Nolo’s Real Estate Tips for Home Buyers

Settling into your new kitchen and curious about things like whether to buy a plastic or wooden chopping board? Here's a fun quiz from the Sierra Club -- I scored pretty well, but still learned more than usually comes standard in the average "green" article.

And while we're talking green, let me throw in a tip of my own. I just painted the bedroom and was finally able to justify having saved all those old bedspreads, sheets, and towels -- you know, the ones that are too ratty to give to charity -- just like my Lithuanian refugee mother taught me. The box of rags was starting to feel like its own kind of clutter, but I was able to cover the floor and all the furniture that was too big to move out, without having to buy any tarps. Very satisfying.

Everyone loves a sequel, right? And as authors of Nolo's Essential Guide to Buying Your First Home, we're thrilled to have just received, hot off the presses, copies of our sequel to that book: The Essential Guide for First-Time Homeowners: Maximize Your Investment and Enjoy Your New Home.

This is the manual we wish we'd had when we became homeowners. It covers everything from housewarming parties to new-found tax deductions, from maintenance to remodeling. And it's loaded with tips for economic hard times, like how to decorate on a budget, deal with your lender if you have trouble paying the mortgage, lower your homeowners' insurance payments, and even save money by going green.

You can start reading a sample chapter right now -- enjoy! And if you know anyone who's just bought a new house, think about this for a fun-yet-practical housewarming gift.

Kudos to Nolo's own Steve Elias, who's been in the news lately, pointing out that efforts in places like Michigan to take owners of foreclosed homes off the voter rolls are not only unfair, but absurd.

Foreclosure has always been a lengthy process, and banks are now more willing than ever to work out a compromise solution, so that the idea that foreclosed homeowners just pick up and leave the moment they get the bank's foreclosure notice couldn't be more off base. For information about how foreclosure affects voting rights in each state, see http://legalconsumer.com/bankruptcy/foreclosure_voter_rights.php?. You'll find links to election rights organizations and state-specific registration information.

Nothing fits so well into your budget as something that's entirely free. And the plus side of living in a consumer society on overdrive is that people are increasingly willing to just give stuff away rather than figure out what else to do with it.

Sometimes being alert to what's on the street is enough. Even in my own, less-than-upscale neighborhood, I've picked up post-garage-sale finds ranging from clothing to file drawers to my very own Oakland A's baseball cap (I'm not a native, but I'm told it's a must-have around here.)

And the online world has added a new layer of possibilities. If you're not yet addicted, check out the free section of Craigslist. (It's there under "For Sale.") In the SF Bay Area, at least, you'll find everything from desks to dirt to dressers.

Another favorite is Freecycle, a grassroots nonprofit where members both advertise giveaways and post requests for what they need.

And for more tips and inspiration, see this September 5th USA TODAY article by Jayne O'Donnell, "If you can't afford it, then get it for free". 

A recent article on Inman News reports that a survey published by Zillow, an online real estate valuation company, shows that a majority of homeowners are unrealistic about the true value of their homes. According to the survey, even though about 73% of homes lost value in the last year, 62% of homeowning respondents said they believed the price of their home had held steady or gone up. These homeowners are unrealistically optimistic about the future, too, with 75% expecting an increase or level value for the next six months, even while 42% expect values in their market to drop.

Why the disparity between reality and perception? One reason is probably a stubborn disbelief that it's possible for the real estate market to fall, especially given the frenzied pace with which values were increasing just a few short years ago. Conventional wisdom says that home values rise over time -- which is historically true -- but "wisdom" just a few years ago told us time or investment wasn't needed, and home values always rise. (If you disagree, try counting the number of television shows and books on flipping properties.)

Probably an even greater misperception -- given the number of people who think the value of their home will rise even while the local market falls -- is that homeowners think their properties are better and different than the rest. They can't imagine anyone wouldn't love what they've done with the kitchen, or ooh and ahh over the new deck.

But the sad reality, as any homebuyer knows, is that houses are commodities. Buyers aren't looking for someone else's dream home, they're looking for something that meets their needs at a reasonable price, and they're not willing to pay the premium many sellers expect for their own customization or improvements. (Often, whether such "improvements" even improve is questionable -- pet showers, anyone?) After all, if they don't like the seller's choice of custom cabinetry or bathroom tile, they can easily find another property without these features -- and not be expected to pay for them.

Alayna Schroeder

Read the news lately? Before you get too excited about the $7,500 tax credit for first-time home buyers included in the recent housing bailout legislation, take note of one very important thing: You have to pay it back. In fact, you don't even get to wait until your house is sold to pay it back -- the feds will claim it in installment payments in subsequent years of your tax payments.

That's no typical tax credit -- it's more like an interest-free loan. For details, see Sandra Block's excellent description in USA TODAY.

Ilona Bray

The recent flooding in the Midwest is a reminder of a single act of nature can have homeowners running to their insurance policy for help -- only to find, in many cases, that they're not covered. Recent news reports say that a tiny minority of homeowners in Indiana and Wisconsin had flood insurance. As is typical, some say they didn't think they were in a flood plain, and that their lending bank didn't require flood insurance to be included in their policy.

We said this in our book, Nolo's Essential Guide to Buying Your First Home, but we'll say it again: The flood zone maps are not always up to date, they're drawn to such a large scale that they're not necessarily accurate for individual properties, and they have traditionally identified flood areas based on the worst flood likely to occur in 100 years, or 1% of the time.

Meanwhile, flooding is the United States' most common natural disaster, affecting many people who live nowhere near water. Melting snow, overflowing creeks or ponds, a weak levee, or water running down a steep hill can all cause flooding. And experts say climate change is making it worse by bringing more severe storms.

Does that mean everyone needs flood insurance? Probably not (though it is relatively affordable if your house is not in a designated, recognized flood plain). But before finalizing your insurance policy (assuming you're just buying a home) or renewing it (if you already own), check with your neighbors, the local flood control board, and your city building department about recent trends.

A good credit record and score has always been important, but with the tightening up of the mortgage industry, people with a low score may have a harder time than ever buying a house -- a shame, if you want to take advantage of recent dips in home prices.

But, warns Kenneth Harney, that's no reason to pay money to the various companies that promise to not only raise your credit score, but find you an affordable home in foreclosure and a low-cost mortgage to boot. For details of the consumer complaints and FTC lawsuits that these companies have engendered, see Harney's article in the San Francisco Chronicle.

As for raising your credit score, you'll have to do it the old fashioned way: by paying down your debt, paying bills on time, and more, as discussed in Nolo's article on Credit Scoring.

A recent poll of residents of the world's eight richest cities reveals that over 40% of Tokyo's residents don't want to sacrifice a convenient lifestyle to prevent global warming. While these results may seem startling, consider that the average house size in Tokyo is 64.5 square meters, or 694 square feet (not to mention that many residents probably take public transportation to work, and drive cars that put American gas guzzlers to shame). To really make a positive environmental impact, those of us who are quick to pat ourselves on the back for our eco-friendliness must think beyond bringing our own bags to the store and driving hybrid vehicles.

And there's no better time to think about these issues than when buying a home, which leaves a (literally) big footprint. While some features -- energy efficient appliances, CFL light bulbs -- can be added later, some "green" features are permanent. Consider these important factors:

• The size of the home. A few months back, I read an article about a woman in California's Central Valley who installed solar panels on the 3,000 square foot home she lived in, apparently alone. She was quite smug about her positive environmental impact. But she could have had done even better by choosing a smaller home that took fewer resources to build and could be heated and cooled more efficiently.

• The age of the home. Older homes sometimes don't have energy saving features, but can often be adapted to include them. Two years ago I had better insulation sprayed into my attic; it almost paid for itself with the rebate from my utility company, not to mention my lower heating and cooling bills. Again, fewer natural resources are spent when an old home is updated than when a new one is built.

• The size of the lot. A large grassy lot could mean a great place for dogs and kids to play, or it could mean heavy water use, toxic weed killers, and hours of upkeep time. If you don't buy more lot space than you need, you'll save yourself hassle, money, and environmental impact to boot.

Alayna Schroeder

For many new homebuyers, one of the most exciting things about buying a house is having the space to garden. For the first time, you may have a little dirt to call your own, and a million ideas about how to fill it. That's great, but my advice is to take it slow. I'm living proof that if your ambition out-paces your knowledge of gardening realities, you could end up with a lot of dead plants.

When I bought my first home years ago, one of my first purchases was the Sunset Western Garden Book. I happily spent weekends weeding the overgrown backyard, buying and planting hundreds of dollars worth of new plants, and learning about mulch and ground covers. I was determined to turn my small yard into an English garden, and I succeeded (at least for a while).

But as time went on, I found myself enjoying gardening less and less. Money I used to spend on manicures and dinners out now went to new garden tools and the latest non-toxic snail bait. Rather than hike with friends in beautiful parks, I was alone in the dirt, nurturing my tomato plants. Gardening seemed the thing every new homebuyer should do, so why I was resenting it? Thinking I should scale back, I bought every book on low-maintenance landscaping, only to learn there's really no such thing. (Gardening's only easy is if you pay someone to do it all for you.)

I gradually started letting go and found myself happier shopping for vegetables and fresh flowers at the farmers market rather than growing my own. I started buying more novels instead of gardening books, and reading instead of weeding.

Before long, my once beautiful garden began to return to its original state of disarray. I looked for as many ways as possible to keep my little yard full -- outdoor play structures for the kids, a hammock, bird feeders, little lawn ornaments (though I didn't go so far as pink flamingos). My gardening friends were appalled: How could you let those perfectly good plants die? Well, like the person who finally admits they really don't like to cook (or shop, or redecorate), I have finally reconciled myself to the fact that I am not a gardener. At least with the recent emphasis on conserving water, I have an excuse when people inevitably ask, "What happened to your garden?"

Marcia Stewart