MONEY Housing Market

The Housing Number That Really Matters: 2.28 Million

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Wiskerke / Alamy

The number of homes on the market increased enough to slow down surging price gains and make it a little bit easier for buyers. Bidding wars aren't going away, though.

Home buyers worried they will be stuck in bidding wars for a scarce number of homes can relax a little bit. The number of homes for sale in May is up 6% over last year, to 2.28 million, reported the National Association of Realtors.

At the current pace, it would take 5.6 months to sell all the homes on the market. Six months is considered a healthy balance between buyers and sellers. The 5.6 number means it’s still, on average, more of a sellers’ market, but far better than late 2012 and early 2013, when there was less than a five-month supply of homes.

For May, sales continued to strengthen after a “lackluster” first quarter, said NAR economist Lawrence Yun. The median price of existing homes for the country, which includes condos, was $213,400, up 5.1% over a year ago.

But let’s get back to inventory, which has been driving much of what’s been happening in housing.

Around late 2011, buyers began tiptoeing back into the market, eating into the oversupply of distressed properties that had swelled post-bust. A year later, more confident buyers and an investor boom pushed the pendulum toward housing shortage. This chart shows that trend and how it’s been easing so far this year.

 

Source: National Association of Realtors

This is great news, because in some cities buyers have become so frustrated by the scarce choices that they’ve given up. Especially in hot cities (Denver, all the big cities in Texas, southern California) and in the best neighborhoods in most cities, buying a home has become about how to win a bidding war.

Even now, homes are still selling relatively quickly—the median number of days a home spent on the market in May was 47. But at least that’s six days more than a year ago, giving buyers some room to breathe.

That in turn means a slowdown in the hefty price gains that have marked the last 18 months or so of the housing recovery, but the market needs more, Yun says. “Rising inventory bodes well for slower price growth and greater affordability,” he said in a statement. But “new home construction is still needed to keep prices and housing supply healthy in the long run.”

New construction is a bit wobbly, however. Yes, builders are building more homes, but they are mostly apartments (the rental market is still going gangbusters). Builders have been slow to commit, worried about the financial health of buyers. Economist Brad Hunter of MetroStudy, which analyzes the new home industry, says consumers are still skittish, but traffic through builders’ showrooms continues to improve. So sales should rise soon, he says.

As with everything real estate, it’s all local. Construction is healthy in southern California, Texas and Florida, while Arizona and Nevada are down, Hunter notes.

And, it matters where you fall on the income spectrum. That’s another key aspect of the current housing market: Pricier homes are selling better, while the market for first-time home buyers is depressed. The percentage of first-time home buyers in the existing-home space fell again in May, to 27%, according to NAR.

In new construction, builders have begun targeting young buyers with lower-priced homes, but Hunter sees too many obstacles: high student loan debt and low employment among millennials.

Another obstacle: lending standards. The credit score needed to get a mortgage has been trending down, but very slowly. Real Estate Economy Watch, writing about an Ellie Mae report, said 32% of closed loans had an average credit score of under 700 in May, compared with 27% a year ago. The median credit score for purchases (not refinances): 755.

The median scores for FHA loans fell to 684 from 695 last year–FHA loans are favored by first-time buyers because of low down payment requirements.

The trend should draw more potential buyers off the fence, says Cameron Findlay, chief economist for Discover Home Loans. “When everyone’s talking about how difficult it is, if you’re a borrower on the cusp, you don’t bother going through the hoops and trying to apply, you just stay back,” he says. “Now they’re saying, ‘Let me see.’”

MONEY Investing

The Top 5 Ways to Make More Money on Your Rental Properties

If you own rental property, be sure to maximize your profits on your current investments before rushing out to buy new ones.

Rather than just acquiring as many properties as possible, let’s take a step back and think about whether the best way to make more money is to focus on your current portfolio.

1. Decrease Vacancy

The best way to minimize vacancies is to find a long-term tenant so that you don’t have to deal with turnover. This is covered separately by my next point because it is not the only way to keep your property occupied.

In the event that your tenant must move, vacancy can also be minimized by keeping turnaround time to a minimum. A friend of mine owns a condo in the D.C. area that is rented to 3 individual roommates. Although multiple tenants have moved on, he has kept occupancy at essentially 100% by posting ads the minute he learns of the move. Demand in the area is so high that he will have immediate interest and line up a new tenant to move in on the coattails of the old one.

You might think, “how does that apply to my property in an area with lower demand?” The thing is, nearly every property in every neighborhood has solid demand at a price. If your vacancies are consistently high, you may be doing it to yourself and need to think about your price point.

Every month of vacancy costs you 8.3% of your potential yearly revenue, so you would be better off renting every property one month faster for 5% less rent, two months faster for 10% less rent, and so on.

Another way to think about vacancy is this. If a property does not have some characteristic that sets it apart from the rest and sells itself such as a prime location or a to-die-for kitchen, you can give it one by providing the best value in town.

Related: The Biggest Threats To Your Real Estate Investment Property And What You Can Do To Stop Them

2. Minimize Turnover

Turnover costs money in multiple ways. There are advertising costs, the cost of patching and painting walls and replacing flooring that your previous tenant would have lived with, and, of course, vacancy. It’s a little counterintuitive, but this is another area where relatively lower rent may have the tendency to increase revenue.

One of your goals should be to find quality tenants that take care of your property and pay consistently. When you find these people, do what you can to keep them!

Some people will inevitably leave because they are moving across the country or buying a home, but the last thing that you want is to lose your best tenants to the landlord down the street, dealing with the expense of acquiring a new tenant and lost revenue in the vacancy.

The price of rent is not the only factor involved in tenant retention. The other key is customer service. Whether you personally manage your properties or have a property manager, make sure your tenants are treated with respect and professionalism, their concerns are valued, and matters are dealt with urgently and to their satisfaction. A good tenant/landlord relationship keeps tenants from thinking about moving.

To assess whether your property manager is performing in a way that fosters good tenant/landlord relationships, send a postcard soliciting feedback from your tenants, letting them know their opinion is valued and they can contact you directly if they are dissatisfied with their manager.

3. Increase Rent Strategically

Now, after telling you that lower rents can lead to higher revenue, I will proceed to advise increasing your rents on your longer-term tenants. This is really not a contradiction at all. Rather, it is a delicate balance that requires knowledge of your property’s value relative to your competition.

As I mentioned, tenants may be more loyal if they can’t find lower rent elsewhere. But this doesn’t mean that you should never raise rents when you have good reason to do so. Moving costs tenants money too. If the value of their current rental is significantly better than the value of a new rental plus the cost of moving, you still have the upper hand.

Make sure you know the rents in the area, researching sites such as Zillow, Rentometer, Craigslist, and the MLS if you have access. You may find there is plenty of room to increase your revenue a small amount each year (1%-3%) while remaining competitive.

Two tactics I use to increase rents: Communicate an offset to new costs such as increased HOA fees, which cover utilities and amenities that they enjoy, and have them coincide with an upgrade to the rental. For instance, I may plan to paint the exterior of the home or upgrade old windows from single to dual pane anyway, but I will schedule the work to coincide with a lease renewal and the tenant feels they are getting something out of the deal.

I may even ask them if there is anything that would make them more comfortable and select items from this list that will justify rent increases while increasing the market value of the home. In other words, make improvements that are necessary for maintenance or have immediate return on investment.

4. Be Diligent on Late Fees

Showing kindness and respect to your tenants does not mean being a pushover when it comes to rent collection and late fees. Collections are not the most enjoyable part of being a landlord, but are essential to running a profitable business. Make sure your tenants understand that this is a business, they have signed a contract, and it is your job to complete this transaction, following the contract and all applicable laws (including eviction proceedings if necessary).

Related: 6 Sure Ways To Never Be The Bearer Of That “Worst Tenant” Story

If you allow tenants to get away with paying late without the appropriate fees, you are leaving money on the table. And, your tenants may try to get away with late payments several more times, causing you extra work and stress.

If your tenant sends you a late check without including the late fees, politely explain that rent is not considered paid until all fees are collected, and that unfortunately you cannot accept this payment until all fees are paid. If you hold firm, they will quickly learn that you cannot be taken advantage of and will most likely comply.

More from BiggerPockets:
Wicked Cool Ways to Finance Your Next House Flip
10 Renovation Tips That Will Save You Time and Money
Video: Protect Yourself When Purchasing a Property As-Is

5. Add Revenue Streams

In multi-family properties, look for the opportunity to add services like coin-operated laundry and vending machines, which will not only provide revenue but will add resale value by raising the property’s return on asset value, or capitalization rate.

In single-family homes, offer extra house cleaning and landscaping services to tenants when they sign the lease. They may be happy to pay extra to avoid responsibilities they’d otherwise take on. You can negotiate the rates of independent landscaping and cleaning services, contract them out, and collect a fee as the contractor. For instance, if a cleaner agrees on a $75/month fee, you may offer the service to your tenant for $85/month, increasing your annual revenue by $120.

Overall, you may find that you can reach your business goals not only through acquiring a large number of properties but by operating a smaller number of properties more intelligently.

This article originally appeared on BiggerPockets, the real estate investing social network. © 2014 BiggerPockets Inc.

MONEY home improvement

Swimming Pools: Valuable Home Upgrade or Just a Pain in the Wallet?

Is Lisa Gibbs' pool a valuable upgrade or just annoying? She says "both."

The average inground pool costs about $22,000. Worth it? Yeah, but not because it will increase your resale value.

That lovely patio and pool you see in this photo is my Fort Lauderdale backyard. As summer steams in, maybe you’re dreaming of a similar view.

Before you call the contractor and start picking out float toys, let’s make sure you know what you’re getting into.

The average in-ground swimming pool costs $21,919, according to home improvement site Fixr. And that’s for a pretty basic 32’ by 16’ model. (Eleven years ago, we spent about $24,000 on our pool plus that pavered patio.)

But that’s just to build the thing. Then you have to take care of it.

Not only are we basically lazy people, my husband and I learned that keeping a pool clean and clear is actually tricky business. After a few too many “Ooh, why is your pool water green” comments (we have a salt pool, so no algae-killing chlorine), we gave in and 911-ed the pool service company.

Cost: $85 a month, plus an extra $1,000 or so a year for annual maintenance items (new filters, etc.) Then there’s the pool vacuum we had to replace last year ($600) and now we’re dealing with frequent leaks. At 11 years old, our pool needs resurfacing—that’ll be $2,500 please.

Oh yeah, and then there’s the patio furniture we need to replace (the Florida heat, storms and salty air is hell on outdoor surfaces), the new layer of sand we need to throw on the patio every year or so and the outdoor sound system we “had to have.” Finally, a pool pump and, if you go that way, a heating system will absolutely up your utility bill, and it will almost certainly bump up your homeowner insurance premiums because of the increased exposure to liability.

But at least we’ll get our money back when we sell our home, right?

Well, not so fast.

Remodeling surveys and real estate agents seem to agree: A swimming pool is probably a wash in terms of cost vs. value, and it depends on the area.

In sunny states like where I live, a pool is practically standard equipment for any family-size home. If every house on the block has a pool, the lack of one will subtract from a buyer’s perception of value.

That said, even in Florida, some buyers are wary either of safety issues—especially if they have very young children—and the maintenance costs. Massachusetts agent Kimberly Kent sums up the annoying ambiguity of it: “A pool is a great selling feature for those buyers who want one, and a major detractor for those who are absolutely against one.” See other agent comments on this Zillow thread.

In northern climes, a pool is a tougher sell. As agent and Zillow consumer expert Brendon DeSimone told me, it’s “too specific.” Meaning, it’s uncommon enough that buyers don’t expect it and are more likely to run away from the costs and effort.

One sign of a pool’s popularity in your area may be the sheer number of pool service companies: Check out Porch’s take on the top and bottom “pool-loving states.” A few of them are a bit head-scratching: Wyoming? Really?

Clearly, “value” goes beyond money recouped in a home sale.

When we put in the pool, our kids were 7 and 5 years old, respectively. The pool provided a lot of easy entertainment on a lot of slow summer days, not just for the two of them but for their gazillion closest friends. Now that they’re surly teens, guess how many times they’ve gone in the pool lately? Yeah, exactly zero. Still, we got years of pleasure out of it and still do.

Nothing beats being able to splash in my pool at the end of a hot day (well, at least after the afternoon thunderstorm passes) and, at the very least, my lovely backyard provides a nice mental oasis to stare at when I need a break from my office and the incessant demands of my slavedriver bosses.

I’m confident that my own thousands of dollars has been money well spent. But I’m also looking forward to the day when I can stop paying the pool guy and just do my swimming in places like these: World’s Coolest Hotel Pools

MONEY home improvement

Remodeling Your Deck: When to DIY, When to Hire a Pro

Large Back Deck
Chuck Schmidt—Getty Images

Before attempting a DIY deck remodel, consider the risks and rewards. You may want to hire a pro instead.

Remodeling your wood deck can be a great way to rejuvenate your outdoor living space and update your home’s whole look. Instructions for tackling your own deck remodel without the help of professionals are readily available. But why go DIY? Labor constitutes 50%-60% of typical project costs, so remodeling your deck yourself can certainly save money in the short term. However, depending upon your exact deck needs, attempting to remodel your deck yourself could cost you more than you think it will. Before you attempt a DIY deck remodel, consider all of the factors.

Understand your deck remodel plan

First, think about your needs and wants. Does your deck require a full remodel, an addition or just a bit of maintenance? Would you like to update your deck’s look to keep up with changing styles? Or do you love your deck as it is, but just want it to look new again?

Understanding your deck remodel plan is the first step in knowing whether it’s a better choice to go DIY or to leave your project to a professional. Check out projects in your neighborhood on Porch to get inspired and see what’s feasible within your budget. Having a very clear understanding of the scope of the project will enable you to decide who should do the work.

Prepare for a time commitment

A deck remodel may sound like a fun weekend project, but even a simple-looking wood deck can be deceptively complex.Homedecks.com estimates that just a 12 x 24 foot elevated deck with a staircase and railing will take an experienced professional and a laborer one to three weeks to build.

A qualified deck-building professional has the experience necessary to remodel a deck using the correct materials and building it to code. A pro will provide you with a project timeline, and will have access to the resources necessary to keep things on schedule. In addition, a pro will have experience in handling project hiccups, such as uncovering dry rot or discovering sinking deck footing, without letting the timeline get too far off track. If common problems like these arise, having a professional on the job could mean the difference between having finished deck in time for summer and having a money pit that gets stalled until the following year.

Deck remodel permits

If your remodel constitutes anything more major than a simple sanding and refinishing, you may need a construction permit to do it legally. Obtaining a permit involves calling your local building department or municipal offices to learn which permit or permits your project will require. Then you’ll need to fill out your permit applications and submit them to the building department, along with a copy of your construction plans, a property survey, and a filing fee. You’ll need to accomplish all of this before you begin your project. You could do this yourself and struggle over that learning curve, or you can leave it to a pro who’s already well familiar with the process.

Superficial flaws vs. underlying issues

If your deck is solidly built but the surfaces are dull, weathered, or dirty, then a pressure-washing and refinishing treatment could transform your deck’s look, making it feel like new without a pricey remodel. These procedures can be undertaken by a homeowner and can generally be completed over a weekend. Check your local home improvement store for renting or purchasing equipment and supplies (such as pressure washers, power sanders, varnishes, oils, and application tools) that you’ll need to finish your project.

However, if your deck is showing signs of wear like wobbly stairs, soft wood or separating planks, there’s a possibility that it’s also become structurally unsound. In fact, the existing deck structure may not have been legally constructed to begin with. To fully assess the structural integrity of the deck, hire a professional. A licensed deck building professional will be able to quickly identify problems such as rot, improper construction, or a sinking foundation, so that you can target your efforts and avoid wasting money on a deck remodel that fails to correct major structural problems.

Safety is a must with deck remodels

Hiring a pro to do your deck remodel can help you avoid or fix many common DIY deck-building problems that will make even a new deck unsafe, such as improperly spaced railings or insufficient drainage systems. Even a deck that was originally constructed by a pro should be professionally screened every year for safety and code requirements. Rain, sun, wind, and other environmental stressors can take their toll on even a well-made deck and cause serious problems. This could lead to anything from a sagging platform to a full collapse. In fact, data collected from the Consumer Products Safety Commission shows that thousands of injuries occur every year which result from wooden deck failures.

Check out NADRA.org for deck safety tips, including a helpful Check Your Deck consumer checklist. Then use Porch to find a professional who can ensure that your deck remodel will meet you and your family’s needs for decades to come.

Anne Reagan is the editor-in-chief of home improvement website Porch.com.

MONEY home improvement

8 Ways to Make Your Home a Staycation Paradise

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Alamy

Staying home this summer doesn't have to be a bummer. Use these pro tips to maximize your outdoor space and create a spectacular retreat.

Longing to escape? Summertime entertainment and relaxation doesn’t have to mean taking a trip away from home. The most enjoyable outdoor retreats incorporate basic, and familiar, elements: earth (landscaping, container gardens), water (fountains, swimming pools), and fire (firepit, candles). Add to that quality outdoor furniture, some fun elements and thoughtful design, and your deck, balcony, porch, or patio can easily become a destination. Designing outdoor entertaining areas in your home takes a bit of planning, but these tips can help turn your basic backyard into a staycation paradise.

Before you begin, be sure your outdoor areas are safe and in good condition. Call a decking contractor if you feel your deck might need reinforcement or repair. Cracks in the patio can be hazardous; fill them in or replace the damaged sections. Prepping your outdoor area is no different than preparing your interior rooms. Start with a good clean slate you can enjoy all summer long.

1. Establish your entertaining zones

Maximize your outdoor space by setting up specific zones or areas. Think of your outside space like the inside of your home: Do you want space for cooking and eating as well as a bar? Do you want special seating for lounging or hosting guests? Do you want everyone to face a particular view? Even if your outdoor area is small, you can still create various “zones” by arranging the furniture or containers. Help define the different areas by adding outdoor throw rugs, using containers as “room” dividers, or letting an arbor or gazebo create a separate space. Don’t forget that even the farthest areas can be focal points. A distant tree is a perfect place for a bench, a small hill can be a spot for a birdbath.

Pro tip: Even the smallest of outdoor spaces can have zones. If you only have a small balcony, consider creating good transition spaces from the indoor to outdoor areas. If you want to grill on the deck but need to eat inside, make sure that the transition between the two feels connected. Or simply reserve the balcony for a cozy post-dinner spot.

2. Give the eye a place to rest

Not every home has a million-dollar view, but even an undesirable background can be made to feel pretty. Looking at natural greenery and giving our eyes a chance to rest upon nature is a great way to make a space feel larger. Arrange your outdoor zones so that guests face a trellis “wall” of ivy or fast-growing bamboo. Or add a small fountain, birdbath or pretty ceramic container as a focal point. Tall objects, like trees, arbors or fences, make the eye travel upwards, creating a larger sense of space.

Pro tip: If your space allows, think about arranging your outdoor furniture zones around focal points. For example, lounge chairs could be grouped around a fire pit, or the dining table could be placed so that the guests view a beautiful tree or outdoor swing.

3. Maximize usable space

Clear and trim away low hanging branches to open up the view, sweep away leftover spring debris, power-wash hard surfaces, and organize storage areas. Not only will cleaning and clearing the outdoor space make it usable, it will make it safer to walk around and play outside, even when the sun goes down. Make sure to leave enough room around high traffic areas like doorways and grills. If you’ve been thinking about extending the patio with paving stones, call in an expert to level the area and add drainage. Now is the time to make your outdoor areas available for entertaining and fun!

Pro tip: Landscaping crews can be hired to do a summertime cleanup of your yard, including power washing, trimming and hauling away debris. You can also ask neighbors to organize a front yard clean-up event so that the whole neighborhood benefits from an upgrade.

Related: Make a Landscaping Budget You Can Stick To

4. Add color to create movement

Believe it or not, as our eyes travel around a space, the mind is tricked into thinking that the space is larger than it is. Create a larger-than-life entertaining area by adding pops of color that force the eye to travel throughout the yard. A collection of flowers in colorful containers, decorative pillows on the seating, or strategically placed garden whimsey will create movement as well as style. Whether you prefer a monochromatic color scheme or want a multi-hued yard, variation creates movement and depth that will make the area feel spacious and retreat-like.

Pro tip: Having trouble choosing outdoor colors? Head to your closet! We tend to wear colors we love so if you gravitate towards blues or purples, consider adding those hues to the yard. Warmer tones like red, orange or pink also coordinate well with lots of greenery.

5. Play interior decorator

The most desirable outdoor spaces look and feel as though a professional designed them. Many professionals like landscape designers, interior designers, and even home stagers, can be hired for a consultation. Their advice might be just the help you need to get your outdoor retreat started. If you want to DIY this project, much of this work can be achieved by simply taking the time to think about your outdoor space as you do your indoor space. If your outdoor space is subject to the elements, start with high-quality outdoor furniture that is designed to last, and purchase a fitted protective cover. If you like to change your colors each season, purchase cushions from a source that will allow you to buy covers separately – this way you can be assured of a good fit from summer to summer. Don’t be afraid of adding patterns or colors; the expansive sky outside allows a lot of room for bold designs.

Pro tip: The best time to find trendy outdoor decor is in the spring. But even old pieces can be given new life with a fresh coat of paint. Scrub away moss and dirt and be sure to use spray paint in a well ventilated area. Experiment with stencils or painter’s tape to create unique designs from season to season.

6. Bring inside elements out

Anytime you can bring your favorite indoor designs outside, it creates an environment that feels tailor-made and unique. Adding an outdoor chandelier, laying down an outdoor-safe rug, or setting the table with quality linens and real silverware will help make your outdoor space feel inviting. Outdoor buffet tables or console tables are not only functional, they make outdoor entertaining easy and the space feel customized.

Pro tip: Do not use an indoor-rated lamp outside. It’s not sealed against moisture and may corrode, possibly causing electrical hazards. Outdoor-rated pendants are easy to find. Keep in mind you can always spray paint to the desired color or use a candle chandelier for added elegance.

7. Just add water and fire

A true destination not only allows us to escape, it draws us in and makes us feel welcome. Both fire and water elements instantly transform an outdoor space into something really exclusive. People have always gathered around a fire for warmth, safety and food. Large outdoor fireplaces or small tabletop versions create an immediate gravitational pull. Candles or outdoor string lighting can help create a similar ambience. Group them en masse to create a stronger affect. Similarly, not every outdoor space can have a swimming pool, water feature, or pond. But a bubbling water fountain can be a great substitute and can be found in a variety of sizes and prices.

Pro tip: It’s easy to build your own water feature. You’ll need a container or receptacle that can hold water as well as a small pump (like this submersible pond pump, available for $15). Decorate the water feature with water plants, rocks or water-safe pond lights. You’ll need to place the fountain close to an exterior outlet and be sure to add anti-mosquito drops to the fountain to keep it bug-free.

8. Mimic your favorite vacation spot

If you desire a true paradise in your own backyard, go ahead and add elements that remind you of your favorite retreats. Love the beach? A grass umbrella, beach chair, fluffy towels and seashells can make you feel like you’ve escaped. Is your ideal vacation filled with quiet reading time while submersed in nature? Style a cozy reading nook next to a bubbling water fountain and scented plants like rosemary or lavender. Adding reminders of your favorite hotel or vacation spots can help you extend your holiday time without leaving the home.

Pro tip: Want to incorporate elements of your favorite hotel or spa? Make a list of the top 10 items that remind you of that place: the scenery, the scents, the view, the colors, particular designs…you can probably find replicas of these pieces and add them to your outdoor area.

More from Porch:
Who Builds More Decks: Boston or Dallas?
Tiny Yard? Best Tips for Creating a Big Garden

Anne Reagan is the editor-in-chief of home improvement website Porch.com.

MONEY house hunt

‘It Took 3 Years To Find a Home in a Good School District:’ A Buyer’s Story

Paul and Cassie Wilcoxes' new home in the Morningside neighborhood of Atlanta. Courtesy: Zillow

The Wilcoxes struggled with the classic parents' dilemma: Move to an expensive home in a great school district, or stay put and pay for private school?

All Paul and Cassie Wilcox wanted was a home in a good school district in Atlanta. Three years, numerous house hunting drives and an emotional appeal later, the Wilcox family is finally ready to move into their new home in the Morningside neighborhood of Atlanta. This is the story of their House Hunt.

They grappled with a classic dilemma: staying in an affordable neighborhood with poor schools or moving to a good school district with pricier homes.

The neighborhood we lived in didn’t have a a great public school system. So, as soon as our son, Connor was born, we started looking for homes in neighborhoods with good public schools. There aren’t a whole lot of those in Atlanta. We considered staying where we were but private schools are expensive as college. So we decided to move out.

They settled on their neighborhood, but it took a year to find a home that suited their budget.

We would drive out to Morningside often, surveying the place and just looking at houses. Finally we figured that being in the car all the time wasn’t going to work out and we had to make up our mind. (Notes their agent Danielle Coats, “It usually takes only three to four months to find a house.”)

Be Featured Here: Tell Us Your Home Buying Story!

Financially, things came together, though it’s a stretch.

My software business took off right about the time we planned to move. That gave us the confidence that we could do it. I now work two jobs — one as a systems architect at a financial services firm and my own firm.

Then they had to win the actual house.

It’s a very competitive area. We knew we had to make an aggressive offer and offered full price only to find out that we were up against four all-cash offers. We decided to write a nice letter to the seller, who was a kind, elderly woman. We told her that we wanted our son to go a good school and make the home special and raise our family there. And, it worked. We got a response in 10 days and another two weeks to close.

The list price was $469,900 and I was able to put down 28% of that.

They actually sold their house in October (for $245,000) and had to rent for three months while working on the new home.

Properties in Morningside have a good resale value. I know that if I were to sell my house tomorrow, I’ll make a profit.

More House Hunts:
‘At 27, I’m the First of My Friends to Own a Home’
‘I Have $1M in Investments and I Couldn’t Get a Mortgage’

MONEY selling a home

8 Ways to Screw Up Your Home Sale

With the positive momentum in the housing market, more homeowners are ready to put their homes on the market. Don't mess it up.

If you’ve been paying attention to the news headlines, you’ll know that it’s a “sellers’ market” in many cities right now. But beware – just because prices are up and inventory is down and the market seems prime, don’t become overconfident or careless with your own home. There are plenty of ways you could still sabotage your sale:

  1. Selling A House Via “For Sale by Owner” (FSBO). Trying to sell your home by yourself is sheer madness. Many people think that it’s easily doable because the market is hot and you can save on the commission. Despite the lure of not having to pay an agent a commission, you need the expertise and know-how of a professional, who can help you navigate the stacks of paperwork, provide priceless neighborhood knowledge – and negotiate on your behalf. The numbers also don’t lie: the typical FSBO home sold for $174,900, compared to $215,000 for agent-assisted home sales.
  2. Mispricing Your Home. Overpricing your house is a huge money-losing mistake. Yes, the market is hot. But not hot enough that you can push the envelope and price it for way more that the comps will support. Overpricing your home is dangerous – and you can end up burned in this ‘hot market.’ You run the risk that your home will sit on the market for weeks and months and become the stale listing that every home seller wants to avoid. Know the competition and set the right price – never overprice too high in hopes that someone will unknowingly overpay.
  3. Using Lousy Photos. – 90% of all home shoppers start their home search online, and bad photos can tank your home sale. If you let your agent grab a few fast photos of your house on their cell phone on a rainy day and use those for all your online listings, then you’ll likely get passed over for a home with more flattering photos. You also must showcase your house on its ‘best day.’ When the light is shining through the windows, when the countertops and other spaces are clear of clutter and unnecessary items. It astounds me when any home sellers (and their agents) allow photos of rooms scattered with old clothes and filthy, messy kitchens. Every photo should illicit a “wow!”
  4. Refusing to Make Obvious Repairs Prior to Sale. You will lose money if you don’t take care of repairs before the house goes on the market. Showing the house when there are leaking faucets, cracks in the walls, water stains on the celling, and a busted hot water heater are all ways to turn off potential buyers. When you do find a buyer willing to overlook those necessary repairs, they are going to want discounts or credits worth far more than what it would have cost you to make the repair yourself.
  5. Keeping All Your Clutter and Junk. “Oh the house looks fine” you say to your agent. “It’s going to take too long to pack up and get rid of all our extra stuff” you say to your husband. “Buyer’s will see right past all my boxes and collections of plaster cookie jars and shelves overflowing with nick-knacks” you think to yourself. It may sound like a good idea, but it’s not a smart approach. Believe me, I have seen homes come on the market that obviously could have sold so much faster, had the home owners spent just one weekend depersonalizing and removing all their “stuff” inside the home. Clutter makes your home seem smaller, ultimately eating equity and killing deals. Period. De-clutter immediately! Take inventory of all your possessions and think to yourself: should I save it, store it, sell it, or chuck it?
  6. Ignoring the Backyard – Everybody knows that fantastic front curb appeal sells homes, but don’t forget what’s out back. In the summer and fall months, everyone’s attention turns to the outside spaces, where they dream of warm summer nights and outdoor entertaining. If you don’t maximize and capitalize on your backyard, you are missing a huge component of your warm weather living spaces. That back yard patio is not just for storage of old bikes and broken patio furniture that should have been thrown out years ago. In a buyer’s eyes, it can be the most important ‘room’ in the house. You need to stage your backyard and outdoor entertaining areas as beautifully as you would the interior of your home. Green grass, flowers and trimmed trees should be the same standard as your curb-appealed front.
  7. Hiding Problem Issues From the Buyers. I’ve watched too many home sellers pay out big bucks because they didn’t “reveal it all.” Disclose! Disclose! Disclose! Once you have an accepted offer, sellers are required to fill out disclosure statements. If you did renovations to the house without a permit over the years, disclose. If there was a roof leak that damaged the attic two years ago, disclose. If the electrical blows every time you run the dishwasher and the microwave at the same time, disclose. The buyer’s will find out eventually. And if you knowingly have kept things from them, it sets the tone for an ugly and difficult closing. Not to mention that you are setting yourself up for the liability.
  8. Getting Your Ego Involved When Negotiating. Real estate transactions are business deals. Plain and simple. There is no room for ego here. If an offer comes in low, the mistake is to be insulted and not counter back. Always counter back and keep deals in play. Too many sellers take negotiations personally and lose out on creating a win-win deal. Keep your ego out of the equation and put your head back into it. Remember your end goal: getting your house sold and having a smooth and successful closing.

More from Trulia:
Top Reasons Millennials Shouldn’t Buy a Home–Yet
Can Buying an Older Home Ruin Your Marriage?

Michael Corbett is Trulia‘s real estate and lifestyle expert. He hosts NBC’s EXTRA’s Mansions and Millionaires and has authored three books on real estate, including Before You Buy!

MONEY Buying a House

The Letter That Saved $11,000. Really.

House shaped mailbox or postbox
Melissa Ross—Getty Images

A personal letter could make the difference between winning and losing your dream home. Here's how to do it right.

After a six-month-long house hunt through northern Virginia neighborhoods, Alison and Greg Fitzgerald were’t feeling very optimistic.

Finding homes they liked wasn’t a problem, there were plenty. The hard part was making a deal. It seemed like every house had multiple offers or was sold minutes after being listed. By the time they were able to visit the last two properties that had caught their eye, both had gone under contract.

So when Alison walked in to a beautiful four-bedroom house in Alexandria in May, she knew her family needed to do more than make a fair offer. “They need to feel like we’re their friends so they’ll give us the house,” said Alison.

After noticing the seller shared the couple’s love of the Washington Capitals hockey team, Alison rushed home to write a letter. The result was a textbook example of a tactic many home buyers—especially those in competitive markets—are using to get an edge. Alison’s note, attached to her offer, gave a personal account of the couple’s love for the neighborhood, nearby schools, and the property itself (“we have a baby boy who is about to turn 1 year old… we can already see him playing in that big back yard with our dog!”). She also gushed about the family’s Capitals fandom and included a picture of their 11-month-old son at his first Caps game.

Despite four other offers—one $11,000 higher than their own—the Fitzgeralds got the home. Alison still remembers the sellers’ agent’s call, conveyed to them by their broker: “You got the house. Your letter definitely had something to do with it.”

When the family arrived at their new home, previous owners had left a bottle of champagne and a Caps Kids’ Club banner on the stairs.

Looking for inspiration? Check out this album of actual cover letters (click on the top-right gear for full size):

 

It might seem cheesy (or manipulative), but the Fitzgeralds are one of a growing number of families who triumphed in bidding wars by giving their seller a human connection instead of the highest offer. Redfin, a real estate brokerage with locations in 25 markets, found that writing a personal cover letter “tugging at the seller’s heart strings” increases your chances of winning multiple offer situations by almost 10%. For something that doesn’t cost a cent, that’s a pretty solid return.

“I don’t see where it hurts,” says Anthony Rael, a Denver Re/Max agent who advises his clients to write such cover letters. “It gives a lot of weight to your offer and really shows intent.”

So, if everyone’s writing letters, how to make yours stand out?

Build connection. Agents say you should emphasize commonalities, enabling the sellers to see a little of themselves in your family. Tanya Larson-Topp and husband Benjamin had been searching the Chicago area for two months before falling in love with a four-bedroom on Estes Avenue. When they visited the house, Tanya discovered its owners, the Browns, had a young daughter with the same name as their own three-year-old Eliana. She and Benjamin had also attended the same graduate school as one of the sellers.”We both went to SSA [School of Social Service Administration at the University of Chicago],” wrote Tanya in her cover letter. “What could be better than a couple of social workers living in your old house?”

Nothing, apparently. The Larson-Topps not only beat out a competing bid, they even received a letter from the sellers expressing how thrilled they were. “Selling to two social workers is truly a dream come true!” wrote the Browns. “Feel free to contact us with any questions about the house or neighborhood.”

Don’t worry if you’re not an exact clone, even more minor commonalities can be enough. One of Rael’s buyers struggled to find a seller willing to accept his Veteran’s Affairs financing, until a fellow veteran saw his letter and happily sold him the home. One of his other buyers, a pre-retired couple, won the home of a current retiree despite bidding $50,000 under list price, “much to his [agent’s] amazement.”

Don’t skimp on the emotion. You may feel like pouring one’s heart out to a seller is too corny. But an effective cover letter does more than tug on the heartstrings. It also shows you’re serious about the house and, if you need financing, even helps you stand up against the dreaded all-cash offer. Los Angeles agent Eric Tan says sellers have become frustrated by investors who bid cash on multiple properties, select the choicest out of their accepted offers and cancel the rest. A financed offer, paired with a cover letter emphasizing your attachment to a particular home, can tip the scales away from the investor. “Sellers like to see that a buyer has something more at stake the just the investment of the property,” Tan says.

Keep it short—and positive. Redfin’s cover letter guidelines warn against buyers telling “your entire life story,” and suggest you refrain from mentioning offers you have lost because past failures may be taken as a sign of weakness. Appearing too desperate or pushy can also put off a seller. Tan recalls one instance where a family of buyers and their agent randomly showed up on his client’s property asking for a showing. “The seller says there’s someone who’s been waiting on the front lawn for 40 minutes,” says Tan, remembering the phone conversation. “I said I’m glad you called but we need to call the police.”

Really want it? Make a video. Agent John Venti, who operates primarily in California’s San Gabriel Valley, started making videos with clients in May, using only their smart phone’s camera and editing tools. The videos, he says, are a “way for someone to say ‘here I am, here’s who I am’,” in a time when emails have depersonalized the process (back in the day, offers were presented in person). So far, he’s made 10 different videos, each for clients in multiple offer situations, and these buyers have won out more than 50% of the time.

Is your seller a builder or investor? Don’t bother. Those sellers are generally focused on either the most money or the fastest closing, and often ask their agents to remove any cover letters they receive.

But for many owners, “there’s more to consider than list price and offer price,” Tan says. “In those situations, it does make a big difference.”

MONEY house hunt

Share Your House Hunt Story With MONEY!

Have you bought a home in the last month? Or are you about to close on a purchase? MONEY wants to help tell your home buying story while offering relevant, real-life advice to all the other buyers out there.

See examples here:
‘At 27, I’m the First of My Friends to Own a Home’
‘I Have $1M in Investments and I Couldn’t Get a Mortgage’

We’re looking for buyers of all stripes and in all towns, whether your search took a day or a year. We hope to highlight situations that can be useful to other people planning to buy a home — hunting tactics, negotiating challenges, and mortgage nightmares overcome (or not).

Got a story to tell? Fill out the confidential form below. (We won’t use your story unless we speak with you first.)

Thank you!

 

MONEY selling a home

What’s the Best Way to Sell My Home to a Relative?

Q: I want to sell my home to my sister for $1. What’s the cheapest way? Do I need a lawyer? — Stacy C. Bouknight, Glenside, Pa.

A: No, you don’t need a lawyer to unload your home in most states, including Pennsylvania. To transfer the home cheaply, don’t sell it; that would require a title search and insurance to do cleanly, costing several hundred dollars at least. Instead, use what’s known as a quitclaim deed, which transfers your ownership but makes no guarantee the home is unencumbered, says Nolo legal editor Mary Randolph. Fill out the document ($14.99 at nolo .com), have it notarized, and record the transaction with your county land records office.

Have a mortgage? No matter how you turn the home over to your sister, you are still responsible for paying off the note; until you do, your lender has a claim on the house.

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