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Cures for a Languishing House

Smart Moves by by Ellen James Martin
by Ellen James Martin
Smart Moves | May 21st, 2014

Like the U.S. economy as a whole, the real estate market is supposed to be recovering. And many neighborhoods are now experiencing a shortage of available homes. So it's doubly exasperating if your home is the outlier that languishes unsold for a lengthy period of time.

Sometimes, the reason is easy to pinpoint. Perhaps your place is crying out for cosmetic improvements you've failed to do for cost reasons -- like replacing a frayed carpet or repainting a bright-purple dining room. Or maybe your price is just too high for the local market.

But in other cases, the problem is not your own. Perhaps your neighborhood market has lately cooled and your only option is to adapt, says Sid Davis, a real estate broker and author of "A Survival Guide for Selling a Home."

There are many reasons why homes fly off the market in one neighborhood while they sit unsold in another. For example, job cuts by a nearby employer can dampen local sales, as can bad weather conditions.

Jeff Drerup, a mortgage lender who's worked in the field since 1979, says tighter controls over the lending industry have made it harder and more time-consuming for borrowers to get their loans through, which in turn has hurt home sales.

Whatever the explanation for an unsold home, Davis says those who want or need to sell can generally meet with success if they're strategic in their focus. Here are a few pointers for frustrated home sellers:

-- Learn more about your neighborhood market.

When assessing the situation related to your unsold home, Davis recommends you first gather data about your neighborhood. Ask your listing agent for a set of statistics known as "average days on market." These data reflect the time it takes for a typical house to go from list to sale. Notice whether this average time span is narrowing (which indicates a warming market), or widening, (which indicates a cooling market).

If you determine your neighborhood is cooling, and note that your place has remained unsold for fewer days than the average selling time, Davis counsels patience. But if you're already over the typical norm, you probably have two options: improve the look and condition of your home or reduce the asking price.

-- Do a review of your home's condition before cutting your price.

Davis suggests cutting your home's listing price should happen only after you've gone over steps you could take to make the property look fresher and more appealing.

"Homes that radiate a superior pride of ownership are much rarer than you imagine. If you can get your place in tip-top condition, with a superior paint job and sparkling clean windows, you'll make selling much easier," Davis says.

Sometimes minor issues can seriously hinder a potential sale. For example, don't make the mistake of thinking buyers will overlook a little messiness, like dishes in the sink, piles of unsorted mail or an unkempt home office.

"Some people won't even spend five minutes in a cluttered or dusty house, let alone put an offer on it," Davis says.

He recommends that, if necessary, you hire a professional organizer and a cleaning service. Also, your odds of selling could improve substantially with a few relatively small expenditures in your bathrooms and kitchen and fresh paint throughout your place, he says.

-- Try to avoid annoying your listing agent.

As Davis says, it's good for would-be sellers to receive feedback from buyers who visit their home. Such feedback can help you make mid-course corrections. For example, if visitors say the presence of your dog is off-putting, you'll want to put the pet elsewhere when visitors next come through.

Customarily, visitor feedback reaches home sellers through their listing agent. And your agent should contact you on a routine basis. During your listing period, such contacts should occur every few days, if not once a day.

But when sellers become frustrated, Davis says some begin projecting their frustration onto their listing agent.

"Pestering your agent is totally counterproductive to your best interests," he says.

Davis encourages discouraged home sellers to request a "sit down" with their listing agent to brainstorm on ways to gain momentum.

"The agent has the same goal as you -- to get your property sold as quickly as possible and for the highest possible price. So, instead of becoming an irritant to the agent, aim to work as a team," Davis says.

-- Manage your emotional response to the situation.

When a property sits unsold, people's fears are manifest in various ways, from anger to insomnia, according to Davis.

Out-of-control emotions can undermine your plans if they're telegraphed to the buying public through any kind of advertising that conveys desperation.

"You don't want to tell potential buyers you 'must sell' because if you do, you'll only attract vultures who will try to get your place for almost nothing. Desperation advertising sends the wrong message," Davis says.

-- Avoid taking your home off the market for a lengthy time.

Have you decided to do upgrades to make your unsold property more salable? If so, Davis advises you to take your place off the market until the work is done.

"It's a terrible idea to let people in before the work is over, because they'll never be able to imagine how good the place will look once the drop cloths and ladders are gone," he says.

Still, he says it's usually a huge mistake to pull your place off the market for months on end, with the vague hope that selling conditions will improve later.

"Keep your original hopes for a speedy sale firmly in mind. That should motivate you to keep moving forward," Davis says.

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

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How to Land That in-Demand Property

Smart Moves by by Ellen James Martin
by Ellen James Martin
Smart Moves | May 14th, 2014

When it comes to buying a home, many people aren't picky. But a rare set of buyers has a be-all-and-end-all home in mind. They're willing to spend months -- or maybe even years -- looking for just the right place.

In this category is a retired married couple in their early 80s who decided it was time to part with the waterfront home where they'd lived for more than four decades.

After much research, they identified the ideal setting: a well-designed condo complex reserved solely for those who'd once taught at a nearby university. The university-run facility offered the lectures and the intellectual stimulation the couple craved. Moreover, several friends already lived there.

Soon, the couple obtained a spot on the list of people qualified to buy a unit in the complex. But their wait was far from over. And when an apartment there finally went up for sale, there were several rival bidders for the unit.

Still, the couple was determined to prevail. To do so, they sought counsel from Leo Berard, charter president of the National Association of Exclusive Buyer Agents (www.naeba.org). He helped them shape a successful multi-faceted plan to beat the competition.

Are you looking for a unique home in a popular area where buyers now outnumber sellers? And are you likely to face rival bidders for that same place? If so, these few pointers could help:

-- Seek to beat out competitors by offering more.

Berard calls it a "top-off bid," and it can sometimes be an effective tool in an inventory-tight market. Using this strategy, the retired couple bid slightly above the asking price and agreed to exceed any equal or higher offer by $5,000 up to the ceiling on what they could afford.

Granted, you may wish to avoid this approach unless --as the retired couple did -- you have a singular home in mind.

Of course, no matter how special the home you're seeking, you shouldn't bid recklessly without regard to local property values. It's always important not to go overboard. To avoid an excessive bid, Berard recommends you ask your agent to check recent sales to see what similar properties have been fetching recently and stay within that range.

-- Provide watertight proof you can afford the property.

If you're buying your ideal home with cash taken from savings or another source, you needn't prove you can qualify for a mortgage, because you won't need one.

But if you're like most buyers and must have a mortgage, you'll need to demonstrate through a pre-approval letter that a lender believes you can qualify for a mortgage and have the credit status to make your loan application viable.

"The sellers of that unique house you want will never take your bid seriously until you produce a pre-approval letter. It's a minimum requirement," says Ashley Richardson, a longtime real estate agent affiliated with the Council of Residential Specialists (www.crs.com).

However, not all pre-approval letters carry equal weight when it comes to impressing sellers. Richardson recommends you seek pre-approval from a well-known lender with a recognizable name.

"Ask your agent for a referral to a local lender known to be trustworthy. Otherwise, your letter will be worth no more than the paper it's written on," Richardson says.

Remember, too, that the strongest pre-approval letters are granted only after your credit history has been checked and your cash assets verified. Proof of income can be established through pay stubs, W-2 statements and recent tax returns.

-- Write a friendly letter to the sellers telling why you love their home.

Most people are emotionally attached to the home where they're living. Even those who must sell due to an unhappy situation -- like a divorce or a financial reversal -- like to know that others admire and appreciate their property.

Because homeowner pride is nearly universal, buyers who love a particular place may find it advantageous to convey that sentiment in a brief note attached to their offer and addressed to the sellers by name. This could make a difference, especially if the sellers have received multiple offers that are roughly equal in dollar value.

"A sincere letter covering what you like about the home can give you an edge," Berard says.

He recalls how the retired couple seeking to move into the university-affiliated condo complex used such a note to support their winning bid. Their letter told how much they admired the apartment's built-in cabinetry and attractive patio.

But Berard cautions against trying to use a heartfelt letter to make up for a subpar offer.

"It's folly to come in with a lowball and then think you can sugarcoat it with a nice letter. Chances are all that would do is to insult the sellers and maybe even turn them against you," he says.

-- Tailor your offer to the seller's timing needs.

Money is almost always the leading factor determining if home purchasers get the property they're seeking. But timing also counts.

For instance, the woman selling the condo in the university-run building wanted to sell and move out of state promptly to live near her grown son's family. The retired couple, however, would have preferred to wait for a closing date that was at least three months later. But the buyers wrote a contract offer aligned to the closing date the seller wanted, which helped them seal their deal.

"In multiple-bid situations, the more reasons you can give the sellers to choose you, the more likely you are to win your prize," Berard says.

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

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Smart Moves by by Ellen James Martin
by Ellen James Martin
Smart Moves | May 7th, 2014

With the U.S. employment picture gradually brightening, real estate specialists say more young families are now considering a move from their starter home to a larger property. Many such moves are spurred by a promotion or a salary increase.

"That means larger houses are selling well again," says Tom Early, a real estate broker and past president of the National Association of Exclusive Buyer Agents (www.naeba.org).

Of course, not all families crowded in a starter home can afford an upward trade. True, far fewer homeowners are now "underwater" on their mortgages than in the aftermath of the financial crisis. Even so, Early says that in many cases, equity is still in short supply.

But the outlook is better for those who didn't overpay for their first home and have gained appreciation in the last year or two.

"Many people who were conservative in their selection of a first home -- and who weathered the economic storm that hit in 2008 without falling behind on their payments -- are in a decent position to move now," Early says.

"For people who own stocks, there's also the 'wealth effect' from the stock market rebound, which has made (prospective buyers) more confident about their finances," says Eric Tyson, a personal finance expert and co-author of the "Home Buying Kit for Dummies."

In addition, homeowners are often prompted to move up if their family size is increasing.

"There's always the classic case of people starting a family and needing another room for the baby. That's one of the most common reasons people want bigger housing," Tyson says.

A growing family also means adults in the house may have had to surrender their use of a bedroom they used as a home office, to let the kids have their own rooms. But as Tyson notes, more people than ever want and need a dedicated home office space, especially if they telecommute at least some of the time.

What features do most young families seek in a trade-up property? Early says a large family room is typically near the top of the list.

"Anymore, most people don't demand a formal dining room or a formal living room. They're looking for space that's comfortable and large in useful ways. A family room is nothing if it's not big enough for that 65-inch TV," he says.

But Early, a veteran of the real estate business, says experience has taught him that it's critical for young families to approach a potential trade-up purchase cautiously. Here are a few suggestions:

-- Make sure you can truly afford a bigger home.

Tyson cautions buyers against committing to a much more expensive home without first considering the long-term spending requirements.

"It's not enough to know that a bank will let you borrow for a larger mortgage. You have to do some financial soul-searching of your own," Tyson says, noting the frequent disconnect between the maximum sum a bank will lend and the amount a family can truly afford.

He advises those considering a move-up purchase to attempt to project their future financial needs. To make basic calculations, he 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).

-- Factor in all related home expenses.

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

"Are property taxes rising in your area, and what's happening to your homeowners' insurance premiums? You can't overlook these indirect costs of ownership," Tyson says.

In addition, he says, it's necessary to take into account all the expenses involved with furnishing a larger property, as well as utility costs to heat and cool the place.

-- Do an assessment of real estate valuation trends in your area.

In recent years, home prices have recovered strongly in a number of popular neighborhoods, though in some cases price gains have recently slowed or stalled due in large part to ever-more-stringent mortgage lending standards.

Does that mean you can still find an affordable move-up property in a neighborhood that's likely to appreciate in value in coming years? Tyson says the answer to that question depends on the strength of the local labor market and economy.

"If the area you've targeted has unusually strong schools, that could help keep values high and rising. But if the area is already overbuilt with large houses, you'll likely have to wait longer for appreciation," Tyson says.

No matter the size of the home you buy, you should stay there for at least five years to make your investment worthwhile, according to Tyson. Many who've held real estate in strong neighborhoods for the long term have been richly rewarded.

-- Plan your move-up purchase with your major life goals in mind.

Early estimates that well over half his home-buying clients purchase as pricey a property as their mortgage lender will allow. But the rest undershoot their ceiling because they have other money goals as important as housing.

For example, he's worked with clients who place as high a priority on family travel or on private-school tuition as on luxury housing.

"There's nothing un-American about buying the fanciest house your pocketbook will allow. But before you do so, make sure you're not spending so much that you'll sacrifice other top objectives. No one wants to be so house-poor they can't live fully or meet the legitimate needs of loved ones," Early says.

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

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