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Homeowners: Planning for a 2021 Property Sale

Smart Moves by by Ellen James Martin
by Ellen James Martin
Smart Moves | June 3rd, 2020

Mark Nash was an early adopter in an accelerating trend: the retreat from urban to suburban living. The longtime real estate analyst and broker sold his vintage place in a trendy Chicago neighborhood in favor of a ranch house 42 miles northwest in the bedroom enclave of Antioch, Illinois.

“With the internet, I realized I could live wherever I wanted. So after I did some major fix-ups on my Chicago home, I put it up for sale,” says Nash, the author of “1001 Tips for Buying & Selling a Home.”

Given that he tracks real estate trends nationally, Nash isn’t surprised that many Americans, including families and elders of retirement age, are now retreating from city neighborhoods to greener, more placid lifestyles in suburban settings.

“The pandemic changed everyone’s perspective. It showed us how in dense cities our germs interact with the germs of other people,” Nash says.

The emerging quest for more relaxed, less worrisome suburban lifestyles is now more feasible due to the strong work-from-home trend, says Glenn Kelman, the CEO of Redfin, the Seattle-based real estate brokerage.

“This has weakened demand for homes in urban centers,” Kelman says.

Nash says the strength of the movement toward suburban living was unexpected, and that even some of those planning such a move are surprised at the rapid change in their own lifestyle preferences. But he cautions owners against rushing to put a property on the market before it’s thoroughly cleaned, repaired and upgraded.

“Maybe you’ve adapted to your leaky roof, stained carpets and rickety railings, but most buyers won’t be willing to take on your problems unless you give them a very steep discount,” he says.

Nash predicts it could take months for those transitioning from urban to suburban life to prep their properties.

Are you a part of a pandemic-weary household now plotting a retreat to the suburbs or a smaller city? If so, these pointers could prove useful:

-- Plan well in advance for your property sale.

Sid Davis, a veteran real estate broker in Utah, says those in a quandary about their selling plans should try to crystallize their thinking using pen and paper before embarking on any substantial redo of their property.

“Most people operate on a spur-of-the-moment basis. But those who plan ahead, looking at the large picture, make much smarter choices with their money,” says Davis, author of “A Survival Guide to Selling a Home.”

-- Request guidance from real estate pros before calling in contractors.

Suppose you decide to downsize in 2021 and know your long-time residence will need extensive work before it goes on the market. Is it too soon to ask real estate agents for their advice?

No, says Dorcas Helfant, a former president of the National Association of Realtors (realtor.org).

“The best real estate agents aren’t looking for quick sales. They get most of their business through referrals and know that relationships with clients develop over time,” Helfant says.

She suggests you invite one or more agents over to evaluate your property, helping you create a checklist of superficial changes that could make your place a lot more appealing.

“Cosmetic improvements -- like painting, planting flowers or pruning your trees and shrubs -- are nearly always well worth the cost. Still, you may need guidance on other steps you could take, like whether you should replace kitchen appliances that look dated yet are still functional,” Helfant says.

-- Show caution in the selection of home improvement contractors.

For any given job, sellers typically ask for three bids on the work and then pick the company charging least. But Davis questions this approach, noting that “short bidders,” who come in well under their competitors, often perform poorly. Or they’ll tack extra charges on at the end.

“The company with the highest bid could also prove problematic. Maybe this firm is now too busy to take your job and is using a high bid to turn you down without creating ill will in the process,” Davis says.

Unless all three bidders are close in price, he says the middle one is generally your best choice.

-- Engage the services of a home inspector to identify functional problems.

Most homeowners can readily identify minor items that need fixing around their place, such as a leaky faucet or a shaky stair railing. But what about hidden problems with plumbing, electrical, heating or cooling systems? And has your roof reached the end of its functional life?

These questions are best answered by a qualified home inspector. To avoid surprises later, Davis advocates that sellers arrange for a “pre-inspection” to get an early indication of hidden problems. He recommends you find an inspector in your area through a professional organization, such as the American Society of Home Inspectors (homeinspector.org).

The cost of a home inspection can easily run well into the hundreds of dollars, especially for a large home. But as Davis points out, sellers who identify and resolve repair issues early often avoid expensive and time-consuming complications later. The purchasers are still entitled to engage their own inspector. But most waive this right after reviewing the first inspector’s report, along with receipts showing all the home’s problems were resolved.

“Surprisingly, your inspectors’ report can be a powerful tool in marketing your property,” Davis says.

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

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Selecting a Home for 'New Normal' Family Living

Smart Moves by by Ellen James Martin
by Ellen James Martin
Smart Moves | May 27th, 2020

Back in March, a college professor and his homemaker wife received an urgent appeal from their 37-year-old son in New York City. The son wondered if he, his wife and their two toddlers could move into his parents’ small ranch house in suburban Delaware. They were desperate to escape their urban neighborhood, one of the COVID-19 epicenters.

Soon, the son and his family took up residence in modest, semi-finished quarters in his parents’ basement. Fast-forward more than two months and they still have no intention of returning to New York. Indeed, the grandparents are so delighted with the arrangement that they’re now pondering the purchase of a larger place where all three generations could live more comfortably into the indefinite future.

Frank Furstenberg, a sociologist who researches family issues, doesn’t know the people in this true story. But he’s not surprised that the pandemic caused all of them to pile in together.

“Family homes have always served as a refuge in times of crisis. Doubling up is the new normal, not the new abnormal,” says Furstenberg, a professor emeritus at the University of Pennsylvania.

In fact, COIVD-19 caused Furstenberg himself to retreat from his Philadelphia apartment to a five-bedroom country house he owns in Connecticut that he’s now sharing with three grown grandchildren, all of whom are also exiles from urban living.

Real estate specialists say it’s too soon to know the extent to which such COVID-related family arrangements will endure after the pandemic clears. But they observe that like the Delaware professor and his wife, an increasing number of homeowners are now considering a move to a larger property to accommodate multi-generational living -- including housing for family elders.

“It’s not just the pandemic but also financial factors, like student debt, that are causing more family members to move in together,” says Jon Boyd, a Michigan real estate broker who specializes in assisting buyers.

Joel Kan, an economic analyst for the Mortgage Bankers Association (mba.org), says, “Twehe housing market is continuing its path to recovery as various states reopen, leading to more buyers resuming their home search.”

Of course, economic setbacks are currently making it tough for many would-be buyers to fulfill their hopes of upsizing. Yet an increasing number of those who still have solid jobs are now eagerly taking advantage of near-record-low mortgage rates.

Jon Boyd, a Michigan real estate broker who specializes in assisting buyers, says he’s busy these days helping clients define and fulfill their changing expectations. Before arranging any property tours with new clients, he always conducts a 90-minute Zoom meeting to discuss their priorities.

“What’s absolutely risen to the top of the list is a floor plan that lets every adult in the house have a home office for their exclusive use,” says Boyd, a past president of the National Association of Exclusive Buyer Agents (naeba.org).

After thinking it through, he says many buyers realize that bedrooms, which afford privacy for conducting work, are often the best choice for home office space.

“You don’t need a large bedroom, but you do need walls and a door that encloses the space to make it workable,” Boyd says.

Here are a few other pointers for bedroom-minded buyers:

-- Realize that a four-bedroom home could be an affordable purchase.

In many areas, a home with four bedrooms is no more expensive than one with three.

“If you can afford a three-bedroom house, usually you can also afford a four-bedroom house in the same neighborhood,” Boyd says.

Why does that fourth bedroom typically add little to the cost of a property?

The reason, Boyd explains, is that home values are determined primarily by location, as well as square footage. And the square footage of many four-bedroom homes is no greater than three-bedroom properties in the same neighborhood. Because of that, he says a fourth bedroom also doesn’t usually add much, if anything, to the home’s utility costs.

-- Make sure any space counted as a “bedroom” meets the definition.

Given the increasing popularity of properties with plenty of bedrooms, Boyd says it’s not unusual for home sellers to sometimes stretch the definition when counting their bedrooms.

For instance, some sellers will place an armoire and a bed in a small den or another spare room and then will call it a “bedroom.” Or they’ll count a sitting room off a master suite as a “bedroom.” But Boyd says buyers shouldn’t be fooled by these falsely named “bedrooms.”

“If a space doesn’t have a built-in closet of its own, as well as a window or door for egress, it’s not really a bedroom. Likewise, if a room can only be entered through another bedroom, it not a bedroom,” he says.

-- Consider a property with a first-floor master suite for an elder parent.

Boyd estimates that at least 20% of all buyers “are now talking about an elder parent moving in with them at some point in the future.”

If this is a possibility in your case, he says you should consider buying a one-level, ranch-style home or a place with a first-floor suite, complete with a private bath.

Even if your parents can easily scale the stairs now, they might find it a lot harder later. Having ready access to a bedroom with a full bath can be especially important to those who are elderly or have a disability.

"The coronavirus is making everyone more aware of the needs of our aging population. A first-floor master suite is also a terrific plus for resale. All this makes it a win-win for buyers,” Boyd says.

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

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Trying to Downsize With Kids in Tow

Smart Moves by by Ellen James Martin
by Ellen James Martin
Smart Moves | May 20th, 2020

A clinical social worker in her 60s had long dreamed of downsizing from her sprawling suburban Tudor to a petite, low-upkeep condo in a pristine gated community. She was convinced the summer of 2020 would be the ideal time to make this exciting transition happen.

But that was before COVID-19 and before her two daughters -- one a graduating college senior, and the other a young professional who lost her marketing job -- moved back home unexpectedly. Now her transition is on hold indefinitely.

“I hate waiting. But I’m also horrified at the thought of putting my girls out on the street,” the social worker says.

The other reason she’s postponing is that due to economic uncertainty, she worries her Tudor wouldn’t fetch as high a price as it would during a more robust economy.

For the social worker in this true story, the decision to delay her sale is more of an emotional than financial choice. But despite the recession, real estate specialists are surprisingly optimistic home prices will remain stable in many neighborhoods. The reason? A severe shortage of available properties.

“The supply of homes for sale declined even more dramatically than homebuyer demand in April,” says Taylor Marr, a lead economist at Redfin (redfin.com), the national real estate brokerage.

Indeed, Marr says many affordable housing markets are continuing to see “sizable price gains.” Moreover, owners who are postponing their sales are further worsening the housing shortage, especially in areas where a strong job base has kept up buyer demand.

Take the case of Virginia Beach, Virginia, which is located near several military bases. There employment remains stable and “houses are flying off the market,” says Renee Joseph, a real estate agent who’s worked in the area since 2007.

Joseph says that everywhere in the nation, in strong markets as well as weak ones, aspiring downsizers with “boomerang children” living at home face special challenges should they decide to sell during the pandemic. One issue is that many grown kids returning to the family nest bring with them lots of belongings, including bulky furnishings.

“All that clutter can make your house look small and sell for less money. Until your house sells, you have to put all that extra stuff in your garage or a storage unit,” she says.

When your property is shown to prospective buyers, it’s also critically important that every member of the family -- including the grown kids--leave the place until the buyers have departed. That’s a given in any market but it’s all the more vital during a time when everyone is acutely fearful of transmitting the virus.

“One great thing about the current market is the availability of virtual home tours, which are truly amazing but also expensive to do,” Joseph says.

Here are a few pointers for wannabe downsizers considering a sale despite grown offspring who’ve returned to the nest:

-- Weigh the idea of providing a temporary rent subsidy.

Given the level of difficulty confronting many young people trying to gain or regain lost ground in the current job market, it can be a jarring transition if they’re jettisoned from the family home without sufficient funds to cover their own housing costs.

Should you help them pay for the costs of renting their own place? Tom Early, an independent real estate broker, says that might be a realistic way to proceed with your home sale without fear your offspring could become homeless.

“Not everyone can afford to help their kids pay rent for their own place. But if you have ample funds, this could be the best solution for all concerned,” says Early, a past president of the National Association of Exclusive Buyer Agents (naeba.org).

-- Consider buying an investment property where your kids could live short-term.

Clearly, many parents are money-strapped as they head toward retirement, which is the reason they must liquidate a large family home.

But retiring parents who have extra funds might consider purchasing a small investment property where their offspring can live for a limited period until they’re on their feet financially, says Donna Goings, a veteran real estate broker affiliated with the Residential Real Estate Council (crs.com).

She recommends that anyone considering this plan make sure their kids know the place is for their short-term use only and will likely be converted to a rental property in a few years.

Interested in the idea? Then search for a place that should be easily rentable in the future, perhaps because it’s located near a university where student housing is always in demand.

-- Don’t feel guilty about downsizing to protect your retirement assets.

By the time parents reach their late 50s or early 60s, Goings says they need to focus much more intensely on their own finances rather than subsidizing their grown children.

“At a certain stage, people have to get on with their own lives,” she says.

If you have a grown child or two living with you yet you need to move soon for financial reasons, it might be feasible for the offspring to also move to the new place, assuming you’ll have sufficient space there. But in that case, Goings says it’s wise to charge them at least a minimal level of rent -- proportional to what they can currently afford.

“The best thing you can do for your kids is to see that they get on their own two feet so they’ll develop the skills for independence,” she says.

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

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