Our home is under agreement. When we moved in we installed expensive hardware that we really love (door knobs, switch plate covers, towel rods, etc.). We would like to take it with us. Can we substitute other items before we close?
Absolutely not! Any item that is affixed to your home with a screw, nail, etc. must convey with your home unless you have specifically excluded it from your agreement of sale. Unless you raise this question during negotiations and your buyer agreed prior to signing the agreement, the items must remain with your home.
About 15 years ago I represented a buyer of a home that was remodeled with high-end Restoration Hardware items – cabinet knobs, towel bars… After we agreed on a price but before closing, we returned to the home to discover that the sellers had removed the expensive Restoration Hardware items and installed baseline builder items from Lowes. This was not what my client had seen when they toured the home and not what they had agreed to purchase. The seller ended up providing a $7000 reduction in the purchase price to make up for the items that had been switched. I’m not sure if the buyer ever replaced the items – what is relevant was that the removal of the high end items made the home less valuable.
If you find yourself heading toward a closing and you are just realizing that there is something affixed to your home that has sentimental value that you forgot to exclude, you can certainly ask your buyer if they would agree to a substitution – most buyers will allow removal of a sentimental item if you replace it with a like value item. Absent buyer consent or upfront exclusion, all affixed items must stay. Items that are occasionally inappropriately removed include: appliances, doorknobs, switch covers, towel bars, curtain rods, mailboxes, attached shelving and TV wall mount brackets. Mirrors that are attached must stay. Those hanging on hooks can be removed if you have to have them (although most buyers do expect them to remain).
180 Summerlawn Drive
Beautifully remodeled open concept 17 year old home on ½ acre wonderful lot in a delightful Sewickley neighborhood close to Village. Four finished levels of living space including finished walk out lower level. Kitchen with new stainless appliances open to family room. Main level laundry. Large master suite. Four bedrooms, 3 full and 2 half baths. Third floor great room. New roof. $599,000.
7 Harvester Court
7 Harvester Court
Tired of looking at one “project” after another for a home that is “move in ready”? Your search is over! This custom-built all brick colonial was just renovated with 3 new luxury baths, newer kitchen, new roof, new HVAC, new deck, new paint in modern aesthetic and more. Totally turn-key for you and your family! 4 bedrooms, 3.5 baths, 3 car garage, finished walk-out lower level, nearly 2 acre lot. $775,000.
As an Associate Broker at HOWARD HANNA REAL ESTATE SERVICES, Kathe Barge, CRS, ABR, CNE, is ready to answer any questions you may have regarding your real estate needs. Feel free to contact her at the office (412) 741-2200 x238, or on her mobile phone (412) 779-6060.
What financing options exist for transitioning between homes if we don’t have to sell our current home to buy our new one and our objective is to remain debt free when the transition is complete?
The process of selling one home and buying another often feels like there are many moving pieces. If you are fortunate enough to be able to buy a new home before you sell your old home, you have put yourself in a wonderfully strong position as a buyer to be able to make an offer on a new home that is not contingent on your old home selling. As we enter what will be a very strong spring market, that will be a big advantage for you!
You have a variety of options on how to pay for your new home. Perhaps you have cash – but with the recent run up in the stock market, this may not be the best time to liquidate your investments.
A particularly affordable alternative might be to put a home equity line of credit (“HELOC”) on your current home, IF you have enough equity in your current home to provide the cash you need to buy your new home. HELOCs tend to involve very low costs to the borrower up-front. They can also remain untapped until you need the money, so you are not paying any interest charges while you are searching for your new home. You can pay the HELOC off as soon as your old home sells, leaving you with less debt (or possibly none) on your new home. Finally, it is something you can arrange for now and be well positioned to jump on a great home when one comes on the market.
Of course, being able to buy without selling may mean you can qualify for a traditional mortgage on your new home. Whether this is the right choice for you will depend on whether and how much debt you want to end up with in the end. If you need a large amount of cash upfront but ultimately would prefer to carry a smaller mortgage (or no mortgage) once your old home sells, consider financing through a combination of loans and pay the second loan off when your old home sells, leaving your with only the first mortgage in the smaller amount. If you intend to carry no debt, there are products with low upfront costs that you can pay off as soon as your home sells.
There are many options to consider when creating a plan that to achieve your long term financial goals – give me a call and I can connect you to trusted financing providers who can help you develop a solid startegy before you find your dream home!
If there was one thing you would advise us to do to our home this year, what would that be?
Whether you are planning to sell your home this year or not, the best thing you can do to your home this year is a home inspection! We all live in our homes but rarely take the time to stop and give them a careful look. Weather beats up the outside of our homes year round. Caulking fails, flashing fails, paint peels and exposes wood to rot. We forget to clean our gutters on a regular basis – gutters and downspouts fill with decaying debris, causing water to back up into our homes and cause mold problems. We forget to have our furnaces serviced and fittings loosen and cause condensate to leak and rust our furnaces. The list goes on and on. Simply living in and not doing a regular check up on your home, you are leaving it open to the possibility of major repair bills later and major depreciation in your investment’s value. A home inspection will give you a to do list of projects to tackle throughout the year to keep your home in great shape and maintain its value!
You may not think about this until you go to sell your home. Some of the wear and tear may be obvious to a buyer, who will typically have checked out every available home, be able to see signs of your “benign neglect,” and pass on yours because of its comparatively negative condition. Even if a buyer doesn’t’ notice at first, there is no doubt that a home inspector will notice! After working hard to get your home sold, you may find yourself in the all too common situation of being presented with a long list of inspection requests that you need to complete in order to hold your deal together, or worse yet, a buyer who backs out of your deal because the house needs “too much work,” leaving you in the position of having to fix everything and start all over again. A homeowner should expect simply keeping a home in acceptable condition will cost them $3,000 – $10,000 a year, depending on the size of the home – some years wil be more if its time for a major project, and some less. If you’re not investing this, chances are someday you will when you are faced with a long list of inspection issues.
The first thing on my household resolution list this new year is a home inspection and I suggest you add it to the top of your list as well. Give me a call if you need the names of reputable local inspectors.
We would like to buy a new home in the new year. How much money do we need to have on hand?
The new year will soon be upon us, and with a new year comes a new opportunity for putting your housing dreams into motion. How much cash do you need to be able to close on a home
First, you must have your down payment. You will receive the best lending rates if you have at least 25% down. 20% down was the normal minimum years ago, and that is still not a bad idea if you want to avoid paying PMI (private mortgage insurance). A 10% down payment is also a possibility – you will likely pay an upfront PMI fee, however, for the privilege of putting less down. You can have this PMI waived if you will pay a higher monthly rate- generally .25% more than the rate would have otherwise been. Five percent down is also possible if your loan amount is under $417,000. And of course, with an FHA loan, you only need to put 3.5% down, although the PMI fees are fairly significant.
In addition to your down payment, and PMI if applicable, you should also budget for the following out-of-pocket expenses when you buy a home:
- Inspection fees – you will pay approximately $400 for a general home inspection, $55 for a pest inspection and $135 for a radon inspection. If you add a mold inspection, plan for approximately $225 more.
- Appraisal – approximately $350 charged by your lender to have the how appraised to be sure what you have agreed to pay for the home is in line with the market
- Application fees – this will vary by lender and can be negotiated upfront – plan on approximately $750.
- Transfer Taxes – in Pennsylvania, each party pays a 1% transfer tax (on the sales price of the home)
- Title Insurance – a fee regulated by the state, it is a percentage of the purchase price that varies depending on the price of a home. For a 100,000 home, the title insurance is almost 1% of the purchase price. At $1,000,000, the title insurance is slightly more than one half of one percent.
- Finally, allow approximately $1000 for other miscellaneous fees (title endorsements, recording, settlement, survey)
The best first step toward buying your new home in the new year is to talk to a lender today and begin the pre-approval process. Once you know how much you can afford to buy, you will be better able to calculate how much you need to close, and to align your new year’s savings goals accordingly!
The holidays are here and our home is on the market – any tips for selling during the holidays?
The holidays can be a challenging time to sell your home – the number of people looking for a home is much lower than almost any other time of year. But those who do look around the holidays are usually very serious buyers and so it is worth making sure that your home presents as well as possible.
Start with a good fall cleanup! It’s definitely time to put your yard to bed! Make sure your yard is well raked and all dead plants removed. Curb appeal is even more important in colder months when the landscaping is less lush and appealing to a buyer. Make sure gutters are cleaned and everything outside is looking crisp.
Make sure you keep your thermostat up for showings – walking into a cold house for a showing can be a real turn-off. Warmer homes will cause buyers to linger when its cold outside – which will allow them time to admire your home’s wonderful amenities. And of course, with as gray as Pittsburgh can be in the winter, be sure all of your lights are on for showings (and that you have working lightbulbs in all of the lights). Its also a good idea to put a few lights on timers if you are away so the home always looks cheerful from the street.
Holiday decorations always add cheer to a home, but be careful not to overdo it! Keep your decorations this year on the more minimal side, and try to avoid religious themed decorations. Be sure that you de-clutter BEFORE you decorate and also be sure that your decorations coordinate well with your décor scheme. And of course, avoid large inflatables in your yard!
Finally, don’t forget that if it snows, you must keep your driveway and walk clear of snow so that the buyers can easily get inside
Why should we consider buying now? Isn’t it better to wait until spring?
This fall, the market has been a bit sluggish, perhaps led by election anxiety, and now the holidays are quickly approaching. We are, however, expecting a very strong spring market. The millennials are expected to make a huge impact on our housing market this spring. Over 50% of home purchases are projected to come from first time home buyers. Many millennials are moving into their first homes, many are moving out of apartments and/or out of cities to a more “family friendly” environment. Sewickley , a walking community that has become so very popular in millennium America, is well positioned to see the impact of that surge.
This expected demand is going to put incredible pressure on our spring market. It is anticipated that prices will be increasing and bidding wars will become commonplace. All of this suggests that now is the absolute best time to buy if you are thinking of moving! There are very few people who buy this time of year, as most are too preoccupied with getting ready for the holidays. While inventory is lower than it will likely be come spring, the absence of many buyers gives you a much better chance to strike a good deal. Why pay over asking price in a bidding war come March when you could negotiate a discount now? Rather than putting yourself at a competitive and financial disadvantage, start the home search process now.
And of course, if you are thinking of selling, carve out some time this fall to prepare yourself for a spring introduction in January/February. Market trends show that the sale surge happens in March, not April, so you should be getting ready now! If you will be selling a starter home (which here can be up to $500,000) and are well prepped and well priced, you should expect a positive market response and maybe even a bidding war!
We may move out and leave our home vacant and for sale – is there anything special we should know?
First and most importantly, you must consider your insurance coverage. If you have a loss and you have not notified your insurance company that you have vacated the home, they may deny coverage for your loss. Some companies may not provide coverage for your vacant home and you will need to switch insurers. Some will provide coverage for a limited amount of time, and some will provide coverage as long as you leave your furniture in place. However, most will deny coverage for any loss related to water, so whenever you leave a home vacant for any amount of time, its important to turn the water off at the main. If its winter time, you should consider having a plumber professionally winterize your home.
Second its rarely a good idea to leave a home totally empty. Some homes do show better without the owner’s furniture, but even in those cases its important to leave bathrooms, the kitchen, fireplace mantles… staged so that the home feels loved and inviting to prospective buyers. Be sure to have a few lights on timers – buyers often drive by homes at night and you don’t want yours looking haunted! Of course, there are professional home stagers that can help you with any level of staging, whether its working with your existing furnishings, accessorizing bathrooms and the kitchen, or bringing in new furniture to fill the empty space.
You should have a house keeper who comes monthly to keep the home fresh and bug free and a yard service to keep the yard freshly mown and free of weeds, as well as leaves rank and snow shoveled. Finally, you should be sure to keep the temperature set at a comfortable temperature – in the winter no lower than 60 degrees and preferable 65 degrees.
Leaving a home vacant certainly makes showings easier, but it does require some extra attention to make sure the home does not feel abandoned and remains appealing to prospective buyers!
What assurances are there to a seller that if they enter into a contract to sell their home, it will actually close?
Reaching an agreement on the sale of your home is an important first step to getting your home closed. However, before a seller has any assurance that a home will actually close, several hurdles must be overcome. First, the inspections have to be completed. In most instances, the buyer has the right to terminate a transaction if they learn anything on the inspection that they are uncomfortable with, and in almost every instance, the buyer has the right to terminate if the seller does not agree to make the buyer’s requested repairs. So a seller has no assurances at all that their home will close until the inspection period is complete, which generally takes 21 days.
The same thinking would apply if the Agreement includes an appraisal contingency – until the appraisal is complete (which also takes 21-30 days), there is a risk that the home will fail to appraise and the transaction will not close.
If the buyer has a mortgage contingency, then there is a risk until a “clean” commitment letter is received from the lender that the buyer will not get their loan approved, in which case the transaction will not close. Usually it takes about 45 days from the date of agreement to know with any certainty that the buyer has received a loan commitment.
There is also the rare instance where a buyer never provides the contractually specified deposit money or second deposit money. This is a breach of agreement and if this happens, it’s reasonably unlikely that the buyer will cure that breach and close.
Finally, very rarely there are buyers who complete all of the steps in the process and just refuse to close. In those instances, the seller is often entitled to the deposit money, but that may seem like a small consolation prize when their home is empty and back on the market.
Working with a skilled real estate professional will help you to manage the risks and move toward a successful closing. So while the short answer is that there is never a guarantee until the home actually closes, with proper management of the details the risk to a seller of moving out and leaving behind an empty home can be minimized.
We have our home listed with another agent and are unhappy with the service we are receiving. We can’t help but wonder what process we should have gone through to find the right agent. Any ideas?
When choosing a Realtor, it’s important to do more research than asking a colleague, friend or service provider who they would recommend. I often help my clients find an agent in the new city they are moving to, and I start online.
First, I look for agents who do a lot of business in the area my client is moving to. How many listings does the agent have? I look at her sold listings on Zillow and see how many she has sold, both in the area and in the price range my clients will be buying into to make sure she has the experience they will need.
I then look at her individual website for her certifications and qualifications. These credentials require extensive commitment to training by the agent, and training means the agent is best equipped to achieve the very best result for you. Much of this training requires years of dedication to learning and excellence. All agents are not brokers, for example. An Associate Broker’s license takes a minimum of three years commitment to additional learning and hands on experience. If you are buying or selling a Signature home, there is an even higher level of training available to an agents such as Distinctive Homes Specialist. Christie’s Great Estates Specialist. These programs add yet another level of skill and expertise to an agent’s repertoire.
I like to say “a monkey can stick a sign in your yard.” It takes years of training and experience though to sell real estate while making it look smooth and easy. By earning credentials, we learn how to price optimally, how to market strategically, how to use the latest technology for your benefit, the complex ins and outs of our lengthy Agreement of Sale (the intricacies of which are just waiting to ensnare the inexperienced), how to negotiate for success, how to navigate the rough seas of inspections and how to close on time. Every one of these skills inures directly to your benefit and your bottom line.
I also look to see how developed her website is (is it more than a simple blurb) and how many reviews/ quality of reviews she has on Zillow. This gives a sense of how committed the agent is to the business.
Finally, I interview the prospective agents to determine marketing plans, detailed knowledge of the area and their personal market statistics. So take the time – get to know our credentials – and make an educated decision when choosing your next real estate agent.
We want to downsize but are not sure how to go about that process – do we buy our new home first or sell our current one first?
Your question touches on one of the trickiest scenarios in real estate – sell first or buy first? The answer is different depending on an individual’s circumstances. Buying first is usually the best choice – you can take your time finding the perfect next house. And you can move out of your current home before listing it for sale, which will allow you to stage and present the home without clutter and without the hassle of having to tidy up for showings. However, buying first requires a few things. You must qualify to own two homes at once. You must have a down payment for your new home in a savings account, or an existing home equity line in place on your current home that will allow you to pull out the cash you need for a down payment. And you must be okay with the concept that you may be carrying two homes for an undefined amount of time.
If you do not qualify to own two homes at one time, do not have the required down payment for the new home, or are just too nervous about owning two homes for an undefined amount of time, then your only option is to sell first. It’s a good idea before putting your home on the market to get pre-approved for your new home purchase (you want to be sure you qualify before selling yourself out of your existing home) and to start looking online for new home possibilities. When you get an offer, you may need to act quickly. The buyer for your home is unlikely to be able to wait for you to figure out what you are going to do next. If you need to wait to figure that out, you may lose the buyer. Additionally, to purchase a new home, that seller is likely going to expect that you have already moved through inspections on your current home and have a solid deal. Therefore, you will want to agree to a longer closing date on your current home to give you time to get through the inspection negotiations and select a new home. Of course, there is always the option of renting if you cant find the right home!
It is tricky, but with proper strategic guidance it can be accomplished smoothly and successfully.
We have a very old (25 years) furnace.. It is still working well and we don’t have the cash to replace it. We are planning to sell our home next year. What advice do you have?
A 25 year old furnace is a very old furnace, well beyond the useful life expected of such equipment. If a buyer makes an offer on your home and then finds out how old your furnace is, there is a very high likelihood that they will be asking you to buy a new furnace as part of their inspection response. There are a few things you can do to set yourself up for a positive outcome.
First, when you complete your seller disclosure, be sure to write on the document that the furnace is past the end of its useful life and may need to be replaced soon. Price your home accordingly and be sure that your agent highlights to buyers agents that you have priced your home at a lower price point because of its older mechanicals. This will prevent the buyer from expecting you to buy them a new furnace – they should take the age of the furnace into account when making their offer.
Second, put a home warranty on your home when you list it. This will provide coverage to you should the furnace break while you own the home and will give the buyer 12 months of coverage should anything happen in their fist year of ownership (and it is renewable).
Finally, consider buying a new furnace. Many contractors are willing to accept payment at closing if you make arrangements for this upfront. With a new furnace you can ask more for your home and are more likely to draw more enthusiasm form the buyers who do see your home.
We are planning on buying a new home in the coming months? Should we get prequalified or preapproved for a loan? What is the difference?
Its always important to make one of your first steps in buying a home a conversation with a lender. Pre-qualifications are easy – you just pick up the phone and tell the lender your income and amount you have available to put down towards the purchase, they check your credit and issue a preapproval letter. However, this does not hold much clout with the seller.
A preapproval is a much more rigorous process. Basically, you apply for the loan without having found a house. You give the lender all of the documentation they think they need and they out it through the loan underwriters. This is much more time consuming – these days lenders require quite a long list of documentation and explanation to approve a loan. However, this is something you will have to go through anyhow when you are ready to buy, so its not a bad idea to get it done upfront.
The preapproval process will also save you potential heartache later. Sometimes buyers are surprised at what gets in the way of a loan, You may have child support or student loan debt, for example, that you don’t think to mention in the very simple prequalification process that lowers what you can afford on a monthly basis. It would be unfortunate to find your dream home only to go through the loan approval process and find out that you don’t qualify to buy it. Additionally, sellers strongly prefer preapproval letters from buyers because they know lenders have taken a thorough look. A preapproval letter will make your offer much stronger, which could be important if more than one offer is received.
Keep in mind that whether you go through the prequalification or the preapproval process, this does not bind you to a specific lender. Once you have a home under agreement, you are free to shop rates and costs to choose the best lender for you.
Our home has been on the market for a while – we are getting a fair amount of traffic but so far, no offers. We are concerned that others are selling and ours is not. What are your thoughts?
Selling a home is a partnership – a realtor cannot waive a magic wand and make a home sell. An agent’s initial primary job is to make sure that your home is well advertised and to provide honest advice and feedback about condition. If you are getting a reasonable amount of showings, then that’s a good sign that the marketing is working well. Hopefully, you have gotten feedback from these showing and have taken steps to overcome any perceived drawbacks. Some things can’t be overcome – if a buyer needs an extra bedroom or garage, there isn’t much to do about that, but if there are concerns that you can address, be sure that you do.
Take a quick tour of your home, invite a neighbor over for a look or visit other open houses to make sure your home is presenting as well as your competition. Take staging to a new level. If you have checked all of the typical boxes (no wallpaper, neutral carpets throughout, neutral paint, no clutter, removing personal items such as family photos and religious décor…) take the time to consider what else YOU can do to help improve the chances of an offer. If your rooms don’t look open and spacious, remove more items to a storage facility. Did you remember to clean your windows this spring? Dirty windows can make a home very dull inside. In this heat, have you been watering your landscaping so that it is alive and thriving? How about your lawn? Green or dead? Have you removed the signs of your own wear & tear – are switch plates and walls clean and smudge free? Have you de-cluttered too much making your home sterile? Pottery Barn is still the easiest look to sell—make sure that while your home is reasonably free of personal items such as family photos, it has some warmth – fluffy white towels in the bathrooms, attractive throw pillows on couches and beds… Unsure of what you need? Bring in a home stager for some professional advice. Remember, selling a home is team work – you need to be doing your part!
Finally, price must constantly be evaluated. Keep in mind the oldest rule of thumb in the book – 13 weeks or 13 showings – if you still don’t have an offer, its probably price. Yes, improving condition can improve price. But if you are getting the showings and you aren’t drawing an offer and can’t make significant changes to the home to overcome objections, you must reduce your price, or be very patient waiting for what could be years for that one buyer to come along.
Friends of mine just had the sale of their home fall through because of a home inspection. How can that be prevented?
Yes – sellers should have their home pre-inspected before listing to prevent these kinds of issues! Finding a buyer and agreeing on a purchase price is only one small component of a real estate transaction and yet it is often all that sellers focus on. What happens between then and closing, however, is often the more difficult part of the process. Issues with a home uncovered on an inspection often cost a seller thousands in unexpected repairs and when sometimes even result in a terminated transaction. Inspectors are incredibly thorough (sometimes even finding problems that aren’t problems) and so every home seller should anticipate that the home inspector will find deficiencies and that the buyer will expect correction.
All home sellers should seriously consider having their homes pre-inspected. For as little as $250 – $500 for a basic pre-inspection you will quickly have an insiders view of how a buyer’s inspector will assess your home. Use the inspection as a maintenance check list – find a handyman to come in and fix all of the little things so that they don’t come up again on a buyer’s inspection. If there are larger items that you do not have the ability to repair, such as a roof nearing the end of its useful life, get an estimate or two for the repair or replacement. Note the issue on your disclosure and include a copy of the estimate. This should prevent you from having to credit the buyer for the repair later – buyers are supposed to review the disclosure and take any disclosed items into account in making their offer to you.
Of course, if your inspection is good or just has a lot of little items that a handyman can fix, attach the handyman’s receipt showing the repair provide a copy of the inspection in the house for buyers to see with a note indicating that the home has been pre-inspected and repaired and that they buyer can buy with confidence knowing that they are buying a house in great shape! In a town full of older and aging homes, this will really help your marketing!
So before you list your home – consider a pre-inspection. It will give buyers the confidence they need to move ahead with a purchase, may combat concerns that there are likely problems that would lower their initial offer to you, and will hopefully result in a smooth transaction once you do have your home under agreement.
How much more “life” do you think our spring market has left in it?
My crystal ball is out being repaired so I’m afraid my response will need to be a best guess, without it’s reliable aid! In all honesty, what the market is or is not doing in a given week or season is never more than a guess. There are certain norms that we have come to count on: the spring market is stronger than the fall market; homes in the Village sell faster than homes “up the hill,” which often require more patience. But being able to predict how long buyers will continue buying in any season, or how many buyers companies may transfer in, or how many buyers will accept the jobs they are offered and actually come to Pittsburgh, choosing Sewickley as their home base, is impossible to predict with any certainty.
And of course, there is the added uncertainty of what impact a Presidential election has on our market – historically it often slows around election time. It’s been a strong spring market. Buyers have come in waves – there was a huge surge in the March. Sales have been strong in certain brackets and not in others, but that could change on a dime. We saw a small surge “up the hill” but that market has quieted again.
To answer your question, I expect sales to continue along their usual patterns, with a reasonable number of sales in June and some in July as well. We are in our final push of families who need to be in for the school year. I expect that things will slow as they always do in August when most people desert Sewickley! Usually things pick back up again in October. If your home hasn’t sold yet, there is still a chance it could sell this spring, particularly if its well conditioned and priced perfectly. If you are thinking about listing in the future, it’s the perfect time to give me a call and develop a strategic plan for entering the market in the months to come!
Why does it seem that almost every home we view online is so neutral? What happened to all the color?
I recently reviewed a portion of a local market in the mid-price ranges and interestingly, almost every home that is under agreement has zero wallpaper and is painted in a neutral color palate (including beiges, grays, greiges and a few other nearly neutral tones). Only one of these homes had any true color on its walls, and that home took nearly a year and several price drops to go under agreement.
Professional home stagers have been counseling for years to remove all wallpaper before putting your home on the market –asking someone to buy a home with wallpaper is as personal as asking them to buy someone else’s wedding dress. No matter how beautiful, it’s rarely done and appeals to very few. Stagers are also quick to recommend neutralizing your paint palate. While there are some warmer neutrals, these days the cooler neutrals like gray and greige are the more popular tones with the buying public. Even having a more colorful child’s room can be a big turnoff.
It seems the selling public has in large part heeded this advice. The homes that are actually selling for the most part have been stripped of their wallpaper and painted in a more current, more neutral paint palate. Absent a compelling reason to choose a home that is not “sale ready” such as a severely discounted price, buyers are far more likely to overlook other “road blocks” to a sale such as a lack of a garage than they are to look past a personalized and colorful decorating scheme.
Does this mean that we must all live in color-free homes? Of course not! Your home should reflect your personality and your personal furnishings undoubtedly tie your color choices together. But it is important when we move toward a customized design scheme to remember that when its time to sell, part of the cost of selling will be repainting these spaces back to a more neutral palate!
We have noticed that several homes have sold lately before they have hit the MLS. Are these “pocket listings” a good way to sell your home?
If a home sells before it hits the MLS, as a “pocket listing” as they are often called, it is highly likely that the seller could have sold the home for significantly more money. The MLS exposes a home to a large number of prospective buyers in a very short amount of time. This widespread exposure is what has the potential to drive the price up for the seller.
A “pocket listing” is more like a secret sale. The agent you are dealing with may have a buyer that is willing to buy your home, but if it’s that easy, chances are you could have received more money if the general public had a chance at your home, and a bidding war could have possibly ensued. If an agent is being straightforward with the seller and discusses the strategies involved with using the market pressure of the MLS to drive in a higher price, it’s a rare seller who will willingly leave money on the table.
So why do we occasionally see these seemingly “secret sales” taking place? Some sellers perceive these pocket listings as a good thing – some don’t want to be hassled with multiple showings, some don’t want the general public to know their home is available for sale. Some agents choose this strategy because they want to keep all of the commission for themselves and that only happens if their own buyer is the successful bidder. If a seller’s goal is to maximize financial return, however, a pocket listing, or accepting an agreement of sale before the home is marketed in the MLS, is rarely the best strategy.
So no, my 17 years experience indicates that a pocket listing is usually not in a seller’s best interests. The highest returns I have seen sellers achieve occur in scenarios when they have used strategies to maximize the excitement within the buying community through proper pricing, excellent conditioning and staging and full MLS exposure.
Why do some homes seem to fly off the market and others take years to sell?
Location. Price. Condition. These are the three most important factors that go into how long a home is on the market. Unique attributes and depth of market segment would be fourth and fifth!
Location is really where it all begins. If your home is in an easy to sell location, the market will be far more tolerant of imperfections in other areas, such as wallpaper or a slightly aggressive price. Location is sometimes relative to a particular buyer – their work address may make one part of town more desirable than another, but generally speaking, buyer excitement about properties rises and falls with address.
Condition is also a very important factor in pricing. Homes that look like they are straight from the pages of a Pottery Barn catalog tend to sell more quickly, and tend to bear higher prices than are sometimes warranted. Those that are dated, with older wallpaper and carpeting, for example, tend to sit – unless, of course, they are in a hot location and deeply discounted, in which case our stable of “flippers” will be ready to buy with cash and close quick for the opportunity at a profit when they renovate.
Price is the easiest of all factors to change. If priced well, even less popular locations and homes that have condition challenges can sell quickly. But if you are trying to match the price of competing sales that were in better locations, better condition or with more amenities, you may find your home takes far longer to sell.
Finally, you may have a home with unique features. A home with no off-street parking can be a challenge to sell at any price point, and it is a matter of being patient and waiting for the right buyer who appreciates the home’s other attributes. You may not have a master bathroom. You may not have any green space in your “yard.” You may have a kitchen barely big enough for one. You may have only two bedrooms. There are many factors that could lengthen time on the market even with perfect condition and price. And of course, depth of the market segment is relevant as well. The higher you go in price, the fewer qualified buyers there will be and the longer your home will take to sell.
Our home is on the market and not sold – where are the buyers this spring? How can we get it sold?
Our spring market has seen some very unusual fluctuations. In some weeks there have been surges, with several houses going under agreement in a week, and other weeks have been quiet. The one million dollar price range has been hot for the first time in a couple of years. The under $300,000 market is also moving very well. If you’re home is in the “middle” then yes, it’s been slower than expected and it’s hard to know why. Speculation has included the election, of course, as well as cutbacks in some oil and gas companies.
Sadly, real estate agents don’t have magic wands that we can wave to make a buyer appear for your home. If it’s been on the market for more than a few weeks it’s likely the local prospects have seen it and determined that its not a fit for them. The most likely buyer is someone currently outside the area, and there is just no predicting when a company is going to relocate someone who might be looking for a home.
Therefore, what you must do is make sure it is the best choice in the price range when a buyer does arrive on the scene. It is important to make sure that it shows perfectly – there is a lot of competition – other sellers who really want a buyer as well. I have written many articles that you can find on my blog at www.kathebarge.com that cover critical topics like de-cluttering and staging, and updating your home. It might be time to bring in a professional stager. It might be time to update paint colors, freshen any dated carpets, update lighting fixtures or baths. Many of these things can be done very cost effectively and could give your home the edge with the next buyer through town.
It may also be time to have a professional appraisal done of your home, both to check to make sure that you have it priced competitively and to give any buyer prospects confidence that the value is there.
In the end, homes with completely updated features and current design palates continue to be the first ones to sell. If that’s not your home and changes aren’t possible, then review price, do the best you can to stage and de-clutter, and then be patient. Buyers can be very fickle – your buyer will come!
How much negotiation should we expect when buying a home?
Some homes sell for 100% of asking price, even months after they have come on the market. Others sell for 25% off ask. How does a buyer even begin to know how much to expect to “negotiate off” the asking price of a home?
Community practices are a good place to start. In the North Hills, for example, homes typically sell for very close to asking price – if a home is priced too far above what the market will bear, buyers simply sit and wait for sellers to reduce. In Sewickley Heights, on the other hand, large discounts are commonplace.
It’s also important to consider how long a home has been on the market since it’s last price reduction. If it’s been a few months, there may be more room to negotiate.
The time of year and market activity and other important factors. In the spring market, homes are far more likely to yield higher realizations. This has been a very hot spring market – if you are buying this time of year and looking for a large discount, you may be disappointed.
Listing agent pricing styles are also relevant – some agents price to allow for large amounts of negotiation and others prefer to choose a price very close to market value in an effort to engender more enthusiasm about a home –knowing the agent’s average realization will help you determine the best approach to take if you actually want to be successful in your negotiations.
Finally, and most importantly, its important to review and understand the comparable homes, including price per square foot and neighborhood particularities. If a home is priced at or below the price at which comparable homes in similar locations have sold, it’s highly unlikely a deep discount offer will succeed.
Before you determine how much to offer and how you will approach your negotiations, ask yourself how much you want to own the home. If you are dreaming about raising your family there and your goal is to actually own the home, take a realistic look at the above factors before diving too deep with your offer.
Is your first offer your best offer?
It’s an age-old adage in real estate – your first buyer is always your best buyer. How true is this, and what does it mean for you, the home seller?
As much as we all love our homes and are absolutely certain they are worth more than a buyer is often willing to pay, it is almost always true that your first buyer is your best buyer, and well worth trying to make it work with. After sixteen+ years in real estate, I can share experiences all day of sellers who let buyers move on, only to ultimately take a lower offer. For example, I had a listing priced at $350,000. The first offer, received in only one week, was for $325,000. The seller wouldn’t budge. 60 days later, a remarkably short period of time, the second offer came in an topped out at $320,000. Again, the seller wouldn’t budge, now holding out for the earlier $325,000. Another 60 days passed – at this point both the first and second deals would have been closed and the seller happily freed from his mortgage obligations. This time, the buyer topped out at $317,000 and this time, the seller had the good sense to grab it, netting $8000 less and closing 120 days later than he would have had he gone with his first buyer.
This scenario is all too common, and yet, despite the sound advice from those of us who do this every day, history continues to repeat itself. If you have an offer out of the gate, it doesn’t mean that you priced your home too low. There is a certain energy that surrounds a new listing. Buyers panic a bit when a new home enters the market, certain that if they like it so does everyone else. This panic will drive them to pay more and keep their terms cleaner than a buyer who comes along later. If you are one of the lucky sellers who gets this early offer, do not second guess yourself or your agent – a better price is never found than one that happens as soon as a home comes on the market. Grab it and be happy that your home is sold!
Working with your buyer is also important during the home inspection. Inspectors are extremely thorough these days and buyers have high expectations about condition. If you are lucky, the buyer will let some issues go. But many buyers will require that you address 100% of inspection issues. If you have to put your home back on the market because you don’t want to make repairs, you will be required to disclose all issues and can be almost guaranteed of a lower offer next time around.
So yes, it is true. Your best offer is most likely from your first buyer – do what you need to do in order to make the deal work!
Do you think living in a top ten school district adds value to our homes?
Absolutely! There is no doubt in my mind that living in the Quaker Valley School District, ranked in the top ten in Western Pennsylvania, adds both value and sale-ability to our homes. In fact, if you missed the news, US News and World Report recently ranked Quaker Valley High School as the #6 high school in the entire state! That’s an impressive ranking for our small town and equally small school district.
How do these impressive rankings translate into more money for you? Families moving into Pittsburgh have been a significant force behind our home sales for decades. Buyers with children almost universally start their home search considering school districts. Our school district not only offers top numbers, but it is small and can afford more personal interactions between families and faculty. This personal touch makes Quaker Valley both unique and a highly sought-after school district for people moving to Pittsburgh.
Relocation buyers are not our only customers. We see dozens of home sales each year to families living in other Pittsburgh communities where the school districts are not as acclaimed looking to improve the educational opportunities for their children. Pittsburgh neighborhoods that seemed fun and exciting to DINKS give way to sensible communities with outstanding schools like Quaker Valley once kids come along.
And yet we are a small community, with limited housing options. As our educational performance continues to shine, living in Quaker Valley continues to be a strong draw for buyers coming from both near and far, and yet we only have so many places to house these buyers. The increased demand for housing in the District has continued to push our housing prices up, and that has become particularly evident in some of our more affordable price brackets, which are feeling less affordable each year.
So yes, absolutely –living in such a highly acclaimed school district is driving more and more families to explore the possibility of living here, and despite our new construction, the very limited nature of our housing inventory, when combined with the strong demand, is continuing to put strong upward pressure on our housing values.
What is reasonable to expect a real estate agent to do for you when selling your home, and what is not?
This is an outstanding question posed by a recently closed home seller. Clarifying listing agent responsibilities up front is an outstanding way to keep the consumer/agent relationship a happy and productive one. Homes don’t always sell quickly and the relationship can be lengthy!
It is reasonable to expect your agent to be well versed in the market you are in. She should be familiar with all comparable sales and competing listings and should have visited most of them personally. She should be able to describe their differences to you so that you can understand how your home realistically compares to others. She should also have an understanding of our market cycles and be able to explain when your home is most likely to sell, and how many days on average it takes to sell a home like yours.
It is reasonable to expect that your agent keep your home well advertised. You should expect professional quality photos and a full saturation of the internet, which drives most home sales these days. It should appear in print media as well and be occasionally open to the public, although sales from open houses are rare. It is reasonable to expect periodic market updates and feedback reports – monthly is the most common that I see among my colleagues.
If your home is vacant, it is reasonable to expect periodic property checks. Bi-weekly is appropriate, but I do provide weekly checks for my vacant listings. It is also reasonable to expect your agent to have enough community connections to be able to provide referrals for work that needs to be done.
It is important to remember that an agent’s job is to market your home, and ultimately, to negotiate a contract for the sale of the home. The home does remain your home, however. Therefore, it is important for you to be a continued partner in its sale. A real estate agent cannot maintain the property for you and cannot contract for you to have it done, but hopefully can refer you to service providers. Additionally, as much as we wish we did, a real estate agent does not have a magic wand to miraculously produce a buyer for you or a crystal ball to know when that buyer will come along, although sometimes we are able to sell homes so quickly that you might think we do. We must all work within the market that we are in and stay the course with consistent advertising, price reviews and condition adjustments as needed to get a home sold.
Dear Kathe –
We’re getting our home ready for the spring market – we don’t want to do too much to get it ready because we’re sure the buyers will want to do projects to make it their own. What do you think?
Recently I was showing a lovely home that was, for the most part, picture perfect, in my professional opinion. And yet when my client walked into a room with a cream colored carpet on the floor, she couldn’t miss the glaring rust stain on the carpet. At that moment, the positive vibes she had been feeling instantly turned negative and the home was surprisingly crossed off her list.
This drove home the point once again of how critically important it is for sellers to make sure their homes really are picture perfect and if at all possible, to not leave obvious projects for the buyers. Buyers really are this critical these days and so unless you have a hot commodity that you are willing to sell at an obviously low price, it is well worth your time to make sure there is nothing that could turn a buyer off. If you were buying a used car and saw a big scratch on the side panel, would you stop and wonder what else is wrong with the car? Would you dig deeper than you otherwise might, searching for other deficiencies? Would you expect the dealer to give you a big discount because of the glaring issue? Would you be thinking that you would prefer to repair the scratch so that its done to your satisfaction? What if the dealer had taken the time to repair the scratch, so the car looked good as new? Would it have affected your perception of the car and its desirability to you, the used car buyer?
The same analysis applies to the sale of used homes and yet sometimes, sellers don’t seem to see it that way. Experience shows that your home will sell faster and for more money if it is properly conditioned for the market before it hits the market. This does not mean leaving projects for the next owner. Yes, they will want to make the home their own and yes, they may undo some of what you have just done. But they wont even consider making it their own home if they start off feeling like there is work that must be done.
So do yourself and your bank account a favor. Hire the agent who walks carefully through your home and makes a “to do” list for you of what you need to do to get your home sold, not the one who sweetly glosses over all those things you have seen on HGTV are “no nos” for home sales. Hire a home stager (they are quite reasonably priced). And then, take their advice and eliminate all of the objections possible before a buyer walks in the door. Don’t be the place that “needs a lot of work” — be the one that is “wow, they have really done a lot of work.”
What impact will the new lending laws have on us as future home buyers?
This is a huge topic that I have attended day long seminars on! On October 1st, new laws will take effect that will impact the way that we all buy and sell homes. Its complex and will take some getting used to, but its important to keep in mind that all buyers and sellers should plan to close their transactions in no less than 60 days, unless the buyer is a cash buyer. Stacked closings, where the sellers close on their home and immediately close on their new home, will, at least until we adjust to the new rules, become much trickier.
To start, much of the terminology has changed. Lenders are now called Creditors. Borrowers are called Consumers. The Good Faith Estimate is no more – it has been replaced by the Loan Estimate – this is what your Creditor gives you to set forth the loan terms. The HUD-1 is also gone. It has been replaced by the Closing Disclosure. And the closing/settlement is now called the Consummation!
The most cumbersome change is that the Consumer must receive their Closing Disclosure 3 days prior to closing. It is generally considered that this requires sending the Closing Disclosure 7 days in advance of closing. To meet these deadlines, Consumers will need to be very prompt in making their loan application and all of getting their documents to the Creditor. If documents are delayed, underwriting will be delayed and the above notice requirements may not be met. If these requirements are not met, your closing will be delayed.
It is recommended that walk-throughs go to a two-step process. A preliminary walk through is recommended 7 days in advance of closing to make sure the seller has complied with all terms of the Agreement of Sale. Sellers – this means that you will need to make your inspection repairs well in advance of closing. Buyers, your agents will need to remind Sellers through their agents to be sure they leave all appliances, clear all personal effects and debris from the home… A second walkthrough is recommended for immediately before closing, but if there are any issues that affect value (such as an appliance that was removed from the home), this will cause a lengthy delay in the closing. Therefore it is critical that all parties know and understand their obligations under the contract.
The new laws are complex – be sure to choose a real estate professional who is well educated on these changes to make your real estate transaction is as smooth as possible. Check back next week for more information on how these new laws are affecting all of us.
Is now a good time to list our home for sale?
August is typically a quiet time in our real estate market, and this August is proving to be no exception. Buyers are distracted with last minute vacations or getting their kids back to school! However, a quiet market is not a dead market. For new introductions, there is still a reasonable number of buyers looking for homes. Just last week I listed a home and sold it in 3 days! The buyers had been looking for months and this home checked all their boxes!
If you’re ready, market entry is typically best right after Labor Day, once we really have closed the book on summer. I would not wait for the spring market to roll around. There are more buyers in the spring market, but there are more homes on the market to compete with. Our inventory is at a record low in most price ranges. Homes that are market ready will continue to sell well through the fall.
Market ready is the key, as it always is. I cannot overstate the importance of doing your homework upfront. If you’re new to my column, check out my blog on my website for back columns about readying your home for sale. Briefly, low cost must do’s include decluttering (and storing off-site if possible), repairing all damage/wear and tear, and giving the house a top-to-bottom (including basement and garage) scrub down. The next level of preparedness includes removing wallpaper, repainting in a current color palate and replacing worn or colored carpets with new neutral carpeting. If you’re not ready, you will either need to discount the price or take the time to prepare your home. If you’re not ready now, plan for a spring market entry in February and get to work! If you are ready now, give me a call and let’s get going – its been an exceptionally strong year! Interest rates remain low –it’s a great time to make your move!
My friend’s closing on her existing home was delayed and she ended up having to delay her closing on her new home, and was stuck with all of her stuff on a moving van and unable to move in to her new home. How can these major inconveniences be avoided?
Back-to-back closings do raise the possibility of delayed closings and moving vans sitting curbside waiting to unload. When there are multiple transactions lined up on top of each other, if one in the line-up fails to close on time, it will affect everything in line behind it. Ideally, transactions would not be back-to-back, but this only works if buyers are paying cash out of existing accounts or have sufficient resources to carry two homes, so that the new home can be closed independently of the closing on the old home. But even if transactions are not stacked, closing delays can still occur, causing unhappy buyers and sellers, because lenders aren’t ready.
So how can these inconveniences be avoided? Selection of your lender and closing agent are absolutely critical. There are a lot of people out there who would like your mortgage and closing business. Many may even be your friends, neighbors or family members. But the relevant question, in addition to rates and fees, is whether they close on time every time. This is where you really need to rely on your agent’s expertise. Even consumers who move frequently only engage in the mortgage process once every few years. A busy agent is dealing with lenders daily. We know who stands behind their word and will not let you down, and who will not. A well-intentioned but poor performing lender can cost you significant unhappy delays – make a careful choice up front.
It is also crucial that you get your lender all of the documentation that he needs immediately at the time of mortgage application. You don’t want to be part of any delay. Finally, even once you have turned in all of your paperwork, its important to check in with your lender weekly, daily the week before closing, until they tell you that they have the “clear to close.” The old saying “the squeaky wheel gets the grease” is never truer than when it comes to closing your mortgage loan – stay in close touch with your lender!
The rules surrounding lending and closing mortgages is about to change again, in October. In an effort to protect consumers, the process will be getting even more cumbersome and delays should be anticipated. Your careful choice of your service providers will become even more critical!
My home has been on the market for quite a long time and has not sold. Should I take it off the market and give it a rest so that it doesn’t seem so stale?
The best course of action to take when a home has been on the market for a long time and hasn’t sold depends on why it hasn’t sold to begin with. For example, if you have a very unique home, it may take a long time to find the buyer looking for your unique features. If you take your home off the market, you may miss out on that one buyer seeking a home like yours.
If your home is located in a challenging location, such as next to a perceived detriment, then taking your home off the market may cause you to miss out on the one buyer who doesn’t perceive the neighboring feature as a detriment. If, however, the buying public perceives your price to be too high, then removing it from the market for a rest is highly unlikely to change that perception, unless your “rest” spans several market cycles! The risk with waiting for the market to “catch up” with what you “need” out of your home is that you don’t have a crystal ball –prices could go up or down and you could end up waiting a long time for the same price you could get today.
And of course, if your home has not sold because of condition, the passage of time isn’t going to change that and may even make it worse. Consider how large a renovation you are willing to take on in order to get your price. Stripping wallpaper and repainting, for example, might be a good start, but if you have dated kitchens and baths, it’s not going to do much to change the buyer perception of a “dated” home.
In the end, there is rarely a scenario when taking a home off the market for a “rest” ultimately yields a better result for a seller than staying the course. In fact, we have many examples of recent sellers who tried to do just that and have ended up with lower offers than they had just a couple of years ago. So my best advice to you is to reevaluate your home for possible problems that are easy to fix like too much stuff, reevaluate price to make sure it is realistic and in line with recent sales (consider an appraisal to be sure), stay the course and then work with the offer that you do get.
What about this year’s spring market has surprised you?
I have been surprised by an interesting trend in real estate this year – I have actually had buyers choose homes based on how clean they are! And we aren’t talking about whether the home is broom swept clean. In these homes you could literally eat off the floors! There is no doubt that Mr. & Mrs. Clean live in these homes. Buyers have actually looked past their “must haves” and have chosen homes because they are so incredibly clean!
So what is incredibly clean to today’s discerning buyers? Decluttering is step one. Renting a storage facility or getting a pod is a great first step. After that, every inch of a home needs a good scrub down. Every light needs to be cleaned, every baseboard scrubbed, air returns and bath vent fans cleaned, carpets professionally cleaned (or replaced if they don’t look new again after cleaning), every smudge on the walls and cabinets removed (which may require repainting – and please make sure any touch-ups are NOT noticeable). Check every light switch – make sure they are crisp – if they are dingy looking, have them replaced. Air filters on furnaces should be changed. Worn floors need to be touched up or refinished. Grout must be completely clean – if you cant get it to look like new, hire a professional steaming company to steam your grout and then reseal it with grout sealant. Refrigerators and ovens should be spotless. Closets should be tidy and well staged. Light bulbs should all be working. Crystal chandeliers should be polished.
And of course outside, all landscaping should be well trimmed. Walks and driveways should be edged. Porches and patios should be swept and in great shape. Windows and futters should be clean. Garages should be swept out and well organized.
Sound like a lot of work? It is – super deep cleaning is no fun. But this spring we have certainly seen sellers who have taken their cleanliness to the next level rewarded for their efforts!
We are in the process of buying a new home, and had agreed with the seller for a credit of $5000 for repairs related to inspection issues. Now our lender is asking what the credit is for and sending an appraiser back out. What is going on – this didn’t happen the last time we bought a home?
As the years pass post-2008, it seems that lenders are getting more and more restrictive with their lending rules. At first, they just didn’t want to know about repairs, so buyers and sellers started moving repairs to side addendums and providing un-named credits for items the seller didn’t want to fix. Lenders seem to have caught on. They now want to know why money is being credited back post-agreement – it’s a fair question.
From a lenders perspective, they are financing a home that has an appraised value. For example, if you are buying a $500,000 and it appraises for $500,000, the lender agrees to loan you money with the assumption that if you default, that is what the house is worth. If there is something wrong with the house (a failed roof, for example), and you get a credit for it, then the house (with its failed roof) really isn’t worth $500,000 after all, and there are no guarantees that you will take the credit and put on a new roof. If a credit is being offered to a buyer to cover inspection issues, the lenders now want to know why so that they can assess whether the items affect value, and they want to send an appraiser back out to make sure that the home is worth what he said it was worth now that the deficiencies have been revealed.
This is not only going to slow transactions down and possibly delay closings, but it raises the possibility of appraisal failures. For example, if the roof really is bad, the house may no longer appraise. It is probable that our ability to offer credits for inspection issues is coming to an end.
All of this might sound complicated, but there is one very easy take-away. Inspection issues will need to be fixed prior to closing by the seller. Sellers, its important to keep this in mind — if there are inspection deficiencies, you are probably going to have to actually fix them. Don’t want to be blindsided by a long list of issues four weeks before closing? For many reasons, the best course of action is to pre-inspect your home and make repairs upfront.
We are remodeling our kitchen – what type of flooring should we install?
The most important thing to consider when choosing a new floor for your kitchen is what is going on on the rest of your main level of your home. It is a critical and yet often overlooked rule-of-thumb that the most easily sold homes do not have more than two types of floor coverings per level. The trend decades ago was to customize flooring to the room. The living room might have been green carpet to coordinate with the living room furniture, the dining room might have been blue carpet to work with the custom drapes. Today that is no longer in vogue and for a home to feel updated, and not subject to the “dated home discount” it’s important to unify the floor coverings within the home. Floors are no longer considered an important opportunity for you to express your sense of style – that is better done with area rugs and other items that are easily removed from the home. So when you are choosing a new floor for your kitchen, first consider whether you have the opportunity to unify (or move toward unifying) the flooring in your home.
Hardwood floors are by far the best choice you can make for your kitchen floors. There are two basic types – finished in place and factory finished. Factory finished floors are the easiest – they come out of the box pre-finished and just need to be installed. However, finished-in-place hardwood floors have far greater durability and a much more classic look. You do have to endure the sanding & staining process inside your home, but the costs are roughly equal and in the end you have a far more saleable floor. Avoid trendy choices in wood – while hand scraped or hickory may be trendy today, it will quickly feel dated. Stick with traditional oak floors (of any board width), as styles change the most you will have to do is update the stain color – a far easier task than completely replacing the floors.
Many people choose tile for their kitchen floors. This is not a choice I would recommend however. Tile is the quickest floor covering to feel dated and the hardest to change once it is dated. Its also cold on your feet, anything you drop is likely to break and it can be a challenge to keep grout clean and crisp looking. Other trendy choices include cork and laminate. Laminate in particular is not a good choice for a higher end home.
In the end, finished in place oak remains the best choice for your kitchen (and for the rest of your home!)
If its such a hot market this spring, why are so many homes still on the market?
In some parts of our country, a hot market is defined by homes that hit the market and sell almost instantly with multiple offers in excess of the asking price. That is not how a hot market is characterized here in Sewickley. Here, when we have a few homes that sell in the first week of their listing, and when those sellers realize in excess of 95% of their asking price, we consider the market to be “hot.” In a Sewickley “hot” market, not every home will sell quickly or for a high realization.
Even in our best market, Pittsburgh is a very value-driven city. In other words, buyers here are concerned about whether a seller establishes value and whether the data suggests that the value will be there should they resell the property in the next 2-3 years. Value can be conveyed in many ways. Establishing your basis in the property by providing detailed information about your improvements will help a buyer understand the value you are offering. Correct pricing will also help establish value – its very important to price your home by applying the proper dollar per square foot range to your documentable square footage.
For example, if your home needs some updating, applying a square foot value that has been established for a totally redone home is not going to convey value to a buyer. There are many other factors that will influence a buyer’s perception of value, such as quality of work completed at the property (a handyman special is not only obvious, but likely devalues your home) and the quality of the amenities (higher end appliances will create a higher feeling of value, for example).
In the end, even in a hot market, Pittsburgh buyers keep a level head about themselves and are going to be looking for value before they prepare an offer on a home. If a home has been on the market for the entire spring and has not sold, or if it has received offers that were below what the seller feels the home is worth, there is a high likelihood that buyer perception of value does not align with the asking price and some kind of an adjustment will be required.
I’ve heard that agreements on many homes have fallen through lately from home inspections – why is that?
Our market has traditionally been one where buyers know they are buying old homes and allow the seller some leeway in not presenting a “perfect” home from an inspection standpoint. However, in many parts of the country, this is not the case. Sellers are expected to remedy all issues noted by home inspectors prior to closing. As more and more people migrate here from other parts of the country, our prices are going up, but so are the buyers’ expectations as to a seller’s responsibility for concerns discovered on a home inspection. At the same time, inspectors are getting significantly more particular. And so yes, it is absolutely possible to have purchased a home only two years ago and have new concerns arise that clearly existed and were overlooked when you bought your home. And yes, it is equally possible that you will be expected to fix them and if you refuse, your sale might fall through.
This can often leave a seller feeling like they are the unlucky one who got stuck holding the “hot potato.” As the years pass, the list of “hot button” issues mounts and if you are the owner when the issue is discovered, you will be the one paying the bill even though the home was bought and sold many times in advance of your ownership. These hot button issues include items such as radon, mold, damp basements, lead water lines, asbestos (fireplace inserts, duct tape, pipe wrap or flooring) knob and tube wiring and pushmatic electric panels. If your home has any of these issues, you should figure you will be the one footing the bill and address them before they become an issue on a home inspection.
The best way to prevent an inspection fall through or an unexpected bill for defects is to have your home inspected before you put it on the market. A pre-inspection will allow you the opportunity to fix those items that can be fixed and disclose the rest to save yourself from a laundry list of requests. Be sure not to ignore the small stuff that comes up or that you know is wrong. For example, when I list a home, I specifically ask sellers if all of their windows open, stay open, shut and lock, and if any are cracked or have broken seals. Sellers more often than not disclose no issues with their windows and yet it is one of the most frequent inspection deficiencies. Take the time to do your homework – get your home inspected – repair or disclose any possible concerns – and save yourself from a long last-minute repair list and potentially even from losing your sale.
It seems like its been a busy spring market – why hasn’t my home sold? Any advice?
At Howard Hanna, we have just finished the busiest May that we have seen in the history of our company! If your home has been on the market for the entire spring cycle (at least since April 1st) and has not sold, then its time to review the listing and develop a new plan going forward.
The first factor in selling a home is location, and it’s the one you can’t do anything about. Currently, Village homes are in higher demand than those outside the Village, and certain locations in the Village are perceived to be more desirable than others. But you can adjust condition and price to account for location.
Condition and price go hand in hand and, if your home hasn’t sold, one or both probably need to be adjusted. You can read many past articles on my website about how to condition your home so that it actually sells – remove all wallpaper, paint in a current color palate, neutralize/freshen carpet, update lighting and plumbing fixtures, remove signs of wear and tear, declutter (pack in advance what you plan to move with you and donate the rest) and stage your home for success. It’s a simple formula and yet it always surprises me how often I show homes where this basic formula for success has not been followed. Yes, it often requires a home seller to invest even more money into their home to recoup their original investment. But you have likely used and enjoyed your house for several years and it’s a rare day that a buyer wants to be a product that feels well used, at least not without an appropriate “used” discount. If you can’t be objective, and who can be about their own home, calling in a home stager is the fastest way to unbiased advice on what it takes to get your home sold. A home stager doesn’t just move your furniture around — she can give advice on paint and carpet colors, what needs to be packed up and what wear and tear needs to be repaired.
Price is the easiest thing to adjust, and if you aren’t in a position to adjust condition, adjusting price may be your only option. There is a price at which every house will sell, even one that is not well conditioned for the market. Finding the right price can be a challenge. It’s hard to know how much to discount for a challenging location, a challenging feature (or lack thereof, such as no garage) or updates that buyers perceive are required. Touring competing listings at open houses will help you to understand your competition, but the most valuable data comes from understand the homes that have actually sold and why. Having an independent appraisal done is another excellent way to get an objective opinion on value.
If your home hasn’t had an offer this spring, then its well worth your time to take a serious look at condition and pricing and make any suggested improvements before the slow days of summer set i!
How important is it that we get preapproved before we begin our home buying process? Couldn’t we wait until we find a home and then meet with a lender?
Preapproval is an important first step in the home buying process, for many reasons.
First, before you consider any homes, its very important to know not just what you can afford, but what that will cost you each month, and whether you are comfortable with that payment. There are many people who qualify for far more than they want to afford, and there is no sense getting your heart set on something, only to realize that the monthly payment feels much too steep to you. Additionally, you may qualify for more (or less) than you had assumed – it is a far more efficient use of your time to shop in the range you know you can afford and are most comfortable being in.
Second, sometimes the preapproval process will reveal credit issues that will prevent you from getting a mortgage, yet. No credit issues that you know of? Best to double check. With reporting errors and identity theft, you would be surprised how many people have glitches on their credit that they didn’t know about. Its best to be sure upfront – when you start the pre-approval process, the lender will check your credit and this will give you some time if there is any “clean-up” work that needs to be done.
Finally, when you make an offer on a home, the seller will expect your agent to provide a pre-approval letter. In the spring market, there are many buyers out there and another buyer could end up getting an offer in and accepted before you even have your pre-approval letter back.
Prepare yourself for success in this spring market – after you hire your buyer’s agent, get your pre-approval and you will be ready to buy your new home.
We are ready to put our home on the market but are private people and would prefer not to have the home in the MLS. Could you just show it if you hear of a prospective buyer?
I may be repeating myself here, but in this hot spring market, it really is an important message. There is simply nothing more powerful for driving in a high offer for your home than listing it with a real estate agent who is fully engaged in the marketing and selling of your home! Yes, you did ask a realtor, so you probably expected that answer, but here’s why.
First, Sewickley loves a secret sale. Everyone loves knowing what no one else knows yet, and buyers feel really special if they get the first chance at your home. But that secret sale is unlikely to drive in your best offer. What credibility do you as a seller have for pricing your own home? All homeowners love their homes and most feel they are worth more than the comparable sales. A real estate agent with a proven track record for pricing home correctly is going to add an air of credibility to your asking price.
Buyers at secret sales will also automatically go for the “you don’t have a realtor” discount. In other words, you are saving nothing by not listing your home with an agent – the buyers will discount their offer to you based on what they think you would have spent in commissions. So your net will be the same (at best) as if you did have a realtor and yet you don’t have an advocate on your side helping you through all of the tricky scenarios that come up in selling a home.
Secret sales are also just that – they are not publicized city wide. There could be a buyer in the South Hills waiting for a home like yours and without a full market press, they will probably never find your home and may buy another, frustrated that “nothing” is on the market.
But most important of all – buyers at secret sales don’t feel the market pressure that a real estate agent can bring to your home. If there is a potentially interested buyer and they see your home marketed absolutely everywhere, they will assume that there are many other buyers out there and they are more likely to succumb to the pressure of the market and perceived competition and pay you more. If it is a secret sale, they can take their time, think carefully, and ultimately will either talk themselves out of buying altogether or talk themselves down in price. Neither is a good answer for you.
So don’t take any chances – if you are serious about selling, list your home with an experienced full time agent and engage the power of our larger market to drive in your best deal.
I heard my neighbor’s home is sold and the sign never went up. Is the market really that hot? How does this happen?
The short answer is yes, the market really is that hot! We absolutely are selling some homes before the sign installer can get to the house! In fact, just this weekend, that happened to one of my listings! I would like to congratulate my clients (and column readers) Krista & Ryan on their one day sale of their home on Thorn Street! They didn’t just call 1-800-Ask-Kathe, but they actually took my advice, which was probably a little shocking out of the gate. They installed two completely new bathrooms and removed all of the old carpet from their home before entering our spring market. And they were handsomely rewarded for their hard work with a lucrative sale to the first buyer prospect who viewed their home!
I have to admit, I have been falsely accused on rare occasion of “strong arming” my sellers into investing money that may not need to be invested to get a home sold. Like many of you, I pay careful attention to our market and what I see is that those who don’t do the hard work up front are those who languish on our market. Prepping for market is not a guarantee of a one day sale – there still has to be a buyer out there looking for a home like yours. But not prepping is almost a guarantee of no sale, unless you price at a deep discount (or happen to own that rare home with a main level master on a prime street that I am always in a desperate search of).
So what did Ryan and Krista do so right? They started by calling me to get a road map! They decluttered. They staged. They installed two completely new bathrooms just weeks before coming on the market. They removed everything dated and presented a home that was clean, crisp and in a current design palette. There were no signs of wear and tear. There were no unfinished projects for the next owner to complete. And then they priced their home exactly in the range of reasonable.
Those of you who read my column each week could probably write it by now! What is the recipe for achieving a fast, lucrative sale in this market? Declutter. Stage. Update. Eliminate signs of wear and tear. Eliminate wall paper, worn or colored carpet. Choose a current design scheme if at all possible. Its hard work, but Ryan & Krista are the proof, yet again, that it works!
April 15th always reminds me of taxes, and how high our taxes are here. Is this a disadvantage when it comes to selling homes in this area?
I always counsel my new clients relocating here from other states that property taxes are something that need to be viewed as part of an entire budget. Yes, our property taxes seem much higher than in many other regions of this country, and yes, upon first look, it can be a deterrent. But my advice to out-of-towners is to consider how much they pay each year in all forms of tax.
In Pennsylvania, we only pay a 3.08% income tax rate and here in Sewickley, we add on top of that an additional 1% on earned income only. We currently have no sales tax on food and clothing. We also have very low car registration fees at only $36/car. In some states, income tax alone can be as much as 8% – 9%, car registration fees/yearly taxes can exceed $550+/car and they do impose sales tax on food and clothing. If buyers are counseled to look at the big picture, more often than not they find that they are actually saving money when they move to Western PA, despite our high property taxes, but it does take a skilled realtor to get them over this hump.
When dealing with local buyers, property taxes are a much bigger issues. When moving up, buyers definitely have to consider taxes – they wont be getting any new income tax breaks by just moving across town. Of course, Uncle Sam does subsidize a portion of your property taxes by allowing you to deduct them on your federal tax return, so they are technically only costing you a portion of what you are paying. Whether buying or selling, its important to take the time to make sure that your taxes are in line with the market value of your home – if they are not you should appeal them so that inappropriately high taxes don’t become an even larger deterrent to a purchaser.
If you were going to repaint the interior of your home with an eye toward selling, what colors would you use?
There is no doubt that the MOST powerful color in selling homes right now is the fifty shades of gray! Were I choosing a paint palate most likely to drive in the highest dollars in the least amount of time, I would choose gray, greige and beige.
Last year I sold a home that had been appraised twice by two reputable appraisers in preparation for listing the home. The entire interior was painted light gray and the home sold within a week (and despite its older kitchens and baths) for more than $100,000 over the highest of the two appraisals. A proven testament to the power of gray!
I work full time + and watch buyers every day as they respond to the homes that they see – their responses are rarely analytic and are more often emotional – show them a gray house and they want to buy a home that meets none of their “must haves.”
Sometimes sellers object: I don’t like gray. Pittsburgh is too gray as it is. Gray wont look good in my home. I have yet to see a home where a carefully chosen shade of gray/greige doesn’t make the home sparkle. And as to personal taste – try to remember, you are moving. The market has spoken and the market we are in loves gray.
A few words of caution. One gray room is not going to do it. For the power of gray to work, the palate must be consistently applied throughout the home. Additionally, you must be very careful to choose the right shade of gray. I just toured a home where the shade of gray chosen for the walls clashed with the woodwork – gray will not work its magic in that case. And yes, this can be an expense. But if you are asking the question, you must be seeking the truth and yes, sometimes that is expensive. Homes with other color palates do sell, but in 2015 Pittsburgh, gray is the most powerful color you can choose if you want to sell your home!
What advice do you have for pet owners hoping to sell their homes?
I am a dog lover. In fact, there are two canine members of my family. 60% of Americans own a pet, and 40% are dog owners. As a dog lover and owner and lover I am aware that not everyone loves pets. If I am a home seller, this is particularly important to keep in mind. It is critical when selling your home to remove any any all evidence of Fido!
What exactly does this entail? Smell should be your first concern. If you live with a pet you are probably used to the smell and don’t notice it, but your buyer will. Carpets should be professionally cleaned and deodorized to remove any possible smell. If any smell lingers after that, you probably need to change the furnace filter and quite possibly have the ducts cleaned. If you are still living in the home it is critical to keep all your pet things clean – launder blankets regularly, keep crates wiped down, empty litter boxes every day and give your dog a weekly bath. I can’t stress this enough. Any smell at all could kill your chances at an offer.
Cleanliness should be your next concern. If your home is vacant, after you move out make sure there is no evidence of a pet having lived there. Make sure there are no hair balls hiding in corners or behind doors. Clean or replace air return grills as they have likely become laden with pet hair and dander, resulting in a dirty look. Clean the vent cover on the bottom of refrigerators as well – they are often clogged with pet hair. If you are still living in the home, you must address all of the above as well as making sure that physical evidence of a pet disappears during a showing. Pack up toys and beds and tuck them in a discrete location.
Finally, if at all possible, remove the pets themselves for all showings for the best chance of selling the home. While Fido is likely cute as can be, many people are either fearful or allergic – why take any chances?
We’ve been out of school for a few years, have been great savers and are thinking about buying our first home, but with the recession not so far behind us, it seems like a risky proposition. Any advice?
The millennials, as they are known, are a very risk adverse generation, having watched first-hand as many family members lost their jobs and/or their homes in the last recession. It’s not hard to understand why they have been the slowest generation to embrace home ownership as part of the American dream. But as scary as it might seem to take that first big step, home ownership remains one of the best investments you can make, and the sooner you get in the game, the sooner you will start making measurable progress toward achieving your financial goals.
Keep in mind that most of the housing losses from the 2008 recession were due to the immediately proceeding banking practices that are now far behind us. People were allowed to borrow without proof of ability to pay, to start with, and many used their homes as ATM machines, financing cars, vacations and college educations on their presumed housing appreciation. Today the lending laws are much stricter in an effort to prevent another crisis, and so you can be assured that if a lender has qualified you for a particular loan amount, you have passed some of the strictest standards and are more than well qualified by any objective standard to get in the housing game.
Owning a home will always be a far better choice than renting. It’s a rare day that owning what you are renting wont cost you less every month, and you are building equity (money you get back when you sell someday) with each payment. If you compare how much it costs you to own a home over 30 years, versus how much it would cost you to rent that home over 30 years, you will always have spent less money and in the end, you will have an asset that you own and can resell if need be. In addition, owning a home gives you certain federal tax breaks that renters don’t get, which further reduces the actual cost to you of owning a home. Home owners also lock in their housing cost for as long as they own that home. So while your $2000 rental payment will go up each year as your landlord increases the rent, how much you spend for a mortgage is locked in for as long as you own your home. Stay there 30 years and you will still be paying the same mortgage payment that you are paying today! No landlord will give you that deal!
This is complex, no doubt, and I would be happy to meet with you to go over the numbers in person, but there is no doubt that its never too early to get into the home ownership game!
Dear Kathe, Sometimes it seems like everything is breaking around our house and we get behind on repairs. Isnt there some level of wear and tear buyers of “previously enjoyed” homes are expecting to have to accept?
The process of selling and buying a home involves many fine lines. How far do you take preparing your home for sale? Do you really need to address all of the items suggested by your agent, the home stager or the home inspector who did a pre-inspection? Do you really have to attend to everything your family has broken or worn out over the years? Anything that could come up on an inspection, if you know about it, really must be repaired or disclosed. My vote is repair. Even with items that are very obvious, when an inspector gets involved, he may blow the issue out of proportion and something that might have cost you $1000 to repair before you listed ends up costing you $3000 on the inspection request. If its something an inspector might find, you can bet he will find it and you will be expected to cover the cost of repair anyhow, so you might as well repair upfront.
Many buyers actually get quite nervous during the home inspection (also known as buyers remorse). If you happened to have gotten one of these buyers, it is possible that they could walk away from your deal if the inspection concerns feel too weighty to them. After you actually receive and negotiate the offer, the last thing you want to do is lose the buyer over items that you could have fixed but didnt think anyone would notice or care about! In today’s market, they notice, they care. Sometimes they are willing to let you pay for the repair. Sometimes they just walk. Dont take any chances. If you suspect it is likely someone would seek a repair, get it done!
Buyers, as much as I advocate for sellers to take care of the wear and tear items on their homes, it is important for you to be reasonable on your inspection requests as well. If you see an item that needs to be fixed while you are touring the home, take that into account when you make your offer and do not revisit it on the inspection. Inspection requests are supposed to be for items you didnt know about and didnt have a chance to adjust for in making your offer. Again, its a fine line buyers also walk in deciding what are fair and appropriate inspection requests of a seller.
Dear Kathe: We will be selling our home within the next year. We are telling our friends with the hope that we can find our own buyer and sell our home ourselves. Do you see any pitfalls with our strategy?
I am a real estate broker. What do you think the answer will be? You absolutely should not try to FSBO your home! But why not? Because it is not in your best interests. You will be better off if you hire an experienced, full-time agent to represent you. Here’s why:
- You will not end up with more money if you sell your home yourself. If its that easy to sell yourself, chances are you underpriced your home. And if that’s the case, you would have been better off with it listed in the MLS – with the incredible amount of marketing we bring instantly to your home, if you are willing to price it that reasonably, we could have likely generated a bidding war.
- The buyer will negotiate a price that gives him the full benefit of the fact that no commission is being paid. In other words, if your home could have sold for $500,000 through an agent, your buyer will expect to only pay 94% of that or $470,000. You may be thinking “that’s ok – I am no worse off than if I had hired an agent.” But why put yourself through the hassle when for the same net, you can have our expert marketing and negotiating working for you?
- You have no one looking out for you. How do you know if the price they are offering is fair? How do you know if the terms are appropriate – is the hand money high enough, for example. How can you be certain that they are really qualified to perform? How will you respond when the inspector produces a laundry list of deficiencies, as they always do?
- FSBO homes have no urgency. The way we generate bidding wars and nice realizations for our sellers is to create a sense of urgency by marketing your home everywhere instantly. FSBOs simply don’t have the same urgency and the longer a buyer can think about your home without worrying that someone else will snap it up, the less likely they are to buy it.
Just like you wouldn’t operate on yourself to try to save a few bucks, it is unwise to try to sell your own home. Even trying will “burn your market” and make it difficult for us to put into place an effective plan once you decide you have had enough. Start with a well thought out strategic plan—every house is different – every seller’s needs and motivations are different – there is no one size fits all when it comes to selling a home. Buying and selling homes is far more complex than we make it look. Don’t skimp when it comes to professional advice.
We have read what you have to say about home staging and getting your home ready for the market, but couldn’t we test the market and see what buyer thinks before making improvements?
It sometimes surprises me that homes which look great on paper – well priced, good condition – do not sell, and I often wonder why not? After reviewing statistics, the question often remains. All the data suggests that the home should have sold. So why then is it not sold? This can be a very difficult question for frustrated sellers and their agents. Recent studies show that greater than 60% of buyers (both men and women) know whether a home is right for them the first time they walk in the door – they just have a “gut instinct.” This is consistent with what I often tell home sellers – more often than not, people are guided by emotion in making their buying decisions and emotions are rarely something we as professionals can reduce to a clear-cut action plan.
What does this “emotional buying” mean for you, the home seller. First and foremost, it means that “first impressions die hard” – you will probably only get one chance at a buyer. Revisiting prospects later with news of a kitchen update, home staging or offer of a carpet allowance is usually a complete waste of time with respect to those buyers – they saw your home, had a negative gut reaction, and moved on. The focus needs to be, instead, on buyers who have yet to have that “first impression.”
If you are not yet on the market, it drives home the message once again – the message I have been sharing for years now – it is critical to enter the market ready to create an emotional “wow.” Partnering with a home stager, many of whom offer reasonably priced consultations, gives you the best chance of meeting current market expectations. An experienced agent should be able to give you some suggestions as well. Many of the basics I have covered in the past include: remove all wallpaper and paint with a neutral color palate; replace colored wall-to-wall carpeting with neutrals or, if possible, remove entirely to expose hardwoods; declutter and remove personal effects. The trick comes in not sterilizing décor too much – it’s important for the home to still create a warm and inviting feeling – just not one that feels too dated or too personal. Feel free to give me a call if you would like advice on how to best create the “wow factor” in your home.
When is the best time to buy in the spring market? We have seen a couple houses we like, but what if something better comes on the market?
As they say in The King and I, “now is always best time!” And in all seriousness, if you know you want to move this year and have identified a home that you like, there is no reason to sit on the sidelines one minute longer! Right now, our market is only beginning to wake up. Sellers who have endured the typical “holiday dry spell” are eagerly awaiting spring buyers and you are far more likely to get a better price now than if you wait until more buyers join the marketplace, adding greater competition. No matter your price point, there is never a “perfect” house – if its 80% great, it’s a home run from a housing perspective. So if you are waiting to see if a “better” house comes on the market, you will most likely be disappointed. All homes involves some level of compromise. Additionally, new introductions tend to be priced higher than homes that have sat through the holidays, and not only are you unlikely to get a deal, but you might end up over paying as more buyers enter the market and bidding wars become more prevalent.
If beating the spring market rush and getting a good deal on a home that has been waiting for the spring market to begin aren’t reason enough to make an offer, mortgage rates have also dropped a bit, which will pay off in savings month after month for the next 30 years (or until you move again!) Rates are now hovering around 4%. If rates increase 1% as you sit on the sidelines waiting for that “better” house, you will pay significantly more. For example, if you are planning to take a $417,000 30-year mortgage, the payment could be as much as $327 more each month and over the life of a 30 year loan, you will pay in excess of $117,000 more in interest. By sitting and waiting rather than acting now, you are costing yourself money – a lot of money.
Hedging your bets and thinking rates will drop a bit? There is absolutely no reason to do this. Many lenders offer no-cost refinances. If rates drop, you can refinance to a lower rate with no cost to you. You can have your cake and eat it too – if you buy now you can hedge your bets against the likely rate increase and take advantage of a good deal in the pre-seaon, and if rates happen to drop, you can take advantage of a no-cost refinance to capture the lower rate! Call me today and we can strategize about how to get you into your new home in this pre-season!
My wife and I are new doctors and ready to get our own place. We were thinking about renting for a while – how long should we rent for before buying a home?
The rent versus buy decision most often comes down to how much money you have saved. If you have a lucrative job, qualifying for a mortgage at today’s low interest rates is rarely the issue. But coming up with a down payment might be.
If you make $200,000 per year, at current interest rates, and assuming you are not carrying any debt, you could qualify to buy a home for approximately $850,000. That is probably much higher than you imagined. The monthly payment would be approximately $3500/month (principal & interest) with 10% down. But you might find the 10% (or $85,000) down to be the stumbling block and feel renting is your only option.
Renting a nice apartment or small home/townhome would typically cost you $1800 – $2000 each month. That adds up fast – not only don’t you get the opportunity to deduct the mortgage interest that you pay on your tax return each year (thereby lowering the amount of taxes that you owe) but rental payments are all cash lost to you – you are not building any equity that you can recoup someday when you buy. And if you are willing to spend this much each month on rent, you could pay the same amount each month for a mortgage on a $450,000 home if you have the 10% down (which is a much lower $45,000)!
Lenders do typically require 10% down however, unless you use a specialty product like an FHA loan. So if you have no savings, the chances are that unless you can get a “gift” from a family member or incredibly generous friend, you will need to rent until you can amass some savings. However, it is a wise decision to get into homeownership as soon as you can. Even if you buy significantly below what your income qualifies you to buy, just getting in the housing game will save you tax dollars and help you build equity for another home in the future when your savings more closely matches your income. Why pay rent for your landlord to increase his equity in the home you are renting.? With low interest rates, now is the ideal time to explore exactly what it will take to get you in a home of your own!
One of my friends sold her house with multiple offers last week. We are planning to buy a new home this spring – are we going to find ourselves in the middle of a bidding war?
It is true that some of our inventory has seen multiple offers in the past couple of weeks! Even with multiple bids, however, buyers are still cognizant of value and sellers who bought or refinanced their equity out in earlier years may not yet see a return to those value levels.
Why are we seeing multiple bids? As I have mentioned in previous articles, our inventory is down substantially. Our typical inventory sources have been slow. Corporations cut back tremendously on relocations post-2008 and have transferred fewer employees in recent years. Trade-ups or trade-downs have decreased significantly, in many instances because sellers can’t find anything to move to. And so it becomes a vicious circle. At the same time, the lag in inventory introductions has been going on for quite a long time, so many buyers are just plain tired of sitting on the fence and are beginning to compromise on their criteria for a new home. When a new home comes on the market and is well-conditioned and properly priced, or when a home that has been on the market for a while has a price reduction, they spring into action, often resulting in multiple bids.
So what do you do if you are one of those buyers sitting on the fence, waiting for your perfect home? You need to have educated yourself on our market so that you recognize value when you see it. You need to be working with a buyer’s agent whom you feel has a thorough knowledge of the market and can correctly advise you on value. And when that home does become available, you need to make the best possible offer. Weaker offers contain terms such as long inspection periods, long mortgage approval periods, low hand money amounts, delayed closing dates, home sale & home appraisal contingencies and low offer prices. If a home is new to the market or recently had a price reduction, you need to assume it will sell at or close to asking price – if that’s not a price you are willing to pay, stand back – perhaps another buyer will see the value.
As for sellers, you need to follow the advice laid out in my earlier articles. Make your house that shiny penny, price it right, and you could receive a full price plus offer in less than one day!
We want to upgrade our home in the new year. What are the best projects to invest our money in?
Kitchen remodels top the list of projects that drive in the most money for homeowners. Nationally, homeowners recapture in excess of 75% of the amounts they invest in their kitchen remodel. Here in Sewickley, if the home is sold in less than 5-8 years after the remodel, homeowners generally recoup in excess of 100% of dollars invested (design styles change fast enough that if your remodel is in excess of 8 years ago, you are unlikely to recoup 100%, unless, of course, you do a minor remodel to bring the kitchen up to the most current design styles). Nationwide, the average cost for a kitchen remodel is $21,000, and for those of you who have remodeled, that may seem like a unrealistically low number. So where is your money best spent?
Lighting is a quick and easy way to update your kitchen. Changing lighting fixtures, including chandeliers and pendant lighting, can instantly take years off your kitchen. Adding LED under cabinet lighting will upgrade the general feeling of a well-equipped kitchen.
New life can be added to older cabinetry, often simply by changing hardware. Painting older cabinetry can also refresh it, as can resurfacing your existing cabinet boxes and installing new doors. There is a lot can be done to upgrade the look of the cabinetry that requires substantially less investment than entirely new cabinetry.
Appliances should be upgraded if they are more than 15 years old, and the finishes of all appliances in the kitchen should match. In other words, if one appliance is black, all should be black. Your should not mix black, white and/or stainless appliances in one room.
Backsplashes are another easy way to add a level of sophistication of your kitchen. Lowes and Home Depot carry a large variety of stone backsplash materials that work well. If you already have a backsplash, however, you will want to be sure that it has not gone out-of-date.
And of course, granite countertops are expected in homes selling in excess of $400,000 unless that home is carrying significant acreage or is a unique historic home. However, there are many grades or granite, so if you are expecting to resell your home in the near future, look for granites that are most reasonably priced and coordinate with your cabinetry and flooring.
So if you have been thinking about investing in your home, now that the holidays are behind us, today is a great day to start planning your kitchen remodel for the new year. Not sure where to start? Feel free to give me a call to discuss what pays the highest dividends in our area!
My house, a traditional American four square, currently has 1.5 baths with 3 bedrooms on the second floor and two rooms on the 3rd floor (one used as an office and the other a playroom/family room). I really want to add a master bath on the second floor but this would reduce our bedrooms on that floor to two and I’m worried about future resale. Thoughts?
The answer to this question is not so simple. There are many factors that must be considered, the first of which is the likely sales price of your home. At a certain price point, 2 full baths will be required – in Sewickley Village, that price point is likely in the range of $400,000 and above. If you expect your home to sell above this price point someday, you are going to have to figure out how to get a second full bath in your home (and not in the basement)!
The third floor is the most obvious and most frequent place to create a master suite in these scenarios. It would probably be difficult to sell a home with only two bedrooms on the second level, particularly if the two remaining bedrooms on the third floor have to travel down a set of stairs to use the bathroom. Third floors can be reconfigured to create private master suites, leaving three bedrooms on the second level which can be used for a variety of purposes. There is a negative that must be considered, however. Sometimes homes with third floor master suites can be challenging to sell because the home owner doesn’t want to have to walk up two flights of stairs to get to bed each night. If you get to a price point where the most likely buyer is near or past “middle” age, you may find that a third floor master limits your marketability. Third floor masters can also be perceived as a weakness by families with very young children, although with the advent of video baby monitors, this may be a lesser issue for young parents.
Given the limitations of third floor masters, they still receive my vote in light of the circumstances. Assuming you hope to sell your home for more than $400,000, a second full bath will be a necessity, and a third floor master suite is the most sensible way to attack the issue. Just make it as luxurious as possible so that when you go to sell your home, the buyers are so impressed with what they see that the extra flight of stairs seems like a minor inconvenience to get to their private oasis!
As our children become young aduts, I am wondering what we can do to set them up for success when buying their first home?
Not too long ago, we experienced a time when money was free flowing and loans could be had with a wink and a handshake. But those days are gone, likely forever. When I was a kid, my parents talked about saving the 20% down and being sure to pay all the bills on time in order to be a good position to buy a home, and, after a couple decades, we are right back where we started – save and establish good credit! After many “easy money” years, our newest group of home buyers may not have been educated with the old mantras – save – pay on time – and they may shocked to find out that they don’t have what it takes to get a loan. So what does it take, and what can you do to help?
Saving enough money takes time, and they can never start too young to be savers, but if you are feeling particularly benevolent, most lenders will allow gifts from family for a down payment, with a proper gift letter, of course! Do NOT make the gifts without a gift letter unless it is years in advance – a lender will review their accounts and require substantiation of all recent deposits.
Establishing god credit is something they will need to do on their own, but you can help set them up for success. A loan applicant must have credit in their name (and not a card they are authorized to use that belongs to mom or dad) on three separate lines (cards, car loans) and they must NEVER have made a late payment. The cards DO NOT have to be actually used to establish a credit history – the potential homebuyer just has to have been granted the cards. If they do use the cards, then as a general rule, it is not a good idea to charge more than 50% of the credit granted in any given payment cycle, at least if they are nearing a time when the plan to apply for a mortgage. If they miss a payment, that line of credit is disqualified and they will need to show the existence of 3 lines of credit on which they have never had a miss. If they don’t have three lines of credit showing on their credit report, they will only be eligible for an FHA loan, and must be able to show 12 months of payment history on other things such as a cell phone bill or utility bill in their own name (note: utilities paid on a budget plan do not satisfy this requirement).
So what should you be doing to help the next generation of home buyers? Educate your kids & grandkids about how they will have to learn to use credit cards responsibly and how they will always have to pay their bills on time. When you feel they can handle a credit card (or 3), help them choose appropriate no fee cards. Consider checking in with them to make sure that they are remembering to pay the bills (preferably in full). Some banks make credit cards available to unemployed students as early as age 18 – while these cards must be secured with a certificate of deposit, they allow young adults to begin building credit in their own name. With a little coaching, we can all help the next generation of homebuyers to be ready to successfully purchase their new home.
We have been searching for our new Sewickley home for about 9 months with no luck – there doesn’t seem to be much of a selection and we cant find our perfect home – any advice for a family of weary home lookers?
Sewickley is a small town which makes it a unique and wonderful place to live, but with it’s small town appeal comes a definitely smaller number of homes to begin with and yes, in some price brackets, inventory has been far tighter than it has been in the past. It is beginning to feel like Sewickley is such a great place to live that no one wants to move!
When we moved here nearly 21 years ago from D.C., we had a long list of “must haves” that we searched the greater Pittsburgh area for. Our real estate agent showed us only one home in Sewickley – that’s all that was available in our price range at that time! It met very few of our must haves – it did not have a master bedroom, it did not have a two car garage, it did not have central A/C and it did not have a family room. But it did have tree lined streets and sidewalks to everywhere and that was our #1 criteria, so we bought the home despite all of its perceived shortcomings.
In the intervening years (and in the two Sewickley home purchases we have made since then), I have learned that if one wants to live in Sewickley, he or she will ultimately need to bend on the must haves a bit. Price will not help – no matter what the price point, there are simply no perfect homes. It is important to evaluate each home through a slightly different lens. Consider how close a possible home comes to meeting your needs. If it meets about 80% of your “hope to haves” and if you could change another 10% over time to be much closer to what you hope to have, with the remaining 10% being things you wish you could change but realistically cant and will have to learn to live with, then the home is likely a home run and one you should seriously consider buying. I call this the 80/10/10 rule – and I have observed that once buyers come to terms with this concept, they can finally find their place to call home. Those that hold out for “perfect” – looking for the home that meets 90%+ of their hope to haves – will find themselves sitting on the sidelines as one home after another sells – that needle in the haystack simply does not exist.
And so, for example, if you have found a great home with the space you need that is in terrific condition in a nice neighborhood and with a great yard, but you don’t love the kitchen and you think it is a bit too far from Starbucks, give it another look. 80% is likely a yes. The kitchen (10%) can be changed over time. And you can learn to adjust to the extra ½ mile to Starbucks – its still walkable! My best advice to you is to start looking at homes through this 80/10/10 lens – you may be surprised to find that “perfect enough” has been waiting for you all along!
Dear Kathe: We’ve lived in our current home for 16 years and have kept up with maintenance but haven’t done much else – how much remodeling do we really have to do before putting it on the market?
You’ve lived in your home long enough that you have probably “used up” a lot of the value that you bought with your home and will need to restore some of that value if you hope to protect your original investment.
Carpeting is a really good example. I’m sure you are aware that colored carpeting must be replaced with neutrals, but even the most neutral of carpets should be replaced if they are 16 years old. Even if you don’t have pets and absolutely never eat or drink outside the kitchen, avoiding spills that could stain, after 16 years your carpets will have had more than a lifetime of use and the value that might have been there when you bought the home is long gone. In fact, the old carpets might even have a negative impact on price, even if there are not visible stains. The buyers will assume that they need to be replaced and will deduct their view of what that will cost from what they are willing to pay you for the home. Several of the “big box” stores have affordable neutral carpets in stock for quick delivery and installation, making this aspect of prepping a home for market reasonably straightforward.
You should also consider whether you have used up all of the realistic useful life that might have remained in your mechanicals. For example, if you haven’t replaced the water heater in 16 years, then even if it was new when you bought it, you have used up all of its value – it has outlived its expected useful life. It would probably be a good idea to replace it with a new water heater – you benefited from 16 years of use from the old one – when you replace it you should think of it as simply restoring the home to its functionality before you used its systems for the past 16 years. The same can be said for furnaces – while their useful life is longer than a hot water heater, if its pushing past 20 years old, buyers are not going to look favorably on it. In fact, as you can imagine, this thought process can be applied to anything with a predictable useful life, such as kitchen appliances and roofs.
How much remodeling you will need to do after living in the home for 16 years will depend on how quickly you want to sell it and how aggressive you want to be on price, but the higher the price you hope to achieve, the more “pre-listing” remodeling you should do, returning old mechanical systems to a full life expectancy for the new owner.
I read your article last week about home staging and de-cluttering and we do have a lot of stuff – not sure how to begin to de-clutter. Any tips?
When you are surrounded by a lot of stuff and it all seems important to you, it can be hard to know where to begin the clean out. As our days get shorter and the weather gets chillier, this is the perfect time for an inside project for de-cluttering and there are many ways to get started!
Start with all of the broken things you have piled up waiting to repair. From shoes with worn soles to pants with popped buttons, there are probably many things that have been waiting a long time for you to fix them. If you were out shopping today and wouldn’t buy the item again new, now is the time to part ways. While you are at it, this would be a good time to round up all those clothes you thought you might wear “someday.” If it’s been more than a few years, that someday is probably not coming. Saving clothes that used to fit with the hope of them fitting again? Give them to charity – if that day does come, you will deserve the treat of a new wardrobe, not outdated clothes.
Consider whether you can make the cubic square footage of what you are savings less. Children’s artwork, papers and tests are the perfect example. I have made a habit of saving a couple of key pieces in an accordion file for each year of school, have photographed everything else, and have included the photos in the file. Your children will be far more appreciative of a small file of momentos of their youth than boxes and boxes of stuff. The same can be said for documents. Scanning documents to a flash drive or external hard drive is a far more space efficient and organized than keeping the actual hard copies.
Holding onto things because you think they are valuable even though you are no longer using them? Chances are they are worth close to nothing. TVs and computer equipment are so quickly obsolete that in most cases, your old equipment’s highest and best value is as a charitable deduction. Old furniture also yields very little in the used goods market. There is no sense in considering what you have invested in the item – that money is long gone – if you aren’t using it, don’t love it or can’t repurpose it, let it go – many charities will even pick up at your home!
Finally, find a new home for things you have never really liked, the gifts you received that you were afraid you might offend someone by disposing of (the gift giver will never notice its gone), and inheritances that are not particularly meaningful to you (it took me years to part with the pewter pitcher that I inherited and had no use for). Do a reality check. Is your exercise bike more than a place to hang laundry? If its been collecting dust all these years, you won’t use it – why kid yourself? What else do you have that is more of a reflection of forgotten New Year’s resolutions? Add them to the charity donation! Follow these tips as you attack your clutter and you will be de-cluttered in no time!
Dear Kathe: After renovating our 100+ year home inside and out, all that remains is our basement. Our stone foundation is in decent shape. How important is it (or worth it) to clean this space up and how far should we go? Would I get the return on my money?
A basement often reveals more about a home than any other part of your home. It is therefore, more important than you might think that your basement present well.
Most of what needs to be done to basements doesn’t need to be very expensive. Your basement should be easy to access. Whether you are staying or selling, excess clutter is not your friend –if you have a damp basement, it will harbor mold. Clean out now while the weather is still nice! Your basement must be dry. If your basement just feels humid, then you must run a dehumidifier 24/7. If you have ever had water seepage in your basement, you will need to solve the problem. The quickest, easiest and most common fix is to make sure your gutters are kept clean, your downspouts are properly diverted at least 3 feet away from your foundation and that when it rains, water does not drain toward your home (in which case you would need to add soil to change the slope around your home). If that doesn’t work, you will need to invest in a professional waterproofing company.
Your basement should be light and bright – adding a few extra bulbs to the ceiling is something easily done inexpensively that will dramatically improve the feel of your basement. A fresh coat of paint on the floor will also help and is cheap to do (use porch floor paint). Glass block windows are a good investment – they are not very expensive and they add extra security and protection against termites and water intrusion to your home (I recommend including a vent block in each window so you still have the ability to circulate some air). Cleaning up old and unused wiring and plumbing is also a good idea if you have a handyman who can do it cheaply for you – it will certainly make inspections go more smoothly.
Getting your basement up to basic safety and code standards will also save you on inspections down the road. You should have a smoke detector near the furnace, any plugs should be GFCI outlets and if your basement connects to the garage, the door connecting them should be a steel door.
Some of the more expensive fixes are unlikely to yield much of a return. Some people choose to spray their ceilings black – it’s a fun effect but unless the basement is being finished, it is unlikely to yield dividends. Others choose to parge their walls – this actually makes a sandstone foundation look much better, but unless you can do it yourself, it can be expensive. I do not recommend painting walls with dryloc, however. Paint is food for mold and this might only cause more problems!
Our spring market has been quite interesting. Some homes have flown off the market in just days, yielding the sellers great satisfaction and peace of mind. Those homes fall into a surprisingly predictable pattern. Most are under $350,000, although there have been exceptions. Most are in the Village – Sewickley Village remains a strong draw for buyers. And most that sell quickly are offered by sellers who have done the heavy lifting in preparing their homes for market. And yet we have many wonderful, well priced homes that have not sold. Most of these are not in the Village.
Conversely, in the North Hills, homes are flying off the market consistently in just days, often with multiple offers. There are lines of buyers waiting for homes in the North Allegheny School District while we have terrific options available here, often at better prices, just waiting for their new families. It is certainly frustrating to sellers when their homes do not sell quickly. And its hard to figure out why. The most likely rationale is that the North Allegheny School District is ranked in the top three in Pittsburgh – Quaker Valley is top ten. The buyer profile these days trends toward people who give paramount importance to rankings.
What these buyer prospects are not hearing is why ranking is not everything, and it will take this Village to spread that word. Most of you own a home here and will benefit from the continued increase in real estate values. To protect your investment, it’s important that you share information about our town when you are talking to friends and colleagues outside of Sewickley. If you have kids in our schools, point out what makes our smaller school district the best choice – how many more opportunities are available to the kids when they don’t have to compete with 800 other children for everything – how much our teachers and administrators care and are able, given the small size, to know the children and families as individuals.
Spread the word about what a unique and special place Sewickley is to live. Whether you live in an older home in the Village, or up the hill in something newer, we are all part of one community here. The ability to stroll through town – enjoy a meal, shop the galleries, participate in May Mart or the House Tour or Sewickley Unleashed, just to name the most recent few – makes Sewickley special. Our neighbors care about and help each other. We work side by side to raise money for causes. There are very few places like Sewickley in all this country.
Realtors are clearly the most direct connection to incoming buyers and we tell the Sewickley story daily. But we are not the only connection. With the help of this Village we can jump start some of the more sluggish parts of our market and make Sewickley, not just the Village, the hot place to live in Pittsburgh. It will only help you in the long run as your property values increase. So spread the news about what makes Sewickley (and our schools) special to you!
There are many factors that go into determining a home’s value. The first, most important thing to keep in mind, however, is that it’s not what you think. To rephrase, what you think the value should be, or what you think you need to get for the home to either recoup your investment, reimburse you for time spent renovating, or get you what you need to move to your next home is not a factor in determining value. A home will sell for what a buyer thinks the home is worth – not what a seller thinks its worth. So how do you determine that number?
Value is determined first and foremost by comparable sales. What other homes have recently sold for is the most relevant gauge of what the market will bear for your home. If you haven’t been in the homes, however, you will need to rely on a professional to make the comparison for you. Factors to be considered include size of lot, usability of lot (flat is better) and location of the property both in town and as it relates to other homes (currently, closer to the center of the Village will bring more money, across the street from a home in disrepair, less). Also considered are above-grade square footage on the main two floors (finished lower levels and third floors add some value but generally not at the same square footage price as the main two levels) and configuration of rooms (do you have an eat-in kitchen, a family room open to the kitchen, a dedicated master bath). Finally amenities are considered. How many garages do you have and are they detached, integral or attached (the most valuable)? How long ago was your kitchen and bath updated? Under 10 years? Do you have stainless and granite? Have you removed all of your wallpaper? All of your brass? All of your colored carpets? Homes sell every day with dated amenities, but their existence definitely affects price. When looking at other homes that have sold, it is important to have a realistic understanding of how your home really compares to those homes.
The investment you have made in the home also has some relevance. If you have made significant improvements (beyond a fresh coat of paint and new carpeting), there is a high likelihood that you will be able to recoup your investment. It is important to prepare a detailed list of those improvements to substantiate value to potential buyers.
Other homes currently available for sale, however, are not a particularly relevant factor to look at. Many of our homes sell for substantially less than the sellers were originally asking, and while our average community realization is 89% of asking price, there are homes that have sold at nearly half of their original asking price. Competing listings are only relevant to determine how much competition you will have – not how much your home will sell for.
In the end, its what a buyer thinks, based on where other homes are selling and how yours compares, that will determine where your home will sell, and all of the marketing in the world will not change that reality!
It all starts with a picture. Your future buyer’s first impression of your home starts (and may end) with a photograph. The vast majority of homebuyers will choose the homes they want to see from photos on the internet. Therefore, it is very important when selling your home to make sure it is well presented in photographs. To start, when you list your home and photos are taken, be sure that all rooms look magazine perfect. For photographs, condition can be easy to fudge. You can’t see dust in a photograph, and you can hide your clutter out of the camera’s sight. But do take the time to move or store the evidence of your daily living. Clean off all countertops (kitchens and bathrooms). Remove refrigerator magnets. Remove all evidence of pets (including Fido himself). It can be amusing to check out listings online and see how many sellers and/or their agents do not put their best foot forward in photos. A quick scan of the MLS shows rooms photographed with the goodwill pile right in the middle of a room, unmade beds, glasses out on countertops, garden objects strewn around the yard, showers laden with bathing supplies, overflowing hampers, pillows askew and toys laying about. Not the best of first impressions.
What is photographed is equally as important. Your online presence is what will influence a buyer to choose to see your home, or not. Sometimes less is more. If it is hard to get a good angle on a room to make it look spacious, better to leave it out. Photos using a wide-angle lens will greatly aid in showing the whole room and conveying a spacious feel. If your agent does not use a professional level camera, you may need to request a professional photographer do the photography in order to present the rooms in their best light. Close up photos are rarely helpful, unless an architectural element is being highlighted. Be sure your kitchen and yard are included – two key items for a buyer – if they aren’t pictured online, buyers will assume there is a problem that you don’t want the public to see. On the other hand, do not include photos depicting what buyers may perceive as issue – leave out children’s rooms with bold paint colors (or repaint them first) and rooms with strong or dated wallpaper. You want to be certain that you don’t give a buyer a reason online to not come and see your home!
Your home’s pictures can make or break your listing. They need to present your home honestly (buyers feel deceived if they get to a home and it is not as pictured) but in doing so, need to present it in the best possible light. Be sure to take the time to adequately prepare your home for photographs, and review them periodically to be sure they reflect current condition. You may only get once chance at a buyer prospect – be sure your home shines in its photos!
Last week’s incredibly low temperatures left many homeoners in the region with unexpected frozen pipes. It seems in Pittsburgh we may not build with as much attention to cold air defense as they do in historically colder regions of our country, and these unusually low temperatures catch us off guard. As we rebound a bit from the extreme cold, however, it is a great time to think about how your home responds to super cold temperatures. If enough cold leaks in to freeze pipes when we are below zero, chances are you are spending a lot of money heating and cooling the great outdoors year round! A quick energy audit might save you hundreds of dollars in energy bills.
A really cold day is a great time to canvas your home for air infiltration – there is no easier time to find your leaky areas then when cold air is coming into a really warm space. Caulk cracks around windows and doors to eliminate drafts. Add weather stripping to doors and windows, and gaskets to plugs and switches on outside walls. Be sure to check your fireplaces if you live in an old home – decorative fireplaces can be a direct vent out for all of your heat and may require a cap or some insulation if they are never used.
Several of my clients have commented on how dramatically reduced their energy bills are when they add a second blanket of insulation to their attics. If your attic is accessible, you might consider that option if your bills are on the higher side. If your home’s windows are still single pane, replacing them with a good quality double pane window will also reduce your bills, and assuming you choose a better window (wood clad interior), greatly enhance the value of your home.
There are several other things you can do to prevent cold weather damage to your home. Keep your furnace filters clean so that your furnace operates efficiently and can keep your house up to temperature. Clean your gutters to avoid ice dams that can cause water to infiltrate and damage the interior of your home. Make sure all of your water supply pipes are wrapped to help prevent freezing, particularly in colder areas of your home, such as pipes that run through the garage and unheated portions of the basement or crawlspace. And if we do hit below zero temperatures again, don’t forget to leave the water dripping in the sink at night to prevent water from freezing while sitting in your pipes and open cabinet doors under sinks to keep the warmth of your rooms heating the supply lines!
Today is Boxing Day, celebrated throughout the world for centuries, although customs have changed over the years. In many countries, it is a day off for workers, when they receive a gift from their boss or employer known as a “Christmas Box.” In our country, Boxing Day is a big shopping day for after Christmas sales. It’s a great day to spend all of the gift certificates you received over the holidays!
In real estate, why not make Boxing Day a great day to pack your boxes? The spring market is sure to begin shortly, and if you are considering a move, there is no better day to head out to the UHaul store and pick up a stack of boxes and start the clean-out!
For those of you who have read my article over the years, you know how important staging a home is. A staged home is one that will sell faster and for more money. Period. If you are considering a move, start with staging. The most important thing you can do to stage your home is to declutter. Professional home stagers estimate that approximately 50% of a home’s contents need to be removed in staging to make a home look bigger and more attractive. It’s nothing personal – if you are moving, you are now in the business of selling a home. Get out those boxes and start packing (you can unpack it all again once you are in your new home, with a successful sale behind you!) Pack up anything you can live without for the short term.
Other important staging tips include
- Position furniture in furniture groups in the center of the room instead of against the walls – rooms will look bigger.
- Borrow furniture and decorative objectives from other rooms if needed to fill out the décor in a more empty room – remember furniture can be moved around as needed.
- Great lighting is important for a room to feel inviting. Allow 50 watts per 50 square feet in the room. Increase bulb wattage or add fixtures as needed.
- Unify color – if you need to repaint, try to paint adjoining rooms with the same color – the space will appear larger.
- Neutralize paint tones (which may include warm neutrals) to make your home feel fresh and updated.
- Unfinished projects can turn off prospective buyers – be sure you tie up all the loose ends.
So much to do with the spring market upon us, but today is certainly a good day to start with the boxing!
In last week’s article I discussed several of the pitfalls that Buyers encounter through the mortgage application process. Keeping your bank statements “boring” is key – avoid undocumented deposits, NSF charges and moving large sums of money around. Also avoid having your credit “pulled” – don’t take advantage of new credit card offers just to save an extra 10%. That’s the start to s smooth application process… but there’s more.
Don’t change jobs, and obviously, don’t quit your current job without inquiring about the impact this change could have on your approval/approvability of your mortgage loan. Employment stability is a big factor in the underwriting loan process. Quitting or changing jobs or even positions within the same company can potentially endanger your entire loan approval. Switching from a salaried position to a commission-based position can pose a problem with your financing. Changing from a W-2 employee to a new job where you are paid as a “1099” independent contractor will also pose a problem. There may be long waiting periods if your employment status moves from that of employee to being an independent contractor. Often lenders will want to see 1-2 years of income tax statements as an independent contractor before they will agree to provide financing.
Don’t file disputes on your credit card accounts if you anticipate applying for a mortgage in the short term. You may have a valid reason for disputing an account with a credit card company, but you should avoid filing a dispute unless you are certain that you are not planning on applying for a mortgage in the near future. Lenders will often reject financing if a borrower has a disputed account on their credit report.
Don’t forget to pay your bills on time (all bills, including the doctor and the dentist) Late payments could cause your account to be sent to collections which could take you months to reverse.
Finally, don’t pack away your financial documents. We know that you are moving and that getting a head start on packing is a must. Please don’t pack away your financial documents as your lender may need them for the processing of your mortgage loan. Please keep all financial records handy including tax returns, W-2’s, paystubs, bank statements, divorce agreements, etc….
If you’ll follow these simple steps, getting a mortgage should be easy and straightforward!
Mortgage rates remain low, but the process of obtaining a mortgage is more complex than most buyers appreciate. Underwriters are extremely detailed in their review of mortgage applications – one small “mistake” could derail your entire application. Take the time before you buy to understand the possible pitfalls, and then steer clear for a smooth mortgage process.
First, don’t make large undocumented deposits into your bank accounts. Mortgage guidelines require that underwriters review all deposits reflected on bank account statements. If there are deposits present on a bank statement and the underwriter cannot tell where the funds came from, then the underwriter may ask for you to provide a “paper trail” to document the source of the funds used for the deposit. When making a deposit, keep the associated paperwork (i.e. the “paper trail”) you may have received that would show where the funds came from for the deposit (i.e. check stub, copy of check, receipt for liquidation of another account, etc…). Try not to make cash deposits if at all possible as it is difficult to show where “cash” came from. Try not to move your money around between accounts. There will be plenty of time to consolidate funds if you desire after you’ve applied for your mortgage loan and before the closing date on a home you purchases. Be sure to save ALL pages of your bank statements. Do not throw them away or shred them.
Second, strive to have ‘boring’ bank statements – no NSF charges, no unusual deposits, not a lot of moving around of money between accounts. Achieving this will definitely make your mortgage process go smoother.
Finally, don’t open new credit and don’t take on new debts. Unless advised to do so by your mortgage professional, you should try to avoid having your credit checked by anyone or taking on any new debt (i.e. credit cards, loans, lines of credit, etc…). Numerous credit inquiries may impact your credit score which in turn could affect your mortgage loan and interest rate quote. In addition, underwriters may require that you write a letter explaining the inquiries on your credit report stating if you did or did not acquire any new debts as a result of the inquiry. While it’s tempting to take advantage of an extra 10% off at a department store if you open a new credit card with them, it may be best in the long run to pass on those offers and use one of your existing credit cards.
Check back next week for more tips on making your mortgage application process a smooth one!
If you are considering a move but have a home to sell, then you may find yourself in a common predicament – do you buy first or sell first?
If you buy first, you may face the reality of owning two homes at once, which could require a lot of belt tightening (and cutting back on coffee runs!) While we have a shortage of inventory and well-priced, well-conditioned homes are moving well, there is still a risk that you may carry two homes for a while (our strongest market period will begin again in early 2014). Of course, buying first allows you to lock in a home you really love.
If you sell first, you don’t have the financial risk of carrying two homes. But there is a possibility that you may be unable to find a home you love when yours sells, and be faced with temporary housing for a while. This may be the lesser of two evils, if you achieve a sales price on your home that you are happy with. And of course, you may have no choice – your lender may require you to sell before you buy.
There is the option of making a contingent offer on a home you like, and we now have the “right to continue marketing” option for this contingency that makes a seller more willing to consider such a contingency. However, the stigma of a home sale contingency still stands and many sellers will not entertain this option.
Perhaps the best avenue is to list your home now and start looking for your new home. Once your home is under contract, you will probably have a good sense of what is available to buy and hopefully have isolated a couple of top choices. At that point you will be ready to make your offer and get moving! Fell free to give me a call and we can design a strategy that suits your specific needs!
We live in an old town, with homes dating back to the early 1800s. With old homes comes a lot of history, and sometimes a ghost story or two. If your home has a history of paranormal activity (real or imagined), or someone has died in the home, do you have a duty to disclose that to potential buyers? While approximately half of our states do require disclosure of paranormal activity, as of yet, Pennsylvania is not one of those states. However, a case in Delaware County where the seller failed to disclose a murder/suicide that happened in the home may change that in PA.
Many other states have adopted far more comprehensive disclosure laws. In our neighboring New York, paranormal activity must be disclosed. In California, any death in a home in the preceding three years must be disclosed. And in Massachusetts, the law is even more comprehensive, requiring disclosure of paranormal activity, as well as whether the home was ever the site of a felony, suicide or homicide or whether someone with HIV ever lived in the home.
Our disclosure simply asks whether there are any material defects, which is defined as anything that could significantly impact value. Material defects would clearly include any major problems with the physical structure, as well as pending tax assessments and disputes over property boundaries with adjoining landowners. But what about those ghostly apparitions or eerie cries in the night? According to a well-known California appraiser who specializes in diminution of value, a well-publicized murder can reduce value by 15% – 35%. Does a ghost reduce a home’s value and need to be disclosed? Right now, the answer in no in Pennsylvania, although sellers wishing to avoid lawsuits would be well advised to disclose anything that could be seen as stigmatizing a property, including paranormal activity and deaths in the home. For some buyers, value actually increases with the prospect of living among ghosts. But before disclosing the ghost in your attic, be sure there isn’t a rational explanation for what you are experiencing.
Buyers, if you don’t want to move into a haunted home, what can you do to protect yourself in the absence of required disclosure? You can start with the internet – do a thorough search of the property address and sellers’ names. That will likely turn up information on any more recent concerns with the property. Some recommend burning sage to rid the home of spirits, and if all else fails, you can always call Ghostbusters!
As mortgage rates continue to rise, if you are thinking that a move might be in your future, now is definitely the best time to make an offer on a new home. Rates are still below 5%, but it is expected that in 2014, they could rise to 6%. On a $417,000 30-year mortgage, the payment could be as much as $327 more each month and over the life of a 30 year loan, you will pay in excess of $117,000 more in interest. By sitting and waiting rather than acting now, you are costing yourself money – a lot of money. If your affordability is capped by income or debt load, you may also be costing yourself the home you want to buy. As interest rates increase, you will be able to buy less home. At the $417,000 mortgage level, a 1.25% increase in interest rates will decrease ability to buy by $50,000. So if you qualified for a $417,000 loan this year (and no more), you may only qualify for a $365,000 loan when rates hit 6%.
Hedging your bets and thinking rates will drop a bit? There is absolutely no reason to do this. Many lenders offer no-cost refinances. If rates drop, you can refinance to a lower rate with no cost to you. You can have your cake and eat it too – if you buy now you can hedge your bets against the likely rate increase, but if they happen to drop, you can take advantage of a no-cost refinance to capture the lower rate!
The fall market is also an outstanding time for buying a home. Competition is lower than it will be in the spring and you will have an increased likelihood of achieving a better price on a home. It is also generally less expensive to hire movers in the fall and winter months.
Sellers, you may be tempted to wait for the spring “crush” to list your home. With the expected increase in interest rates, this plan may backfire as buyers may become even more hesitant as rates increase. If you know you want to sell, we definitely have movement in our market – now is the best time to list!
Buyers often comment that it’s very hard to figure out the price at which a home should sell in Sewickley. The North Hills are far more predictable, with sales prices normally at or above 95% of asking price. But in Sewickley, realizations can be far lower. Over the last two years, for example, the overwhelming majority of homes sold outside of Sewickley Village that were priced in excess of $1,250,000 sold with reductions ranging from $150,000 – $650,000. Given that huge spread, it is very difficult for listing agents to price homes. Many agents have a very good sense of the likely sales price of a home – but they must leave room for expected negotiations – and how much room should one leave? This is a strategic decision that varies by agent, making it almost impossible for buyers to navigate the market, nevermind feel good about value.
What makes the task of understanding value particularly difficult for a buyer is that there are as many different approaches to pricing as there are agents pricing homes. Some agents approach value as an appraiser would, price within a 10% band of expected realization, and don’t accept listings from sellers whose personal goals exceed the realities of our market. Those agents are often rejected by potential sellers for providing listing prices that seem to be too low. Other agents prefer a softer approach – test the market – some for longer than others. In the end, the seller will never realize more than the market is willing to bear, but it can, sometimes, take agents years of gently coaxing their sellers down to the realities of our marketplace if its not what the seller wants to hear.
Depending on which agent the seller chooses to list with and the strategy adopted, the home could sell immediately for 100% of asking or take a couple of years and sell for less than half of original asking price. For buyers, this makes for a tricky and frustrating marketplace. You may be fortunate and find a home that the seller has had independently appraised (separate from a refinance), and that will provide you with a more certain assessment of value. Aside from that, you will need to do your own homework and look at historic trends for each listing agent to determine what the likely realization on a particular listing will be… or hire a buyers agent (like me) who will do that for you!
If you watch HGTV or read my weekly articles, you likely know how important it is to neutralize your home before you sell. But what exactly does that entail? Paint color is obvious. Your home is far more likely to sell for top dollar if its painted in a neutral color palate. This does not mean your home must be nothing but white. It does, mean, however, that you should remove most strong colors in favor of “colored” neutrals – colors such as harvest beige or light gray. A colorful room or two is fine as long as the color was chosen in the past couple years (trends in color change quickly, but when you live with a color daily and are not in the design business, you probably don’t realize when a color is no longer “in”)
Neutral colors in floor coverings is also key. Colored carpets are extremely difficult to sell. Be careful with ceramic tile –when it goes out of style, it is painfully obvious that you have dated tile and its expensive to replace. However, neutralizing a home goes beyond paint color and floor coverings. Consider the age of your most likely buyer. Buyers these days in their 20s, 30s and 40s as a general rule favor clean lines to florals. If you have floral drapes, silk flower arrangements or large floral prints on your upholstery, this could be a real turn off to a buyer even though these items do not convey with the home. The impression says dated even if the structure itself is not. This is pretty simple to address, however. Pack these things up – you are moving – get a head start. Drapes are great for decorating but unless they are very recently installed, they are unlikely to help your sale – most buyers prefer to see your windows. Slipcover furniture if it’s fabric trends toward yesteryear’s design styles.
Neutralizing also goes to removing personal effects – family photos being the most obvious. And of course, its important to neutralize odor. If you have pets, keep litterboxes perfectly clean and pet beds, blankets and toys frequently laundered. Have a friend double check – you should not be able to tell you have a pet when you enter your home. If you smoke, don’t smoke inside. If you like to cook with spicy food, avoid it while your home is on the market. If musty odors emanate from your basement, run a dehumidifier 24/ 7. If your refrigerator stays with your home, make sure it is clean smells fresh
A neutralized home may seem impersonal to you, but try to remember, you are moving! While it may not be your style, it is far more likely to attract a buyer and a good price!
It has actually been our lucky year! Interest rates fell even lower this year than we would have ever imagined possible, and many buyers were able to buy their dream homes for even lower monthly expenditures. The record low rates certainly spurred a spring market like we haven’t seen in years. As we all know, rates spiked up this summer, with the 30 year conforming rate pushing a little too close to 5% for comfort. Our market slowed significantly in response. From a rational perspective, this is really very surprising. Even at 5%, that is an unbelievable rate compared to historic norms.
In the first ten years of the new millennium, we averaged 5.7% on the same loan products. And in the 80s, when many of today’s homebuyers were born, we averaged 13.99%. So why then does an increase to 4.75% send buyers to the sidelines? We are fortunate to be living at a time when we can still buy at these amazing rates. Why wait for the illusive 3% rates to return, which is unlikely to happen? Inflation will continue to drive prices up, increasing the prices of the homes that are available. The smart answer is clearly to buy now, even at the slightly higher rates.
Today, however, is your lucky day. Rates have dropped for the present moment and, with good credit, you have another chance to buy at 4.25%. Current economic trends suggest that it would be a wise choice to jump on these rates. No cost refinances are still available to you if the rates should drop further, but at least you are hedging your bets against further increases. If you have been sitting on the sidelines feeling like you missed your chance, give me a call and we can design a strategic buying plan for you to maximize your buying power over both the short and long terms.
Selecting the best realtor for your needs is a very personal process. Surprisingly, however, some real estate consumers don’t know where to begin. The internet is such an easily accessible tool for doing your homework before you commit to an agent, and yet so many people fail to take advantage of all that is available to them, and then months or in some cases years later are still complaining at cocktail parties or book clubs about how they are not satisfied with their choice of agent.
In this age of technology, there is no reason not to do some homework upfront, before committing to an agent to handle what is likely your largest business transaction. You can begin by looking at the qualifications and experience of the agent you are considering. What certifications do they have? Certifications such as ABR (Accredited Buyer’s Representative) and CRS (Certified Residential Specialist) require extensive commitment to training by the agent, and training means the agent is best equipped to achieve the very best result for you. Much of this training requires years of dedication to learning and excellence. All agents are not brokers, for example. An Associate Broker’s license takes a minimum of three years commitment to additional learning and hands on experience, which can only enhance your experience with the agent.
Check out their online marketing next. The majority of Buyers start their search online these days. How does the agent market her homes? Check out sites like realtor.com, Trulia and Craig’s List. Are there visual tours? What do you think of the photography? Would you buy the home, or even take a second look? Be sure to check out online recommendations while on these sites.
Finally, when meeting with the agent, ask for statistics. How many days does it take her to sell a home on average and how does that compare to the market generally. How correct is her pricing? How often does she have to reduce the price of a home before it sells? Reflect on how she calculated this data? Is it a guess or did she actually crank out the numbers? This will all help you determine the value of the advice you are receiving.
Each of these factors inures directly to your benefit and your bottom line. So take the time – get to know our credentials, marketing, past performance and recommendations – and make an educated decision when choosing your next real estate agent.
The fall market is a uniquely wonderful time to buy your new home. While many think of the spring as the best time to sell, for you, the buyer, there is far more competition for the homes and you are more likely to have to pay more. Now that it’s fall, while there are still other buyers out there, their number is fewer than just three months ago. In anticipation of the coming winter, many Sellers have lowered the price of their homes, making many of these properties exceptional deals that will not be available to you in a “hot” spring market. Why wait? If you are considering a move, you now have an outstanding opportunity to capitalize on the market slowdown and buy a wonderful home at a great price – and take advantage of the interest rates before they increase further. If I can help you realize a terrific value in a new home this fall or winter, please don’t hesitate to call, text or email me! Kathe