To Buy or Not to Buy

It’s not complicated. If you have employment, good credit, money saved, and a desire to own a home, the stars have aligned to make this the best moment to buy – particularly if you’re a first-time home buyer. Interest rates are at historic lows, home prices have fallen – so you’ll get more for your money, and there continue to be a wide variety of homes for sale.

Plus, the new stimulus plan provides a tax credit of up to $8000.00 for first-time home buyers - or those who haven’t owned a home in the last 3 years. Yes, you’re actually being offered money to buy a home NOW. This tax credit is only good for purchases of primary residences made between January 1, 2009, and December 1, 2009. So, the clock is ticking.

For a quick breakdown of the tax credit, click here. For more thorough information, click here.

Now then, if all you have is the desire to own a home, but you don’t have any money saved for a down payment, and you’re not sure what your credit looks like – or even if you know it’s poor – desire is still a very valid place to start.

Seek mortgage loan officer recommendations from people you trust, and then give them a call. See if they take the time to answer your initial questions, or if they just try to hurry you along. Of course, if you leave a message, and your call is not returned in a timely fashion, move on to someone else. The last thing you want is someone who is unavailable when you’re in the process of buying a home.

Once you decide on a loan officer, set up a time to meet in person, if possible. At that time, have a detailed conversation about what you need to do, financially, to meet your goal of home ownership. Leave the meeting with a clear plan of action.

It is more difficult to buy a home now than it was just a few years ago. Borrowers have to jump through higher hoops – but that’s a good thing. The improved measures for lending money are actually there to protect you, as well as the lender, investors, and the general public. After all, we’re still trying to swallow the multi-dimensional pill that caused the current housing crisis.

You may miss the boat for the tax credit, interest rates may increase, and fewer homes may be on the market when you’re ready to buy, but such is life. Buy when you’re ready to buy – when the stars align in your life, and it makes good sense to do so. Forget the Joneses. They’re presently facing foreclosure.

Open Houses - Still Worth Consideration

Open houses are not appropriate for all properties. They’re best used for homes that will attract a broader number of buyers in a given market. Today, they are increasingly being debated for their current value and relevance. As technology offers more online photos, virtual tours, and videos to millions of buyers at any hour, actual open houses are losing their original appeal.

Many real estate agents have lost their enthusiasm for them – especially if they’re standing around in homes for two hours, without any foot traffic.

A growing number of sellers are opting out of open houses. They’re aware that home sales rarely result from open houses in most areas, and are more of an opportunity for agents to meet prospective clients – be they buyers or future sellers.

Open houses also attract curious neighbors and looky-loos, who simply want to see inside the home or collect decorating ideas.

Open houses may soon follow print advertising as a largely extinct form of effectively marketing properties. Until then, here are some reasons to continue to hold them:

For sellers: Having agents host open houses gives them the opportunity to point out features and answer questions about the property. The more people who see your property, the better – be they actual buyers, neighbors, looky-loos, or other agents. You never know when even a looky-loo encounters someone for whom they realize your home may be perfect.

For buyers: If you haven’t selected an agent to represent you yet, open houses are a great way to observe and meet a variety of agents in what should be a low-pressure environment. Open houses allow you to quickly move through many properties of different price ranges to learn what you really get for the money. Photos, virtual tours, and video can only do so much. There is no substitute for seeing a property, a neighborhood, and an entire community with your own eyes.

For agents: Depending on the location, open houses continue to be an opportunity for you to get in front of buyers in a more relaxed setting. They allow you to answer questions buyers may have about the property, or about home buying, in general. You also have the chance to ask questions – to stay on top of what buyers are seeking. Meeting neighbors and looky-loos may provide you with some unique information about the area that would be helpful in your marketing efforts. The more we can interact with the public, the better our odds for achieving success in our business.

Questions Every Home Seller Should Ask

Now that you have done your homework (see my post, “All Agents are NOT Created Equal”), and you’re ready to schedule interviews with each of the agents you’d like to consider, what should you ask?

Agents who have been in the business for many years may suggest that you ask the following:

1. How long have you been an agent?
2. How many listings do you have?
3. How many sales did you close last year?
4. What’s your average sale time, from listing to close?
5. For what percentage of the list price did your listings sell?

On the surface, these seem like great questions – and the answers are not completely without merit, but they could be very misleading. Let’s review them for a moment:

1. Longevity in this business can be helpful if the agent has been very active AND has embraced the numerous changes that have taken place in the industry. Many seasoned agents are uncomfortable with technology and new forms of research and communication. This discomfort can be an enormous disadvantage for today’s buyers and sellers, where time is of the essence and online marketing is a must. Newer agents are entering the industry with an understanding of what is required to compete in today’s market. They are also fresh from other industries, coming into real estate with a variety of skills – and new energy – that may be just what your listing needs.

2. The number of listings an agent has may not indicate how well the agent performs. The current market and other factors determine how many buyers and sellers an agent is working with. Agents with fewer listings may be be working with more buyers, which could be an advantage for sellers seeking an agent. Those with fewer listings may also dedicate more time to marketing them. That's by no means a hard and fast rule. There are agents with many listings who do an excellent job of serving their clients because they have perfected their service and communication. Then there are others with many listings who may simply show up to list the properties and then collect the commissions, with little contact in between. Some clients are comfortable with this type of service - others are not.

3. The number of sales closed by an agent in a given year does not offer great insight either. In 2008, many agents had numerous deals fall through because buyers could not obtain financing – even when they had good credit. Our current housing climate is throwing seasoned agents for a loop, as much as the rookies.

4. Again, average sale time does not necessarily reflect the efforts and abilities of the agent. It does reflect the nature of the market, but it may also be impacted by the seller. If sellers are unrealistic about how their home should be priced, their home may sit on the market even longer. With all of the options buyers have today, they certainly don’t need to settle for an overpriced home. Moreover, lenders won’t lend a buyer more than the property is actually worth, in current market conditions.

5. The ratio of sales price to list price may or may not be helpful information. If you’re a buyer, you want the sale price to be as low as possible, and as a seller, you want that figure to be high. Also, is the agent figuring the ratio from the original list price, or the most recently reduced list price? Again, this figure is going to reflect what’s happening in the market. And while that is vital information, it’s not going to tell you if the agent is right for you.

So, what questions should you ask? What questions will help you compare the abilities and resources of the agents you wish to consider? Here’s a list that may offer you insight:

* Based on current market stats for your area, how long is it typically taking to sell homes like yours?
* How do they plan to attract buyers to your home? What marketing methods will they use?
* Where will your listing be presented online, for buyers to find it?
* Aside from the yard sign and placing the listing online, what other marketing do they do?
* Do they have any suggestions for how to make your home more salable?
* What do they expect from you, as a client?
* How will they communicate with you, and how often? (Will they use your preferred method of communication?)
* How will you be contacted about showings?
* How will you receive feedback about showings?
* What price do they recommend for your home? How have they arrived at that price? What research did they do?
* What is their commission for the services they (and their company) provide?
* Do they offer a written performance agreement? (This is VERY important.)

And consider these basics:
Do you like the agent’s presentation, communication skills, energy, and personality? Can you see yourself working with this person for at least the next 6 months or more?

If you first take the time to prepare – as I suggested in my last post, “All Agents are NOT Created Equal” – and then pause to interview your top choices, you can then feel comfortable leaving the final decision to your instincts. Information always leads to sharper instincts, which are needed now more than ever.

All Agents are NOT Created Equal

It’s a common misconception that all real estate agents are the same. People assume that since we all carry the same basic licensing credentials, that we all practice real estate the same way. Of course, that’s as silly as suggesting that everyone with a driver’s license practices the same driving habits. So, how might you go about choosing a real estate agent to help you with the all-important business decision of buying or selling a home?

Here are some tips on how to find the agent who’s right for you.

1. Spend at least one day attending open houses – not necessarily to see the houses, but to meet the agents hosting the open houses. This will give you a feel for the variety of agents out there, and how they present themselves. Get a business card from agents you wish to research further online.

2. Ask friends or colleagues for the names of agents they would recommend, and research them further online.

3. Select several real estate companies located where you’re looking to buy or sell, and review the company, as well as the agents on their websites.

Typically, agents share information about themselves and/or their expertise in the “About Me” section of their website. If they haven’t written anything about themselves, or it’s riddled with misspellings and grammatical errors – move on. You want an agent who makes use of all available resources, and cares enough to pay attention to detail. Legally binding contracts and the processes of buying or selling a home are all about the details.

If an agent passes the “About Me” test, take a look at the agent’s listings next. They should also appear on the agent's website. Pay particular attention to the photos and worded description of the properties. As a consumer, you know what marketing grabs you. Photos rank #1 in importance for marketing a property. How does the agent measure up?

As you narrow down the list of agents who peak your interest, be sure to look at their company’s website. This may tell you a lot about the resources the company offers its agents, as well as its customers.

Finally, select at least three agents to interview. Before contacting them to set up appointments to meet, make a list of everything that’s important to you in an agent. This will help keep you focused as you make your final decision. Also, write up a list of questions in advance, so you’re sure to have all of your questions answered.

It may seem like a lot of preparation, but keep in mind the financial significance of what you’re looking to buy or sell.

Should you Try to Sell your Home NOW?

You’re familiar with lagging markets and excessive inventory. You’re aware that many lenders aren’t lending, and buyers aren’t buying – either because they can’t get a loan, or because they’re sitting on the fence, waiting for the market to completely bottom out. And you also know that home prices have fallen substantially. Still, you wonder, is now a good time to sell your house?

On the surface, one would have to say no. And that would be true if you can afford your home and you do not need to move for any reason.

But there are reasons to sell a home, no matter the market conditions:

* You can no longer afford it.
* You are relocating for business or personal reasons
* You’re getting a divorce, and selling your primary residence is part of the settlement agreement.
* Death
* You’ve completely outgrown your home, and you’re bursting at the seams
* You’re combining households, and you need to find a new home that meets everyone’s needs

And you can’t underestimate the power of “want to.” It’s not always need that drives us. Want is also a good motivator. It can signify a decisive change of course, and we’re often willing to make the necessary sacrifices for it.

So, if you can stay put, then do so for the time being. Just ride out this wave, and the market will eventually turn around. It may not return to what it was in its heyday, but that may be best. We cannot forget the reckless complacency that led us to this moment. A balanced market, as opposed to one that heavily favors buyers or favors sellers, is a healthy market.

But, if you need or want to move, be realistic about your home’s location, condition, and features, which all play a factor in the listing price. Consider your competition, because you likely have plenty of it. Anticipate that your home’s actual market value will be less than what you think it should be. And be prepared to both wait and move quickly, when the time comes. But above all else, remain focused on your goal. Do not lose sight of the reason why you’re seeking to sell at this challenging time. Allow that reason to guide your efforts toward a successful sale.

Home Inspection: A Guide for Active Homeowners

So, you want to prioritize home repairs this year, but don’t know where to begin. If you’ve recently purchased your home, chances are good that you had a professional home inspection completed prior to purchase. You should have received a written inspection report at that time, which would specifically note the repair recommendations for your home. If you cannot locate the report, contact either the home inspector or your real estate agent for a copy.

Many buyers simply file away the inspection report after receiving it, but it is meant to be an active resource for homeowners. If you don’t take action and repair certain items mentioned in the report, those same items could become obstacles for you when you later try to sell your home. If neglected, some smaller repairs could also become bigger fixes. And bigger fixes often come with bigger price tags. So, it’s best to keep your home inspection report handy as a reference guide for repairs.

If you’ve owned your home for many years, you may never have had a professional home inspection completed. Only in more recent years have home inspections become a standard practice for buyers, prior to purchase. Whether preparing to sell, or just trying to keep up with maintenance needs, it’s worthwhile for current homeowners to consider a professional inspection of their property.

In south central Wisconsin, home inspections typically run between $250-300.00 and are 2 to 3 hours long. Properties with greater square footage may run higher and longer. Seek service quotes ahead of time, so you’ll know what you will be charged. Payment is generally due immediately, once the inspection is completed.

For reputable home inspectors in your area, seek a variety of referrals from friends/family/colleagues, mortgage lenders, and/or real estate agents. Home inspector associations can also be a good source, but they may not always have members in your specific area.

Home Improvement Starts Now

It is now February, and perhaps some of your resolutions for the new year have already begun to wane. I think it’s tougher for those of us who live in colder climates, where winter blues can really take hold, and spring seems to ignore our daily invitations. But it will eventually arrive, as it does each year, and the question is, will you be prepared?

Now is the perfect time to dream, prepare, and plan. Make a list of ALL of the projects you'd like to complete while you own your home. Then, select a few that are reasonable to finish this year. That way, you'll have a list of both long and short-term goals.

Too often I meet homeowners who tell me about the great plans they had for their home when they bought it. Unfortunately, they never got around to them – so, now they’re just going to sell their home as it is, complete with orange laminate countertops and wall-to-wall carpeting in the kitchen. I also meet homeowners who finally decide to complete their list of projects just as they plan to sell their home. They always kick themselves for not tackling the projects sooner, so they could have enjoyed what the next owner surely will. If you simply take the time to plan, you will avoid these homeowner missteps.

When prioritizing projects, be sure to consider the following:

Financial budget
Repairs needed
Degree of difficulty
Time commitment
Resalability

Your financial budget will always dictate what you can ultimately accomplish. When reviewing your project list, take time to research the costs involved with each one. It always pays to shop around and price compare – much of which can be done online. If you think a project will require professional help, now is the time to get competing quotes from a variety of professionals, as this is the slow season for many of them. Work quotes are often only good for 30 days - but you’re just looking to gather ballpark estimates, so you can plan your projects appropriately.

Home repairs generally aren’t glamorous, but they are necessary. If your home is not structurally or mechanically sound, there is little point in making cosmetic changes, as it will be money down the drain. Many repairs are simple fixes. If you’re not handy – and it’s best to admit if you’re not – you likely have a handy friend or family member who would be happy to show you how to make the repairs. If you’re new in town, and friends and family are far away, contact your real estate agent. Your agent will usually be able to refer you to reputable area professionals, from whom you can obtain competing quotes for service.

Determine the degree of difficulty involved in a project. If you’re planning an entire kitchen remodel while you’re living in the home, your plans may also need to include a mock kitchen setup elsewhere in the house or garage. You’re also likely to spend more money on restaurants and take-out during the remodel period, so you’ll want to budget that in as well. Again, decide what elements of a project you may tackle yourself, and at what point you’ll bring in a professional, if need be. Know your limitations. It's always good to learn new skills, but seek advice from professionals when tackling something new. We all like to save money, but certain mistakes could cost you dearly. Also, a more complex project is more likely to unearth the unexpected. So, pad your budget and the timeframe accordingly.

Try to assess the time commitment involved with each project. It’s amazing what can be accomplished in just one afternoon. When scheduling your projects, start by tackling something that can be completed in one day, or one weekend, that will also have great impact. Do not dismiss the motivating reward of instant gratification. Decluttering your home or garage, or adding landscaping to enhance your home's curb appeal, will inspire you to keep going.

It's also important to consider how projects will add value to your home, increasing its resalability. Your home must absolutely work for you, since you own it. But someday you will want to sell it, and it would be nice to see at least a reasonable return on your investment. If your home has characteristics that will appeal to a broader base of buyers, you may be more likely to move on when you want or need to – instead of waiting and waiting for your house to finally sell.

Once you've selected your projects for the year, write them on a calendar that is always visible in your home. If certain projects require several steps, schedule each step on a specific date, so you stay on track. Also, post your list of home improvement goals in a prominent place as a constant reminder. But now is the time to start. Dream, prepare, plan…achieve.