Joblessness has fallen and earnings are gradually rising. But a surprising number of Americans still live paycheck to paycheck, new research shows.
The problem, according to Jonathan Morduch, a New York University professor, is that many people endure dramatic swings in income, making it extremely difficult to save for hard times and compelling some to sell their home when divorce or a health crisis hits.
In a new book, Morduch argues that an increasing number of people live in perilous economic circumstances due to what he calls “the great job shift.” This refers to the increasing tendency of employers to cut back hours unexpectedly when times are slow or to compensate more workers through commissions or tipping.
In their book, “The Financial Diaries: How American Families Cope in a World of Uncertainty,” Morduch and co-author Rachel Schneider say many people lack the means to handle even relatively minor expenses, such as an unexpected car repair bill. And a big setback, such as a cancer diagnosis or a death in the family, could compel them to sell their home.
Unless your place is located in a red-hot market where buyers outnumber sellers, marketing your home in “as is” condition can mean letting it go for a sacrificial price. That’s why it’s usually a good idea to somehow find the funds for affordable improvements.
“In a lot of markets, low-cost improvements to your property, like a fresh coat of paint or new carpet, give you a good bang for your buck. But if you’re facing a financial crisis, I’d be cautious about trying to do a big rehab to your house,” says Daren Blomquist, a senior vice president with Attom Data Solutions, which tracks real estate transactions all over the nation.
Here are a few other pointers for cash-tight sellers:
-- Seek out help to purge your home of clutter.
One of the most crucial steps in preparing a property for sale -- ridding it of excess furniture and accumulations -- is also one of the least expensive, says Vicki Norris, a former real estate agent and author of “Restoring Order to Your Home.”
“Chaos and other people’s stuff are instant turn-offs to buyers,” says Norris, who runs a professional organizing firm.
However, to execute an effective de-cluttering plan, many homeowners need a support structure to gain momentum and keep on track.
For guidance at a fair price, you can hire one of a growing number of professional organizers. You can search for one in your area through the website of a group such as the National Association of Professional Organizers (napo.net). Or you can turn to a friend or family member willing to help sift through your possessions.
-- Give priority attention to minor kitchen upgrades.
Sid Davis, a veteran real estate broker and author, says your kitchen should be the focal point of your pre-sale home improvement program, but that upgrades in this part of your property needn’t be as pricy as many imagine.
“Some of the most important projects cost around $1,000 to $2,000 each,” says Davis, author of “Home Makeovers That Sell.”
Davis urges cash-challenged home sellers to “triage” in the kitchen, focusing on the projects in greatest need. One typically involves improvements to kitchen cabinets, “which very often have accumulated years of dirt and grunge.”
“If you have wood cabinets, you can make them look a lot better through a thorough cleaning with Murphy Oil Soap, followed by a rub-down with lemon oil. If that doesn’t do the trick, sand and re-stain your cabinets or paint them in a high-gloss white. Also, be sure to add new hardware, which shouldn’t cost you more than $50,” Davis says.
Another low-cost kitchen improvement involves replacing worn flooring. Davis says the skills needed for this task are easily acquired through a class offered at a home center store or online.
“Vinyl flooring is the cheapest, but the price for a nice tile floor has come down dramatically,” he says.
-- Recognize the importance to your sale of a fresh coat of paint.
One proven strategy for adding appeal to your interior is to paint the walls and trim throughout. For advice on painting technique, consult the websites of major paint companies, or borrow a manual or video on the topic from the library.
“The only major element to a good painting job involves solid preparation -- mainly sanding and surfacing -- and attention to detail. You can do it yourself, and that’s a lot better than hiring a high school or college student,” Davis says.
-- Look for low-bid contractors for the most difficult projects.
Are you a homeowner with limited funds to pay contractors for complex or potentially hazardous pre-sale repairs? Even so, Davis urges you to resist the temptation to do this work yourself.
To make the most of your scarce resources for home improvement work, Davis recommends you seek three to four competitive bids from contractors who come highly recommended.
“In every economy, contractors need to keep their crews working,” he says.
(To contact Ellen James Martin, email her at firstname.lastname@example.org.)