Nolo’s Real Estate Tips for Home Buyers

Hello readers:
Just a little URL change. The new home for this blog will be at http://blog.nolo.com/realestate. Come on over for a visit -- and note that unlike before, I'll be able to accept comments!

The decision of where to live in retirement is tough enough by itself. But when you've got two spouses who disagree on priorities, the stress levels can shoot through the roof.

This was exemplified by a conversation I recently overheard (couldn't help but overhear, really) in which a man was describing how his wife not only wants to downsize for retirement, but dreams of finding a home that doesn't need any more fix-ups -- a newly built home, perhaps.

What's more, she has apparently been protesting whenever her husband fixes up their current home, on grounds that they'll soon be selling it and moving to that mythical "house that won't need fixing." The man doesn't agree with any of her arguments, but felt like protesting would risk their marriage.

I had to bite my tongue -- though it's the wife I'd really like to give some commonsense advice to (assuming hubby is telling the straight story).

First off, a house that doesn't need fixing? It doesn't exist. Older houses, though in many cases well built at the time, will inevitably need attention to combat the effects of aging. A new roof, new foundation, structural changes if you want to remodel and need to bring other aspects of the place up to code in order to get a permit, are all on the list of likely fix-ups.

Newer houses, meanwhile, though fresh and up to code, can be a nightmare. Hurried and often shoddy construction -- basic stuff, like windows installed wrong way out -- by developers trying to make a buck in a tough economy are typical complaints . (For more on that, see Nolo's article, "Newly Built Houses: Pros and Cons of Buying.")

As for putting off maintenance because you think you're about to sell? Bad idea, unless you want to sell for far less than you could have. Deferred maintenance leads potential buyers to wonder what deeper problems you've also been ignoring, and to lower their offer price accordingly -- or just pass on the house altogether. Just what shape the house should be in is covered in Nolo's FAQ, "How much should I fix up the house before selling it?"

Sad to say, I'll probably never find out the end of this story. But I imagine it's playing out among numerous couples around this country, with numerous endings.     

Have you noticed how agent-speak, as seen in real estate ads, tends to be either over the top or underwhelming?

More often the former, of course. Just looking at today's local real estate section, it's easy to pull out grand, sweeping, and did I mention grand, statements like:

• "Spectacular views & magical sunsets!"
• "Enjoy the spacious sun drenched living room with views!" and
• "Truly an entertainer's delight and magical at night!"

(Does it say somewhere in the real estate agents' handbook that you must use lots of exclamation points and the word "magical?")

Oh, and here's my favorite: "This gracious, four-bedroom, two bath . . . Tudor emotes a bygone era."

I'll give the agent a small gold star for ditching the exclamation points, but what's with "emotes?" Sounds like the house has taken up method acting. I'm guessing she meant to say "evokes." Or maybe she just got tired of the same old words and decided to get, uh, creative.

Now, for the underwhelming bits of prose -- the ad language that makes you go, "That's supposed to appeal to me why, exactly?"

Again from today's paper, we've got, "Shows very well."

Okay, now that's something an agent might say to another agent, but if I were a prospective buyer, I'd wonder what it says about the house after the staging is gone. It's like saying that someone looks really good with makeup on. 

Or this one: "Grass covered back yard!" Whoa. Better put that one on your must-see list.

And my fave from this list, which isn't an ad for a house, but for a mortgage broker, which contains the following customer testimonial:

"Buying a house is stressful, but working with Sue was one of the most positive and least stress-inducing aspects of the process." Hmm. So how stress inducing was working with her, exactly? They should've stopped at "most positive."

Just for a last bit of fun, here's an ad from an agent who tried to do something a little different: "SWEET STARTER SEEKS SINCERE BUYER. Me: Mature 2BR stucco near shops and San Francisco express bus. You: Looking for affordable cottage in desirable area."

At least he left out any mention of magical sunsets.

P.S. Choosing a selling agent? Read their ads first. Some of the larger brokerages have a marketing person handling all the writing, which can add a layer of professionalism and quality control. In any case, when it comes to your house, ask to read the copy before it goes to press.

 

The United States practically invented litigiousness, so you might think that the frequent arguments between home buyers and sellers about what stays and what goes was a uniquely U.S. phenomenon.

Disputes regularly crop up about curtains, light fixtures, appliances, plants in the garden, cabinet knobs, and more. Sometimes the seller leaves the buyer a rude surprise and strips the house of favorite features just before departing. 

So, we can take some small comfort in discovering similar behavior goes on right across the pond (albeit with more charming vocabulary, for those of us with Anglophiliac tendencies). It's all revealed by Country Life magazine from the U.K., in a December 2010 article called, "Fighting over fixtures and fittings."

Here, we learn about:
 

• the seller who demanded money for each of the "loo-roll holders" in the bathrooms
• the seller who counted up all the lightbulbs he was leaving in the house (mansion, really) and asked to be compensated for those
  
• the sale that nearly fell through over the sit-down lawnmower (the real estate agent saved the day by purchasing it for the buyers out of his own pocket)
• the seller who insisted on removing both the integrated dishwasher and the "bespoke panel" that topped it (I had to look up "bespoke" -- it means custom-made)
  
• the seller who removed the mahogany loo seats without replacing them
• and more!

Do these disputes become more understandable when we realize that Country Life focuses on high-end properties, as in multi-room manors or country houses? Those lightbulbs and loo-paper rolls can really add up.

But the human tendency to get bogged down on small details seems to transcend country or price.

As one agent quoted in the article aptly put it, the two parties tend to develop "stiff-legged terrier syndrome. . . . even with houses worth several million pounds."

For a reminder of what a home seller is expected to leave behind in a U.S. property -- although the buyer and seller can always negotiate differently -- see the first question in Nolo's "Selling Your House FAQ."  

Just as with flavors and caffeine levels of soda pop, the choices to be made among real estate agents has expanded over the years -- despite, or maybe because of, the down economy.

As Marilyn Kennedy Melia points out in her article, "1. Change, 2. Choices," you can now find agents to help with short sales, foreclosures, buying or selling a "green" home, and more.

Meanwhile, other agents have (according to seemingly good authority within the article -- namely me!) packed up their offices and headed for careers with less uncertainty and competition.

Marilyn also quotes me as saying it's worth asking agents about their negotiating style before signing them up. Indeed, carefully observing an agent's personal style and trying to get a handle on how he or she will represent you in front of the other party is particularly important for both buyers and sellers, because negotiations can get contentious.

Buyers have leverage in today's market, and they know it. Many deal have fallen apart over amounts of money both large and small, for example because the buyer negotiated hard over repair costs after the home inspection. It's all too common for either the seller or the buyer -- or both -- to start to "take a stand" on mere principle, forgetting that the ultimate goal is to transfer the house.

WIthout a skilled agent to smooth relations with the other party, not to mention provide a voice of reason when you yourself most need it, a deal that looked rosy one day can simply wilt and die the next.

By the way, I've got a whole list of other questions you might want to ask agents before signing them up -- you'll find it in the article "Choosing Your Real Estate Agent."
 

It's not too surprising, really, what with buyers having lots of leverage in the real estate market, and probably working hard to save a buck (or thousands of 'em) for a down payment: Fixer-uppers just don't have the allure they once did.

In fact, a recent Coldwell Banker survey (reported on in the International Business Times article, "Buyers Bypass Fixer-Upper, Want Move-In Ready") found that 87% of home buyers are looking for a move-in ready home.

Not only that, agents say that buyers are willing to pay extra -- or overpay -- to avoid the responsibilities that come with a home in need of repair.

That brings sellers back to the perennial question of, "How much fixing up is enough?" Do you need to simply patch the cracks, replace some roof shingles, and repaint, or is it time for a complete overhaul, or at least a remodeled kitchen or bathroom?

Definitely start with the basics. But before doing any major remodeling -- which you won't even get to enjoy, if you're planning to sell soon -- consult with your real estate agent and check out the advice in Nolo's article, "Do Home Improvements Really Add Value?"

Planning to commit a crime? Wait, that's not a very good way to start a blog entry.

But let's just say you were -- and that you'd foreseen the possibility of getting caught and having a judge set an amount of bail that you'd need to post in order to get yourself out of jail while awaiting trial. (Actually, real criminals never seem to have that much foresight.)

Okay, let's cut to the chase here: A bail bond agent (the one who fronts you the cash to pay your bail) might accept your jewelry, laptop, or boat as collateral, but is likely to turn up his or her nose at your offer of your house. That's according to a recent report in the Wall Street Journal, "Bail Bond Agents Feel Pain of Housing Crash," by Dawn Wotapka.

Not a real good sign for the housing market, is it?

In more and more parts of the United States, the days of walking into a home for sale and seeing kids' photos, favorite team pennants on the walls, and a kitty litter box in the bathroom are long gone.

They've been replaced by "staging," in which most or all of the seller's possessions are cleared out and replaced by specially chosen and designed furniture and accessories. The final effect should make the house look both inviting and thrilling -- a place to imagine your life will be better than it's ever been.

Do I encourage staging for sellers? Absolutely: I've seen it produce fast sales at full price or above in too many cases to doubt its effectiveness. 

But if you're a home buyer, you need to keep your wits about you. Remember that, as wonderful as homeownership might be, your life will still involve the need for things like space for normal-sized furniture, storage, and so forth.

Take the photo below, for example. It's a beautifully done staging job, which makes everyone who sees it go, "Aww." As a seller, I'd be delighted.

But if you're the buyer, you have to ask yourself: Will this room fit a bed and desk for when the baby is a teenager? Maybe not. Using pint-sized furniture is a common way for stagers to make a small room look bigger. In fact, you might want to bring a tape measure and a list of measurements of your important pieces of furniture.   

Continue reading "Looking Past the Staging: Lesson 1 for Buyers" »

Hey, Bay Area friends hoping to become homeowners, come on down to one of our best beloved independent bookstores, in Oakland's Laurel District, on Wednesday, May 11th at 7 pm.

Why? Aside from the Laurel Book Store being an excellent place to hang out and buy books and other cool stuff, I'll be making a presentation based on my book, Nolo's Essential Guide to Buying Your First Home, just out in its 3rd edition. (And a Nolo bestseller!)

The theme I'm planning to focus on is, "How Buying a House Is -- And Isn't -- Like Buying a Pair of Jeans." You'll have to be the judge of how far I can stretch that analogy to fit. In any case, I'll cover lots of useful topics, from how to evaluate your finances to how to negotiate the best deal. 

And click here for the details from the Laurel Book Store's events page. 

Kudos to SmartMoney, which in its April, 2011 issue came up with one of those topics that makes you say, "Why didn't I think of that?"

The article is called (in the print edition) "All in the (Multi)family," by Charles Passy, and points out that, with house prices and mortgage rates low, and rents relatively high, now is an excellent time to buy a house with more than one living unit. You live in one unit, and rent out the other(s).

What's particularly great about this strategy is that buying a duplex is seldom twice as expensive as buying a, uh, one-plex -- while you can sometimes cover more than half the mortgage with the rental income. And unlike other investments, this is a fairly reliable source of regular income.

What's not so great about this strategy is that you'll have to add "landlord" to the list of responsibilities in your life. For an idea of what that's like, see Nolo's article, "What It's Like Being a Landlord."  

In my earlier post, about asking questions when visiting open houses, I forgot one of the most important questions: How fast are things moving here, i.e. what's the timeline for receiving offers?

You might discover -- as is not uncommon -- that it's already too late, or very nearly so. The house is in contract,  but the agent is holding the open house anyway.

Why would the seller go ahead with an open house with an already pending sale? Several reasons are possible, such as:

• just in case the first contract falls through -- in which case other potential buyers will have seen the house, and the seller doesn't waste time restarting the process
• to try to bring in a backup offer, which will come into play if the first contract falls through (though its real purpose, from the seller's standpoint, is often to put pressure on the existing buyer to act in a cooperative manner and not start nickel-and-diming the seller over issues like repair needs)
• for the sake of the agent, who can use this chance to meet with the homebuying public and perhaps pick up new clients.

Of course, if you're visiting houses with a real estate agent, the agent should already have the inside scoop on the place. But if you're just starting your search, or operating on a casual basis with an agent whom you've arranged to call if you see a place you like, be aware of this issue. It's no fun falling in love with a house only to find out someone else got there first.

(P.S. The photo above doesn't represent a place that continued holding open houses after getting a contract signed -- it's just a random photo to relieve your eyes from the text!)

It's Friday afternoon, an ideal time to take in some weird news -- with a serious message, namely, look carefully before considering buying a home that's in foreclosure!

Here's the Tifton Gazette article on a Georgia house in which approximately 10,000 to 20,000 Mexican free-tailed bats decided to, uh, set up housekeeping. Guano alert: I suggest not reading this while you're eating.

I've started engaging in one of my favorite springtime hobbies: visiting open houses. I'm not alone, either -- I was literally bumping elbows with other visitors on the staircases.

Some of the visitors looked genuinely interested in the homes, a few were conferring seriously with their agents in the corner, and others were probably nosy neighbors just like me.

But the one thing no one seemed to be doing was asking the listing agent, who was typically just standing in the front room looking bored, any serious questions. I sometimes ask questions, just for my own curiosity -- and I often get some interesting answers.

For example, by asking "What's going to happen to that vacant lot behind that back fence?" I learned that it was up for sale as well, and would likely contain a new structure soon. If I'd been a serious buyer, that's something I would have wanted to know about well before falling in love with the place.

It doesn't take a real estate expert to think of likely questions to ask: Just look around, and think about the practicalities of living in the place, or what the future might bring.

Also read the brochure. If it says "Monthly condo fees," ask for a dollar figure. If there's been a price reduction, ask what the original price was, and how long the place has been on the market.

Or if you can't think of anything else, ask how the open house has been going, and whether other people have requested disclosure packets or expressed serious interest in the place. You might get some interesting answers too! 

The spring real estate market is upon us, with open house signs sprouting up right alongside the daffodils. If you're a seller, this can feel like a mixed blessing -- buyers are showing renewed interest, but you're facing increasing competition from other sellers, in a market that's still pretty slow.

But here's some news to help build your confidence: According to Metrostudy (as reported on by Shawn Tully of Fortune, in an article called "Real estate: It's time to buy again"), there's a major shortage of new construction going on in the United States.

Just a few years ago, we were looking at a glut of new homes, luring some homebuyers away from established neighborhoods into new developments. But no more.

What's more, demand for homes to buy may be poised to go up, as apartment rentals have become expensive and harder to come by. (The huge numbers of people who've been foreclosed upon are a factor here -- they're hardly going to want to, or be able to, rush back into homeownership.)

All of which is to say that, no matter what's for sale down the block from you, your place may still be relatively unique, among a amount of housing stock available to prospective homebuyers. And all it takes is one buyer.

Yes, I was surprised too. But apparently opting  for overdraft protection on a checking account may result in a credit inquiry and is viewed similarly to you adding another credit card to your mix, both of which can actually hurt your score a bit. Meanwhile, banks don't report bounced checks to the credit bureaus. And as every homebuyer knows, every point on your credit score can be important when qualifying for a mortgage to buy a home.

Get the details in Marcie Geffner's article, "Banking and Your Credit Score."