplating purchasing a large home, but want to be sure the move is right for you? If so, these pointers could prove helpful:

-- Get your finances in order first.

Depending on your outlook, buying an oversized house is a solid long-term investment or a pointless money drain. With real estate values rising in many parts of the country, Tyson says more homebuyers believe that buying a reasonably priced home and holding it for five years or longer could prove a prudent choice.

But he cautions that no one should buy a supersized house without first looking at long-term budget constraints, things that mortgage lenders don't consider when granting loan approval.

"Your mortgage lender will never ask if you've saved enough to send your kids to college or care for your elderly parents. But these are clearly concerns for many people," Tyson says.

Another concern involves retirement savings. If you buy a big house, will you still have enough to live comfortably in spite of your mortgage payments?

To make basic calculations about a long-term budget, Tyson recommends the free online financial planning tools available through such mutual fund companies as T. Rowe Price (www.troweprice.com) and Vanguard (www.vanguard.com).

-- Consider all costs associated with big-house ownership.

Some big-house enthusiasts are willing to personally handle all the cleaning and maintenance tasks they face. But beyond upkeep costs, there are other expenses to factor into your calculations.

"In many areas, property taxes are going up at a high rate. Also, homeowners' insurance premiums are rising," Tyson says.

In addition, he says you should be sure to factor in the costs to furnish, heat and cool a very large house.

-- Think through your views on the investment potential of real estate.

In recent months, home prices have started rising in many neighborhoods, though in most areas properties still sell for less than their pre-recession levels. Does that mean there are still bargains to be found in the big-home category that could justify your purchase?

Tyson says the answer to that question depends on the strength of your local economy and labor market.

"If the area where you're looking is a popular one with low crime and strong schools, you could gain a lot of appreciation in coming years. But if the area is already overbuilt with big houses, you'll need to wait longer to pick up value," he says.

No matter how large a house you buy, you should stay there for at least five years to make your investment worthwhile, according to Tyson. In the past, many who've held large houses for years have been richly rewarded.

-- See the big purchase in context with your overall life goals.

Michael Crowley, a real estate broker and past president of the National Association of Exclusive Buyer Agents (www.naeba.org), estimates that 90 percent of his clients buy as big a home as their budget will allow. But the rest have priorities that trump housing.

He tells the true story of a couple of clients, college professors in their 40s, who deliberately undershot their spending ceiling. They bought a 1,200-square-foot ranch-style house with a tiny master bedroom, though they could have financed a property much larger, because they wanted to have a lot of money available for foreign travel.

Through the years, he remembers working with a number of affluent clients who placed a higher priority on saving for their children's college educations than on luxury housing. Others were willing to forgo a large house to cover the costs of expensive hobbies, such as skiing.

Of course, as Tyson notes, financial priorities are highly individual. For all who choose a home smaller than their income would allow, many others max out.

"There's nothing wrong with buying a house that's much bigger than you really need. If you can pay for it and are up for all the maintenance headaches, I say go for it," he says.

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

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