Staging Shockers: 9 of the Worst Staging Decisions Ever Made

At the end of every year, my mind naturally drifts to what did and didn’t work this year, in an effort to double down on my successes and avoid repeating my mistakes. Occasionally,I’ll take a look back at my whole lifetime in this same way, reflecting on poor past decisions ranging from old high school sweethearts to bad fashion choices, misguided career moves to things I said and wished, instantly, I could take back.

Rather than letting them fester into regrets, it’s best to look at our mistakes as holding lessons – pitfall avoiding, action-inspiring material we can draw on as we move forward in life. In fact, I actually call my painful past mistakes “tuition”: the price I’ve paid to learn a valuable lesson. The keyword here is valuable. In school, tuition is worth paying because the learning you get in return holds economic value or is otherwise worthwhile.

Tuition is a lot like staging, really: they’re both up-front investments with the potential to make or save you money, in your life, your career, or the sale of your home.

As we grow older and wiser, the goal should be to learn not just from the mistakes we’ve committed – but from those that others have committed, as well. Think of them as tuition-free lessons. I say we should try to do the same with staging – let’s take these ten shockingly bad staging decisions that other home owners have made and continue to make every single day, and boil them down into lessons every home seller can use to drive their own home staging success.


1.  Bizarre collection overload.

Let’s face facts: it is very difficult for almost any collection to look orderly and neutral, two high-level aims of home stagin. Unless you have attractive, high-end built-in cases for your collections and target buyers are share your affinity for the objects, even your cool clock collection or the dolls your grandmother gave you can come off as a pile of space-consuming clutter.

But when it comes to shockingly bad staging decisions, the choice to give your taxidermy collection or your gun collection a starring role in your home’s staging ranks up there in the top few. These collections are highly likely to trigger (pardon the pun) ethical and sanitation concerns in the minds of many home buyers, and are completely distracting from the strengths and features your home has to offer.


Source: Miami.Curbed.com

Lesson Learned: Pack up your clown collection and put your bowling trophies in storage before you start showing your home. And if it once ran, flew or swam, think twice before putting its body out on display as part of your staging showcase (unless, of course, your home is a hunting lodge or in an area where hunting is de riguer).

2. Echo chamber staging.

In an echo chamber, sounds are amplified because they simply bounce around in that closed space.  The same can happen with your thoughts and ideas about staging, if you don’t open yourself up to outside input.  And unfortunately, it seems to be the bad staging ideas that get amplified, more than the good ones.

For instance, no matter how great your taste is, if your home is heavily customized around your personal preferences, it can be very difficult for buyers-to-be to envision themselves, their families and their belongings in the place. Echo chamber staging happens when the sum total of your staging team is you, yourself and you – so that the only conversations that take place about your home’s staging plan are those that take place in the echo chamber of your mind.

For that reason, I’m a big believer in professional staging (if you have the budget) and in professionally-assisted staging (if you don’)t.  That’s because the sellers who stage with zero external or professional input, are often the sellers who are unable to see:

  • that their homes are still significantly cluttered or over-full,
  • that their furniture is too plentiful and too large to show how spacious the home truly is, or
  • that their sweet feline companions are also rather malodorous to strangers.


The truth can hurt – so many home owners avoid it. Don’t fall into this trap. Bring in some trusted pros who are both invested in your success and willing to tell you the unvarnished truth.

Lesson learned: Get input from the pros – and get out there on the market, to see what your competition is like, from a staging perspective, rather than being your own, sole staging adviser. Read some books on staging. View model homes or professionally staged homes that are on the market. Get input from your real estate agent. If you have a bare bones budget, consider hiring a pro stager for just an hour’s worth of advice – let them come into your home and tell you what they would do, if they were you. (And write it down!)


3.  Failure to edit.

You’ve heard thirty-somethings who still live at home diagnosed with failure to launch? Well, failure to edit is a close cousin of this syndrom.  As the New York Times recently put it, “the job of stagers is to reverse the accumulated creep of hundreds of small and misguided design decisions, and to erase any hints of the messiness of daily life.”  You might have a fantastic rug, a beautiful sofa, amazing tchotchkes and the highest-end personal effects are high style. But chances are good that their cumulative first impression to a buyer viewing your home will still fall short of the “one broad stroke of gorgeousness” the Times piece correctly says home sellers should aim for, with their stagin.

The failure to edit is a generalized syndrome which can manifest in all sorts of specific staging woes, from garden variety clutter to disastrous decor style mashups.

Lesson learned: When you think you’ve edited as much as you can edit, edit again. Think of it as pre-packing. The goal should be to remove virtually everything that would allow (or force) a buyer to picture you or your family, or your daily life functions taking place in the home. As well, you want to create as much ‘visual white space’ in your home as possible.  If you’re a do-it-yourself stager, ask your agent and your friends to come in and help you decide what still needs to go, once you think you’re done removing furniture and personal effects.


4. Silly scenarios.

The difference between staging and interior design is simple: staging is cost-and-time efficient design undertaken with the specific objective of showing a home off to its best advantage, playing up its features and helping prospective buyers visualize the best lives they could possibly live in the home, should they choose it. Unfortunately, this has led some well-intentioned sellers and stagers to believe they should stage one bedroom as a Parisian boulevard (Eiffel tower mural included), another with a full-blown butterfly theme and the third as the beach – complete with umbrella, towels on the wall and sunscreen bottles on the nightstand.  I saw this house, folks. With my own two eyes.

Lesson learned: Stage your home to show off its space, light and conveniences, and the best, basic purposes that unusally small or large spaces could be used for. If your backyard is a huge selling point, stage it with outdoor dining or living room furnishings. Or, for example, if you have a very large Master bedroom sitting area and your home is in a school district sought after by new parent buyers, talk with your agent about staging your sitting area as a nursery with a compact bassinet and appropriate decor. Similarly, if your home is a 2 bedroom with a bonus room in an area of 4 bedroom homes, staging the bonus room as a bedroom or home office helps buyers understand the solutions that can minimize the brunt of your home’s challenges.

Staging your home to create “cute” scenarios with no relationship to the selling points or solutions buyers care about is of no value and can create a low-budget feel – which is the exact  opposite of your goal.


5.  The ‘lived-in’ look.

When your home is being shown for sale, it must be immaculate, every single time it’s being shown. It should actually look like no one lives there: no toothbrushes, curling irons, protein shake mixes or paperwork allowed. No bowls of cereal on the counter – actually, nothing on the top of a counter or a table that is not intended to be a design element.

Is this difficult to keep up?  Absolutely, especially if you have children or animals living in the home while it’s being shown. But you’d be surprised at how bad an impression just a few personal toiletries or dishes can make, distracting prospective buyers and making them wonder why you didn’t care enough to pick up before you let them in.

Lesson learned: Work with your agent to set up ideal showing windows, and to come up with a reasonable advance notice requirement they can communicate to buyers agents. And work with your family to set up a system for putting everything away and wiping down all kitchens, bathrooms and other daily mess hot spots every single time your home is going to be shown.


6. Paraphernalia gone wild.

 Similar to collections, any sort of paraphernalia that is allowed to take over a space has the potential to create an instant turnoff for buyers-to-be viewing your home.

This can include:

  • work-at-home electronics, supplies, cords and paper clutter
  • pet supplies like litter boxes, cages and food
  • children’s toys and sporting goods
  • cooking and crafting supplies
  • books, magazines, notebooks, piles of mail and writing implements.


Lesson learned: See #6, above. If you’re going to live in your home while it’s on the market, create a system for putting all your paraphernalia and supplies entirely out of view every single time your home is going to be shown.


7.  Closet cramming.

 If you have years worth of personal belongings of multiple family members that need to be out of sight, but not discarded, it can be very tempting to cram everything in a closet, shove the door shut and call it good. Problem is, home buyers today are desperate for storage space, so will undoubtedly open those same, crammed-tight doors in an effort to evaluate how your home ranks for storage.

Beautifully organized closets with ample room create an impression in the buyer’s mind that they, too, can have an orderly life in your home, a life where there is a place for everything – and everything has a place.  And even huge closets, if crammed to the gills, make buyers wonder how they’ll ever get by with so little closet space. (Closet cramming also makes some buyers wonder what else you might be hiding, whether or not that concern is justified.)

Lesson learned: Use the exercise of staging as an opportunity to sell, donate or throw out things you no longer need – then consider moving as much as possible of what remains to storage for a few months, if your closets are too full.  Your agent can help you decide whether your closets show well, vis-a-vis what local buyers are looking for.


8.  Failing to stage for all the senses.

 A house that smells like pet mayhem or smoke or has a noisily defective heater is a tough house to sell, no matter how beautifully it is staged. Unfortunately, smells and sounds are very easy to get acclimated to, when you live with them. Buyers, though, will detect them the second they walk in – and the moment they do is the moment we in the business call “turn-off time.”

Lesson learned: Ask your agent to reality-check you on how your home smells and sounds. And don’t get offended if they have bad news – work with them to fix it, for your own good.


9.  Not to.

Ultimately, the most shockingly bad of all staging decisions is the surprisingly frequent decision not to bother staging your home at all. This explains homes like the one I once viewed which had residents still sound asleep in their beds, in the dining room, as the listing agent walked myself and my mortified buyer clients through the property. On the less bizarre end of the non-staged spectrum, this is how lovely homes with vast potential – and vast, overstuffed 80’s couches and 60’s decor – end up selling at a discount, as cosmetic fixers at a discount. This is a particular tragedy in cases where the owners could have painted, spruced, moved loads of things out and a few newer things in and made much, much more money on their homes.

Lesson learned: Not staging at all – not even bothering to do DIY staging – happens every day, and it costs more than the costs of putting some time and effort into getting your home ready for the market. If you’re on a budget, talk with your agent, get some books and, again, consider hiring a stager just for a brief advisory session. It will, I assure you, pay off.

ALL:  What are the most shocking staging decisions you’ve ever seen?  Any staging lessons you’ve personally learned?  Please share!

 

Read more at http://lancasterparealtor.com

5 Documents You Need to Save Cash at Tax Time

Tips for Home Buyers

5 Documents You Need to Save Cash at Tax Time

Tax day may seem far away, but if you want to cash in on the real estate-related tax
perks of buying this year you need to be sure you’ve got these five documents
on hand.

1. Mortgage Interest Statement

IRS Form 1098.
The meatiest real estate tax deduction on the books
today allows you to deduct 100 percent of the mortgage
interest you paid during the tax year. To get this
deduction, keep an eye on your mail for Form 1098
from your mortgage lender. This reports how much of
that interest you paid.
In a rush?
Check your lender’s online account
management service (likely where you
make payments online). Many post 1098s
digitally before they send paper copies.

2. Uniform Settlement Statement (HUD-1)

If you purchased recently, right after closing you should
have received your HUD-1 Settlement Statement.
The data on this form is invaluable during tax time.
It details prepaid interest, prorated property taxes,
and other potentially deductible fees.
Hint: The HUD-1 is usually printed on legal-sized paper
and shows the credits and debits for buyers or sellers.
Moving expenses are tax deductible if your move is
closely related to the start of a new job. The rule of
thumb: if you moved more than 50 miles to be closer to
your new workplace, you could be eligible. Consult your
tax pro for details on this credit and be sure to bring
your moving receipts.

3. Moving Expense Receipts.

Under the Non-business Energy Tax Credit, homeowners
who make qualifying energy efficient upgrades
can claim tax credits.
If you’ve recently installed energy efficient improvements
such as insulation, new windows or other
energy savers, you may be able to deduct 10 percent
of their cost.

4. Receipts from energy efficient home appliances & improvements.

Homeowners who’ve purchased in the last few years
using a Mortgage Credit Certificate may be entitled to
a pretty hefty tax credit.
MCCs apply as long as you live in the home and pay
a mortgage on it. But, they only apply to defray taxes
you actually owe – you can’t use them to get a refund.
If you have one, the MCC is a must-have as you start
your tax prep.

5. Mortgage Credit Certificate (MCC).

More Tax-Saving Documents
1. Property Tax Statements
2. Home Office Reciepts
3. Rental Income/Expense Statements
4. Unreimbursed Work Expense Receipts
If you own a home, it can’t hurt get professional help
from a tax attorney or certified public accountant to
make sure you maximize your deductions and
minimize the possibility of an audit.

Pending Home Sales Rise in October

WASHINGTON (November 29, 2012) – Pending home sales rose strongly in October with mixed regional results, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, increased 5.2 percent to 104.8 in October from an upwardly revised 99.6 in September and is 13.2 percent above October 2011 when it was 92.6. The data reflect contracts but not closings.

Lawrence Yun , NAR chief economist, said buyers are responding to favorable market conditions. “We’ve had very good housing affordability conditions for quite some time, but we’re seeing more impact now from steady job creation, and rising consumer confidence about home buying now that home prices have clearly turned positive.”

Outside of a few spikes during the tax credit period, pending home sales are at the highest level since March 2007 when the index also reached 104.8. On a year-over-year basis, pending home sales have risen for 18 consecutive months.

Yun noted there are clear regional patterns. “Contract activity surged in the Midwest and is showing very healthy gains in the South, but was down slightly in both the Northeast and West,” he said.

“The Northeast saw some impact from Hurricane Sandy, but limited inventory in the West is keeping a lid on the market. All regions are up from a year ago, with double-digit gains in every region but the West,” Yun said.

The PHSI in the Northeast slipped 0.1 percent to 79.2 in October but is 13.3 percent above a year ago. In the Midwest the index jumped 15.6 percent to 104.4 in October and is 20.0 percent above October 2011. Pending home sales in the South rose 5.5 percent to an index of 117.3 in October and are 17.4 percent higher than a year ago. In the West the index declined 1.1 percent in October to 105.7, but is 0.9 percent above October 2011.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

# # #

* The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.

NOTE: Existing-home sales for November will be reported December 20 and the next Pending Home Sales Index will be on December 28; release times are 10:00 a.m. EST.

Matthew Steger at Win Home Inspections

When you call WIN Home Inspection, you get

Matthew Steger, Owner/Inspector, is an ASHI Certified Inspector meets the rigorous requirements to be a provider of “The ASHI Experience”, a professional home inspection that combines the highest technical skills with superior customer service. We strive for 100% customer satisfaction and we measure this via a customer satisfaction survey provided to the client. Matthew has more than 10 years experience inspecting thousands of homes in Lancaster, Dauphin, and Lebanon Counties. He is also an engineer. We take the time to fully and clearly explain any issues with the client.

The American Society of Home Inspectors (ASHI) is North America’s oldest and most respected professional society of home inspectors. ASHI sets the mark for the highest inspection standards among national home inspector organizations and also is the only national home inspector association with an accredited certification program.

 

WIN Home Inspection provides:

1. A thorough & complete home inspection that’s easy to read & understand (w/ digital photos);

2. A Free 90 day limited Home Warranty and a Free Appliance RecallChek;

3. The proper perspective for each home inspected (non-alarmist);

4. Preventive maintenance recommendations to help the buyer better protect their new investment;

5. After-hours ordering and phone support to answer your questions, and;

6. Risk-Free Referral (your liability is lowered since you are covered under our E&O insurance).

 

Give WIN Home Inspection a try and find out why “We See More. Clearly.”

 

Print this email and give it to your next client to save them $40 off a Home Inspection/Termite Inspection Combo! (offer expires 31 December 2012)

 

Call 717-361-9467 or check us out at www.winhomeinspectionelizabethtown.com


Matthew Steger
Owner/Inspector
WIN Home Inspection – “We See More. Clearly.”

Phone: 717-361-9467
Web: www.winhomeinspectionelizabethtown.com
Email: msteger@wini.com
2133 Andrew Avenue
Elizabethtown, PA 17022

Check out our Facebook page at:

www.facebook.com/winhomeinspectionelizabethtown

Copyright 2012 WIN Home Inspection

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5 A-ha! Moments That Get Buyers to Boost Lowball Offers

5 Ways to Dodge Lowball Offers

When the market begins an upturn, like it’s doing now in most places, it’s easy to think that the biggest challenges for buyers are soon to be a thing of the past. Loan guidelines are a bit looser, it’s less likely that a property will decline in value after closing, and rates are still quite low. But experienced agents know that in an ascending market, it can be tough to get appraisal comps to keep pace and in the same vein, it can be even more challenging to get buyers’ mindsets to keep up with the heat of the market.It’s not at all bizarre for a buyer to have to lose one, two or ten properties while the market “educates” them that when supply and demand shift, the lowballs of yesteryear just won’t cut it. Fortunately, there are a few powerful talking points agents can use to help their buyer clients experience less trauma and lose fewer dream homes before they stop lowballing sellers and seriously get into the game.

1.  “A great deal isn’t a great deal if you don’t get the house.”

Many of today’s home buyers are remnants from the recession: people who craved to get the great deals and low prices of the bottom of the market, but were afraid to buy until home prices stopped dropping. While they might have done a mindset reset to understand that home prices have stabilized, making it safe (in their opinion) to buy, many have not adjusted their understanding of the flip side of market dynamics. Today’s market realities of competing with other buyers and having to make an offer at or even over the asking price are simply hard for them to swallow.

2.  “If you offer X vs. Y, you’ll actually only be saving Z%.”

You deal in six or seven figure transactions on a daily basis, so it can be easy to forget that your clients do not. For most of them, this is one of only a handful of occasions in their lifetime where they will be involved in a deal of this size and impact. Combine the fear of making a mistake on their biggest transaction ever with the deep desire to get a great deal and to make a smart decision, then add in the fact that many Americans just aren’t that great with math and you’ll see why it’s easy for buyers to think their lowball offer would reflect a much better deal than it really would.

This is especially the case with buyers making a decision between two offer prices on a higher-priced home where there are multiple offers. On an $850,000 listing where you know there are at least one or two other offers, your buyer might be vacillating between offering $860,000 and $865,000. Obviously, the higher offer positions them the most competitively. So, do the math for them: let them know that the $5,000 difference is a difference of only .6% – in a world where buyers are used to retail discounts of 10, 20, even 30%, many will feel that a .6% discount is not worth losing a home over.  Similarly, you might want to point out the actual mortgage payment difference between two offer prices being considered.

This empowers your buyer client to make a completely informed decision about whether the level of “discount” reflected in their offer price is significant enough to be worth the reduced chances of successfully securing the property.  And they may decide that it is, but if they make that decision with this information, they will feel much more comfortable and less regretful about it, if they aren’t the successful buyer.

3.  “Make your best offer on your first offer, as you can’t count on being given another opportunity to go higher.”

Scenario: there are fifteen confirmed offers coming in on an REO property. You give your first-time buyer client the comps, which suggest the home should sell at $30,000 more than the asking price/offer price – and your client can easily afford to offer the offer price + $30K. Your buyer insists on offering the asking price, and no more, because they want to conserve money to negotiate with the bank.

Here’s your talking point: “I urge you to make your best offer on your first offer. This is a bank-owned property, and the bank is unlikely to go back and forth with all fifteen buyers. As well, if the highest offer is a cash offer or is willing to forego an appraisal contingency, the bank might simply take it outright, with no counters to anyone. When there are this many offers, you simply cannot count on being given an opportunity to negotiate and offer more later.”

This point, and all of the others listed here, have a strong track record of success at actually getting buyers to rethink their offer price and strategy on that go-round. However, even if they don’t take your advice, and they go in low and lose the first home, the fact that you gave them the comps, gave them this advice and warned them what would happen if they went in low – then cheerfully wrote the lowball offer anyway – places you in a position to have stellar credibility on your offer recommendations on the next go-round.

4.  “How would you feel if you heard that the winning offer was at $X?”

This is a reality check, another one that most useful where you believe or know there are multiple offers. And this one is particularly powerful because it helps buyers understand that the value of a home at any moment is based on what a qualified buyer is willing to pay for it – and that every home is not necessarily worth blowing the bank on. If a buyer is trying to decide between two price points, this can help them make a decision about which one to choose – “What if you hear that the winning buyer made the same offer as your high offer? Will you feel regret?  Or will you feel fine with having taken that risk, given the way you feel about the property?”

I pose this question even in heated multiple offer situations where my client is offering what I feel is a competitive price for a listing – this prepares them for the reality that they might not be successful, and helps them stay as emotionally detached as possible and move on to other listings very quickly, when they are not successful.

5.  “Let’s look at the list price: sale price ratio for: my last few sales/my last few buyer clients/the recent comps.”

American home buyers aren’t all great at math, but they are desperately interested in making smart decisions, and they are well aware that the data can help them do it. If you’re struggling to get your buyer client to understand that the market has shifted and they need to be more aggressive with their offer prices, shift from giving advice to offering evidence: show them the full comps data for any or all of the following, with a specific emphasis on the actual list price, the actual sale price and the list: sale price ratio:

  • the last few homes you sold
  • the last few buyers you represented
  • the comparable sales for the listing they want to make an offer on.

If the data reflects that homes are selling at, near or over asking, this can be very influential in helping a buyer wrap their head around the new state of the market. It can even be helpful to give them references to other buyers you’ve represented who struggled with this and had to lose several homes before they started taking your offer price advice.

Ultimately, what to offer is a decision for the buyer to make, in consultation with their head, their hearts, their bank account and their tax and financial advisors. Helping buyers have these a-ha! moments is not about trying to talk people up in price, indiscriminately, to get a higher commission, nor is it about trying to convince people to spend more than they can afford on a home. In fact, some of the conversation a smart agent might need to have with lowballing buyers is around house hunting at a lower price range so they can make more competitive offers without blowing their budget.

Helping buyers manage their own mindsets in this way is meant helping buyers who are house hunting in a price range they can afford stop sabotaging their own offers by making time-wasting offers that have no chance of success. It’s also about helping them minimize the regret and frustration that comes with losing home after home and helping them avoid being priced out of a certain neighborhood or size home by a rise in prices.

Most importantly, this is about doing what they come to us for: helping them successfully secure a home that meets their wants, needs and budgets.

5 Revelations of a First-Time Home Seller

1. Beware the endowment effect.

Behavioral economics researchers have found that humans on the whole tend to overestimate the value of things they own, compared with the value the market will actually bear for those things. This creates a perpetual disconnect between what buyers will pay and what sellers expect to receive.  It’s no different with our homes than it is with our cars and other belongings.
Well, there is one difference – if you overprice your home, it can ultimately cost you a lot of money in terms of:

  •  buyers who never find your home online,
  • buyers who see your home online, but never come to see it, because it’s not as nice as other homes in their price range, and
  • lowball offers that happen when your home has lagged on the market longer than it would have had it been correctly priced.


That’s why we rely so heavily on the comparable sales data, which reflects the actual prices actual buyers recently paid for actual homes in the neighborhood.

When I was selling my own first home, not only did I rely on the data, I also had friends and colleagues who were real estate agents come in and check it out to give me their feedback on pricing. And because I was selling it myself, I was also able to glean the feedback from prospective buyers themselves as to what they thought about the home and its price.  This sort of feedback is available to every home seller, in the form of CMAs and home price estimates that prospective listing agents will create for you, as well as the feedback your agent can collect from buyer’s brokers.

The challenge is to know the bias exists, to understand how critical it is to overcome it and then to commit wholeheartedly to overcoming it by paying attention to the data, listening to feedback and course-correcting as necessary.


2.    You only need one offer.

 When I first put my first home on the market, I acted as cool as a cucumber, but was an emotional wreck on the inside.  The days of crazy multiple offers were gone, but homes were still selling at a pretty brisk pace. A week went by, then another, and it became pretty clear that despite my great pricing and brilliant staging (!), I was likely not going to be inundated with a flood of offers anytime soon. Right around the fourth week on the market, though, I got a call from an agent who had shown the home independently – and they wanted to make an offer.

When your neighbors are getting dozens of offers, or when it seems like every town in the country is riddled with multiple offer scenarios and yours is not – here’s a helpful reality check: with every home sale transaction, there is ultimately only one buyer and one seller, in the final analysis. You don’t need loads of offers or floods of buyers. You only need one.
Your job, as a seller, is to work with your agent to:
(a) understand everything you can about who your home’s eventual buyer is likely to be, and
(b) price and market it in a way that maximizes the chance that one buyer will actually see it and realize that it fits their wish list.


3. Don’t just market, message.

Marketing is about preparing your property beautifully and describing it to its best advantage online and off, making sure there are abundant, good photos of the home on all the websites frequented by buyers in your area, that there are flyers in the drive-by box and that all the buyer’s brokers in your area are exposed to the property.  Marketing is about holding Open Houses, if that’s the norm in your neck of the woods.

“Messaging,” on the other hand, is about making sure that these materials and your home’s online presence are flush with content – messages – about why your home is a great choice for the types of buyers who will likely be looking for it. For example, messaging might involve:

  • Detailing with some precision the convenient commutes optimized by your home’s ease of access to 3 freeways within a mile, by the fact that X subway station is at the end of the block, or by the fact that the place is located within 3 miles of the local university and 5 other major employers in your area.
  • Describing floor plan or layout advantages that might be rare in your area and would be attractive to an older buyer or an extended family, like the fact that your home has a level-in entry (no stairs to the front door) if that’s unusual in your area, or that it has a complete bedroom and bathroom suite downstairs (which someone who wants to move an aging parent in might appreciate).
  • Highlighting any major remodeling work that has been done, which is a selling point to a wide variety of buyers who strongly prefer to move right in.


Work with your agent as they write up the listing description for your home, and focus on saving characters by eliminating words like “charming” and “cozy” in exchange for creating more meaningful messages of this sort.

In the end, my first home was purchased by an adult brother-sister pair, who were attracted to the water views, the brand-new kitchen, the uber-convenient commute to very different parts of the Bay and – the deal-maker: the fact that each could have their own suite on their own floor: all of which was “messaged” in the listing and marketing materials.


4. You are not your house.  

Selling your home without going entirely nuts simply requires you to grow thicker skin. The endowment effect makes it likely that you’ll feel like you’re getting less than your home is worth, your agent and/or stager will likely come through and pull out half of the belongings you think are amazing and beautiful (yes – including your sequined butterfly mural) and you might even get incoming feedback from buyers and buyer’s brokers that is somewhat less than complimentary.

All this can feel like you’re taking a beating right where it really hurts, on the subject of the home that’s been good enough for you and yours for all this time – the home you’ve possibly invested much of your time, personal taste and money into.

So, walk into the home selling process with a thick skin – an unkind comment about your home is not a personal attack on you, no matter how much it might feel that way. Understand that every critique or dig you hear about your home is a step on the path to getting it sold so you can move forward with your life. In fact, some might even be made as negotiating ploys – and have very little to do with your home at all!

Again, this process of selling a home is largely a process of finding the buyer for whom your home is a right fit; you might find it helpful to think of those who dislike it as just getting you one prospective buyer closer to the one for whom it will be the perfect fit.

If it’s at all possible to show it vacant or to have it shown while you and your family are away from the home, that is ideal. Not only is it ideal for you and your emotions, it’s ideal for the buyers as well. Serious buyers like to be able to walk through a property and discuss it, visualize their life there, and start sorting through how they would make it their own, with only their agent and family present – without having to worry about how you’ll take their comments.
I had moved out of my first home into my next one before I put that place on the market, which also made it easier to do some of the property preparation projects – including a kitchen overhaul – before listing it.  If you can’t or don’t want to do that, though, at the very least allow your agent to put a lockbox on the property and offer a simple way for buyer’s brokers to let you know when they plan to show the property.

At Open Houses for my first home, I heard buyers say it was too small, too fragmented a floor plan, lacked the deck it should have to take advantage of the views, lacked a backyard, was too green – and the list goes on.  And those things were probably all true, from their individual perspectives. Turned out, some of the things they disliked were the very things that attracted the family that eventually bought the home.


5. Only worry about the levers you can pull.

The three major levers that you, as a home seller, have the most power to pull are simple: price, preparation and marketing.  You control the list price, you control how your home is primped and staged for sale, and you control the agent who is responsible for marketing and messaging your home to prospective buyers.  So, focus your efforts on doing those three things wisely.  Anything else has the potential to create panic and fear – and panic and fear are completely counterproductive to your efforts to make smart, logical decisions.

During the sale of my first home, while I was waiting for an offer, my mind went to some very dark places. I started to doubt everything:  maybe the location was too off-the-grid, maybe the square footage wasn’t as ample as it had seemed to me, maybe the lack of a deck was really a deal-breaker, maybe I had wasted thousands of dollars on that kitchen remodel – maybe the whole town was just “out.”

As my mind spiraled in that direction, I had to force myself to get a grip with the knowledge that even if any of these absurdities were true, there was not a single thing I could do to change any of them. I couldn’t change the market. I couldn’t make buyers appear out of the woodwork. All I could do was price the place competitively, prepare it beautifully, market it thoroughly and place the right messages about it in the right places to the right buyers.  So, that’s what I did.  And you know what? It worked.

Agents and past/present sellers:  What revelations have you had, during the selling process, that might be helpful to other sellers?

 

check us out at http://LancasterPARealtor.com

Lease Purchase and Rent to Own

Lease Purchase

There are many people looking for an alternative to buying their next home. This could be lease purchase or rent to own. We are going to talk about lease purchase today.

When looking in this direction one needs to under stand that it is on the buyer to make the best compelling case and have a Realtor that is willing to work very hard for them that may not get his or her full pay check for doing more work. Most clients just don’t understand that unless they are paying the Realtor out of their pocket that the Agent is not going to get paid from the seller until buyer goes to closing. This could be 1, 2 or even 3 years later. If you go to work this week you’re looking for a pay check at the end of the week. This is why most Realtor’s don’t do Lease Purchase or Rent to own or put very little wait on that file if they do take it on.

Things to remember with the Lease to Purchase or Rent to own.

1.) You have to have one or the other money or credit. – Sellers are looking to sell the home and move on at some point. Why would they want to take the risk of allowing you to move in and have to deal with possible damages, eviction, and or paying for the mortgage and taxes if you don’t follow through.

A.) If you bring enough money to the table to cover your closing cost and down payment you look like a better risk to the seller.

B.) If you have little cash but have a great credit score and it’s just a matter of time till you get the cash for closing and down payment you’re a better risk to the Seller.

2.) When you are looking to do a Lease Purchase you have to under stand that the seller is taking as much if not more risk than the Buyer. Normally you see small self employee people doing Lease Purchases more than any one else. Why you ask well they have an account that told them they made 80,000 dollars for the year but if they write off xyz they only have to pay taxes on $15,000 dollars. This is great until you go to a bank to get a loan to by a home. The bank only looks at how much money you made. How do they decide that, they look at how much you paid in on taxes. They see that you make $80,000 a year but you only made $15,000 after all your debt were paid so they go by the $15,000 dollar number. This is why most of the small self-employed people do Lease Purchases. They have great credit with great income but they are not claiming it. So they need to claim the income for 2 years to use it for the bank to give them a loan. Thus they claim the income they need to show for buying the home on this years taxes and if they file quarterlies then we can pro rat their taxes on the end of the second Quarter of next year. Thus they will show qualifying income in less than a year and a half and they can close the loan. This is a good risk for the seller.

3.) On the other hand we have many people now days with less than perfect credit looking to do a lease purchase to get into their first home. We have help many of them do this. But they have the road to haul. It can take 1 month to a life time to fix credit issues. How we do this is we look at the credit with our bank. The bank then tells us if you fix xyz we can get you a loan in 6 months 2 yrs or what ever the case may be. So now we know what you have to get fixed and if you can fix it and move on. Once you decide that you can fix and repair your credit and we can do it in about 2yrs that is when we start looking at homes for sale.

4.) Let’s go with an example now on what we can expect for a Lease Purchase and if this is the right move for you. We have talked with the bank and they tell us when you fixed the xyz they will be able to lend you up to 100,000 dollars for a home. This means then there is no use in looking for 120,000 dollar home the bank will not lend you the money to buy the home since it is too high. Thus you would lose your deposit money since you can not buy the home.

A.) We find a home for 100,000 that works for you family and their needs. It may not be the perfect home but it works. Most people don’t buy their perfect home the first time that is why the average home owner buys and sells 5 homes in their life time. They have to build up to there wants. Every ones wants out way there needs. So now we write and offer on the home for a lease purchase. We ask the seller to give us 3 years to get our credit in order and in exchange we are putting down x amount of money and non-refundable deposit. This means that if for any reason you don’t buy the home or live by the contract you lose the money no questions asked. The normal Deposit for a lease purchase is 10%. Why well the Realtor’s will get paid half of there pay check up front and half at the end in most cases this will take 3,000 – 4,000 dollars of that money from the seller and the Brokers fee. Now the seller is setting with 6-7,000 dollars in their pocket for the down payment on their next home or for what ever. If the seller agrees we can ask that part of the monthly payment to them over the 3yrs be credit back as deposit money just like principal on a loan is credit to paying off the loan. This could build you 0 – 6,000 dollars more money for closing until your credit is fixed. Thus you will have plenty of money to close on the home with when you buy it out right.

No Down Payment Homes for Sale options

Yes that’s right you can still buy a home with no down payment. You can use financing to pay 100% of the purchase price of the home if you have little cash for closing.

Here is how you do it.

Any where in the USA look around find a home that you like then plug it into this website. http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do When the site loads click on single family housing under the property eligibility tab on the right side of the screen. It will tell you if your choose of home is eligible for 100% financing.

Does this mean you need no money at all?

No you still need money you need to pay for your closing cost. Some banks charge an upfront loan fee. Some banks use this to pay for nothing others use it to pay for your appraisal. Some charge nothing upfront but hit you on the back end. That is another topic for another blog. You will have your fee for home inspection. If  you pre-pay this fee it can not be add into closing cost.

Can you come to the table with very little money yes. How with this type of loan you can get up to 6% seller assist at this point. So if your looking to buy a $100,000 dollar home in Pennsylvania let’s say and you have a 1% transfer tax and your pre-paying taxes and depending on the time of the year you close you could be paying a large about the pre-paid taxes back to the seller if he or she just paid the taxes for the next year. You could be looking at 7 – 8,000.00 dollars in closing cost if you can get up to $6,000 from the seller then you still would have to come to the table with up to 2,000 dollars. That is much better then coming to the table with $8,000 dollars for closing cost and 3.5% down money with an FHA loan. now your looking at up to $11,500 dollars in cash from borrow at the table if you go with the FHA route.

Now with the FHA at this point you can still get up to 6% sellers assist from the seller to off set some of the closing cost. So don’t fret there are no down payment options out there still. Just remember that you may still have closing cost to pay if the price of the home is on the lower end of the price range.

Penn Manor School District

Why is it getting harder to find a good home in Penn Manor School District. Well homes for sale in Penn Manor School District this past Quarter has been the most search. People have been looking to buy a home in the Penn Manor School District more then any other School District in Lancaster County. This is based off our website states. School Taxes are lower in Penn Manor School District then in some of the other surrounding school districts in the are. Penn Manor School District is in Manor Township Lancaster, PA. There are a lot of first time home buyers that buy in this school district. You have some nice homes at or below the average home cost in the local area. Georgetown Hills is a nice area where a lot of first time home buyers pick up there first home. They are semi detached homes ranging from 1,050sq foot to about 1,400 sq foot with additions people have done to them over the years. The average home price is about $120,000. This is a good range for first time home buyers. Now you can still find some home from time to time in Georgetown Hills from $89,900 through $179,000 based on condition and additions. The base home at the 120’s is a 3 bedroom 1.5 bath home.

Lot’s of times when people then look to move up just out side of  Georgetown Hills is a development that has some small to medium-sized single family homes. These range from 150’s to 250’s based on the size and condition of the home. People like the area due to the ability to move up to a  larger home over the years with out having to change much for there children. All of the homes discussed are all in walking distance of year other. There children don’t have to make new friend or change schools over the years.

The next great this about this area in Penn Manor is there is a large public park Charlestown Park. There is a back entrance to the park from the Georgetown hills developments so children don’t have to walk out onto the main road and walk down to the park. This give grown ups a good place to jog and be safe with out traffic and there is plenty of black top paths that you can teach the kids how to ride that first bike.

Contact us today to see what is available in Penn Manor School District home for sale in Lancaster.

Homes for sale in Lancaster PA

Find your next home with us. Also don’t forget you may qualify for cash back when buying or selling your next home. You could get up to $5,050 cash back and up to $2,500 of your closing cost paid for when using our affiliate programs. If your buying or selling in Lancaster County you could get an extra $125.00 discount on your closing cost if your a Veteran and you put your DD 214 on public record at the Lancaster County Office of the Recorder of Deeds and you use Guardian Transfer for your closing on the home. This could be buying or selling.

We have made it easy to find your next home with a few simple links.

 

Real Estate by School DistrictOpen HousesHomes for Sale by BoroHomes for Sale by Township


Cocalico




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Conestoga Valley




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other  

Cocalico




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other


Adamstown




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Christiana



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Bart




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Clay




Colerain




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Conoy




Drumore




Earl




East Cocalico




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East Drumore




East Earl




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East Lampeter




Eden




Elizabeth




Ephrata


Fulton




Lancaster




Leacock




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Manheim




Manor




Martic




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Paradise




Penn




Pequea




Rapho




Sadsburgy




Salisbury




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Upper Leacock




Warwick




West Cocalico


West Donegal




West Earl




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West Lampeter

6 Unexpected Advantages of Having the Right Agent

1.  Insider knowledge.  In a recent survey, home buyers said one of the biggest benefits they got from their agent was an understanding of how the buying process would unfold. When it comes to something as infrequent, complex and high stakes as buying or selling a home, having an insider advisor who is dedicated to your success can alleviate your anxieties and otherwise put you in a power position, when it comes to making smart decisions and moves.

2.  Lifestyle design advice.  I recently spoke with Tim Ferriss, author of The Four Hour Workweek, The Four Hour Body and his brand-new book, The Four Hour Chef: The Simple Path to Cooking Like a Pro, Learning Anything and Living the Good Life. I asked Tim flat out what would be in his dream kitchen, if he were in the market for a home and he answered without hesitation: a six-burner Viking range.

And that was it. No Carrera marble. No European soft-close drawers. To a world class cook, what really matters is the stove. In fact, he explained, he was briefed on the importance of the range, and only the range, to a great chef’s kitchen by chef extraordinaire Alice Waters.

The right agent can and often does precisely what Alice Waters did for Tim Ferriss: they can course correct you around what home features, transaction terms and even timing nuances will help further the lifestyle you are trying to create – and which won’t – based on their past experiences working with buyers and sellers in similar situations.

You might think that you are desperate to live in a particular neighborhood, but your agent can help you understand the realities of the commute in a way you didn’t before. You might want to wait to list your home until the summertime, but your agent can point out the wisdom of getting started prepping the place during your holiday vacation time so that you’ll be poised to take advantage of pent-up cold weather demand at the first thaw. Of course, for your agent to be able to do this, you have to give them as much information as possible about the lifestyle you aim to create.

3.  Save you from yourself.  As we discussed last week, there are many instances in which even the smartest buyers and sellers are their own worst enemies, committing unintentional acts of self-sabotage like overpricing, lowballing, overspending and the like.  If you equip your agent with a deep understanding of the overall life picture, financial picture and then home picture you’re trying to create with your buy or sale (or both), they can help point out when you’re about to take an action that will be inconsistent with or counterproductive to what you say is important to you.

Ultimately, it’ll be your decision whether to take a given red flag-waving step or not, but your agent can be a very valuable coach to gently point out when you might be getting in your own way.

4.  Stop you from buying the wrong house.  A surprisingly high number of home buyers report that their agent actually talked them out of buying the wrong house for them. Whether because the inspection results come back and are deeply worrisome, the sellers simply want more money than you can healthily afford or experience has taught them that a buyer with your priorities will not be happy with a house like that, the majority of agents would rather sell you the *right* home for your family next month than sell you the wrong one right now.

5.  Devise an pre-buying or -selling action plan. What a tangled web we weave, when first we fail to properly plan and prep to buy or sell our home. Okay, so it doesn’t have quite the ring as the original saying, but you get the gist nonetheless. Agents love nothing more than to get a call way in advance of when you think you’ll be ready to make your move. Calling them in advance allows them to sit down with you in an unhurried, unpressured environment to map out an action plan that sets you (and them) up for successfully achieving whatever your real estate goal is.

And that, in turn, can help you prevent the overwhelm, procrastination and eventual last minute scrambling and freak-outs that arise when your ducks are not all in a row.

Things an agent can help you plan out, significantly in advance of your target move-in or move-out date, include, among many others:

  • Referrals to mortgage brokers, financial planners, contractors, stagers and relationship counselors (just kidding on that last one!).
  • Setting up action steps you need to take and helping you understand when you need to take them to meet your target time frames.
  • Getting clear on the relative costs (and financial prep it will take) to buy in any of several neighborhoods, cities and even property types that you are considering.

6.  Illuminate options you weren’t aware were even possible. There’s no shame in not knowing everything there is to know about real estate – even very active real estate consumers will only buy or sell 5, maybe 10 homes in a lifetime. But your agent does this all day, every day, for their entire career. So off the top of their head, they might be able surface options in terms of

  • properties
  • neighborhoods
  • pricing plans
  • contract terms
  • marketing tools
  • negotiation strategies
  • and even post-closing protections and service providers

that you would never have known existed, if not for them.

The theme here is this: don’t limit your agent and the help they can provide you by what you *think* their job is, or what you think they do or don’t know.  Make sure that when you’re getting referrals or meeting agents online and in person early on in your agent selection process, you pay attention to their references and marketing plans, but also to how well your personalities mesh.

Ideally, you’ll find and work with an agent in whom you can confide everything from your big picture life vision to your truly confidential financial details.

Bottom line: The more you feel comfortable sharing with your agent, the more likely you are to be pleasantly surprised with the ways they can help you.

Buyers, Sellers and Owners:  Were you pleasantly surprised by advice or strategies your agent gave you? How so?

7 Real Estate Risks

Risk #1:  The Risk of Foreclosure. The risk of losing a home has only recently moved to the front of our collective national consciousness. Foreclosure was once a very, very rare event, seen as an unlikely worst-case scenario. But it became a vivid nightmare come true for an all-time high number of home owners during the recession. The risk and fear of foreclosure is largely due to this increase in foreclosure rate over the past few years, and to the vivid, catastrophic nature of the event. Also, almost everyone knows someone who either lost a home or had serious mortgage distress, so it seems like a very common occurrence.

When we take a look at the facts behind this risk, we realize that the risk of foreclosure appears to be much higher than it truly is. There are roughly 76 million owner-occupied homes in the U.S., according to the Census Bureau. Earlier this year, real estate data firm CoreLogic revealed that there had been 3.4 million foreclosures since 2008. That would mean only about  6 percent of homes in America had been through a foreclosure – and this, through the very worst recession of most of our lives.

The more probable risk is the risk of ending up underwater, which more than 25 percent of American homes were at some point during this past 5 years.

The fact that home values rise and fall cyclically is not a risk or a probability – it’s a fact of the real estate market, and one that you can’t do anything about. Your aim should be to manage and minimize the risk of serious mortgage distress (i.e., struggling to make the payment) or foreclosure.  And you have the power to manage these risks by:

  • Making smart mortgage choices. Buying at a price well within what you can afford, selecting a mortgage that your household finances can sustain over time, and not overleveraging by borrowing cash against your home equity for things like cars, clothes or ready cash.
  • Making smart financial moves over time, including building a cash savings cushion you can turn to if a job loss or disability interrupts your income.
  • Buying a home in as desirable a location as you can afford – and in an area with strong prospects for economic and population growth.
  • Making small, extra payments to bring down the principal balance on your loan, if and when you can afford to.


Risk #2: The Risk of Overextending Yourself.  This is a very real risk – more real, even than the risk of actually losing a home. Home buyers can overextend themselves when they take loans that give them falsely low upfront payments;. This was common in the subprime era that many believe led to the recession, but is less likely with today’s tighter lending guidelines and narrow loan programs.

That said, it’s still possible to overextend yourself by taking on more of a mortgage than you can truly afford taking into consideration things that your lender doesn’t include in their estimation of you can affordable, like:

  • what you need to put aside for savings and investments
  • childcare and college or private school tuition
  • the costs of fixing, maintaining or upgrading your home.


There’s only one way to 100 percent manage your risk of overextending yourself when you buy a home, and throughout the time you own it: run your own financials! No matter how much you hate math or hate the thought of restricting your spending, it is irresponsible to buy a home (or be a home owner, for that matter), without regularly running your own monthly spending budget or plan or audit or program or whatever you need to call it to encourage yourself to sit down and do it!  You have got to know with specificity what comes in and goes out every month in order to avoid getting in over your head.

Doing this math – on paper, not just in your head – is critical with almost everything you do as a homeowner, financially speaking.  When you decide to remodel, buy things for your home, upgrade your bathroom, or refinance the place, create and honor the habit of making a written budget – even a super simple one -and doing the actual math to get a clear picture of what it will cost and whether you can afford that.

Risk #3: The Risks of Overpaying and/or Leaving Money on the Table.  The night a buyer and seller agree upon a purchase price, one thing happens in both of their households, almost 100 percent of the time. The buyer wonders and worries that they might have paid too much.  “Would the seller have taken less?” they ask themselves.  And the seller fixates on the reverse, worrying whether they could have gotten more cash out of the buyer. “Would they have paid more?” the seller wonders (and often, asks heir agent).

There is one essential truth about home purchase prices that applies to both buyers and sellers:  you can never know, with 100 percent certainty, whether the other side would have paid more or taken less. The answer to that question exists only in a hypothetical world in which you didn’t offer or take the price you did, in fact, offer or take. So, it simply makes zero sense to fixate on the issue. It’s a drain of time, energy and enthusiasm for an agreement that made enough sense for you to ink, so your best bet is to stop worrying about it.

That said, there are smart strategies buyers and sellers can and should take to minimize the risk of making poor decisions as to purchase price.  Buyers should work with their agents to focus on the recent sales prices of comparable homes as a primary driver, along with their own personal budgets, of the price they offer for any given home. In cases of multiple offers, buyers should make their best offer knowing that you have to offer more than everyone else to “win” the home, by definition . And you should decide, in advance, not to worry or wonder whether a lower price would possibly have worked, if you do turn out to be the victorious buyer.

To avoid leaving money on the table or missing the ‘right’ buyers for their homes, sellers must prepare their homes to the very best of their ability (with advance inspections, repairs and staging, as their agent recommends). Then, price them in accordance with the comparables and their motivation level. The aim should be to price it low enough that the home looks like a compelling value to online house hunters, compared to the competition, but not so low that you  miss out on the buyers who are seeking homes like yours – and also not so low that you would be upset about accepting an offer at the full asking price.

Risk #4: The Risk of Buying a Lemon.  Ever see the Tom Hanks film The Money Pit?  It’s a vivid rendering of every buyer’s fear: that the home of their dreams will turn out to be a nightmare, requiring years of surprise, costly repairs and causing many a daily crisis when this pipe explodes or that roof caves in. Every home has flaws – even brand new ones. But this is a risk that is often overrated in my experience, especially by first-time home owners who have simply not had to maintain a property before.

The reality is that this risk is relatively simple to size up for a given property, and to manage, via inspections and home warranty plans. Talk with your agent about which inspections to order for a given property, but it’s extremely common to obtain at least pest, property and roof inspections for a single family home before buying it. Standard practices for your area, the specific features of a given property and the findings of the other inspectors might suggest that it’s prudent for you to obtain any number of additional inspections or repair bids, ranging from a sewer line inspection, to the inspections of a structural engineer, general contractor, electrician or chimney specialist. Best practice is for you to personally attend as many of these inspections as possible, and read the written reports – as well as asking follow-up questions until you feel comfortable that you understand and are okay with the home’s condition.

The other best practice here is to obtain a home warranty plan at close of escrow to cover the unavoidable, eventual breakdowns of things like furnaces and water heaters. Your agent will help you secure a policy before close of escrow, but it’s your job to keep the home warranty in place every year when it expires.

Risk #5: The Risk of Losing Your Deposit.  In most home buying contracts, there is a window of time after the contract is signed in which the buyer has contingencies: the right to bail out of the deal for any number of negotiable reasons, like if the loan falls through or the inspections reveal insurmountable concerns.  While a buyer may have made a deposit at the very beginning of the contract, it is standard in many areas that the deposit is increased (meaning the buyer puts in more money) and rendered non-refundable at the end of the contingency period.  After that point, if the buyer backs out of the deal, many contracts give the seller the right to retain the deposit money.

The specifics of contingencies and deposit money refundability vary, sometimes widely, state-by-state and contract-by-contract. For example, in the standard real estate purchase contract forms used in California and many other states, the buyer must expressly submit a written form that exercises their contingencies or removes them, telling the seller they are moving forward – the deposit cannot be retained by the sellers unless the buyer first removes their contingencies in writing, then backs out anyway.

In other areas, there is an objection period, so that if the buyer says or does nothing (i.e., fails to “object” to the transaction proceeding), the deposit automatically becomes non-refundable when the objection period lapses.  Almost all bank contracts for the purchase of foreclosed homes follow this passive objection period arrangement, rather than requiring the buyer to actively remove their contingencies for the deposit to be rendered non-refundable.

No matter what the specifics of your contract’s deposit refundability guidelines are, there is almost never a good reason for you to forfeit your earnest money deposit. The way to manage this risk is to sit down with your agent before you write your offer and discuss deposit refund, contingency and objection period guidelines. Make sure you ask every question you have and fully understand the guidelines and timelines, as you move through the phases of offer; counter-offer(s), if any; and contract acceptance.

Then, when you do get into contract, work with your agent to get a clear understanding of when your contingencies and/or objection periods expire, and put these dates on your own calendar. Throughout the transaction, operate as though time is of the essence when it comes to obtaining inspections, responding to your loan officer’s documentation requests and the like, because it truly is of the essence.  Finally, make sure you are vigilant about requesting an extension of time for your contingency or objection period(s) if needed.

Your agent will undoubtedly help keep you reminded of what dates are coming up, but you are ultimately responsible for ensuring that you collect the information you need in the time you have to gather it and make a final decision on a given property without forfeiting your deposit funds.

Risk #6: The Risk of Getting a “Bad” Loan. Because the world of mortgage and finance is an area that causes many people fear and trepidation, the idea of getting a so-called ‘bad’ loan strikes fear into the heart of many a home buyer and refi-er.  What makes for a bad loan is different for different people. Depending on where your head is at, it could mean anything from a loan with a higher interest rate or fees than you could have gotten elsewhere to a tricky loan program that has big, bad surprises in years to come, à la balloon payments or scary payment adjustments.

The risk of getting a bad loan was much greater during the subprime era, when there were loads of low-down payment, adjustable loans with big prepayment penalties and skyrocketing interest-only payments.  These loans are largely extinct right now (though they might not be forever).  Fortunately, you have much more control than you might think over whether you wind up with a ‘bad’ loan.

Exercise that control by:

  • Working with a mortgage loan officer that your friends, family or colleagues refer you to – and rave about – rather than simply walking into some branch of some bank off the street or working with the shiniest, slickest someone who promises they can “trick” the banks into giving you a loan.
  • If you have a bank you like or love, consider obtaining a loan quote from them and one from your referred mortgage loan officer, then ask both loan officers to help you compare them.
  • Taking the most plain vanilla home loan product you can. It’s very difficult to be surprised with a basic 30-year fixed-rate mortgage, where the payment stays the same until it’s paid off. The more complexities you add in, the more potential for surprise you open yourself up to.
  • Reading and understanding every line of your good faith estimate – and aggressively asking every question you have in your head until you completely understand it.  Do the same with your loan documents at closing. In fact, I recommend asking your loan officer to make sure you can review your loan documents at least a day or so in advance of your appointment to sign them, so you two can walk through them together in an unhurried manner before you’re sitting at the closing table.
  • Understand that property taxes and insurance costs do vary over time. Talk with your real estate and mortgage pros to try to wrap your head around the future trajectories of these costs. It’s not overkill to work with a financial planner as you move into the home owner stage of your financial life.


Risk #7: The Risk of Being Duped.  Related to the fear of buying a lemon of a home, many a home buyer, seller and mortgage borrower has asked me some version of this question over the years: “How do I know they’re not lying to me?”  And for the word “they,” you can pretty much fill in the blank with “my agent,” “the other agent,” “the seller,” “the buyer,” “the mortgage broker,” “the inspector/contractor” – you name it.  There are several ways to assess and approach the risk of being duped in the course of a real estate transaction, no matter who you fear might be doing the duping.

First, recognize that most people are more likely to be honest than they are to lie, as a general rule. Does this mean no one has ever lied to a buyer or a borrower?  Of course not – but it does mean that the risk of you being lied to is actually far lower than the risks involved with failing to fully read the disclosures a seller or lender has provided, in my experience.  This is especially true when it comes to professionals who have their credibility and livelihoods on the line, and sellers, most of whom would rather over-disclose than be sued later.

Second, work with professionals who have been referred to you and vouched for by people you know: your friends, relatives, colleagues, or the other real estate professionals you already have and trust.

And finally, whenever possible, get a backup source of information – don’t rely 100% on one individual’s word, if you don’t have to. Get inspections to give you a fuller picture of the home’s condition, beyond what the seller says.  Pull the home’s file with the city building department to learn more about how it’s been modified over time, if your contract and the real estate law of your area allows. Talk to the neighbors about their experience of the neighborhood – they’re often more than happy to share. Your agent can tell you what is and isn’t allowed under your contract.

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