Series: 20 Best-Kept Real Estate Secrets, Part IV

Now that the summer has wound down, it's time to get back to the grindstone and finish off our series with the final five tips for buyers.  Get those pencils up & ready!

6.  Avoid Sleeper Costs
Owning a home comes with a price, and most buyers are unaware of the financial impact a home can have on a budget.  Besides the obvious fix-it issues and DIY projects, things outside of your home can add up, also.  When purchasing, ask your Realtor if the area you are looking in is due for a tax increase.  Are there any special tax assessments you should be aware of?  One of the best exercises I suggest for renters is to live with your "future amount" even while renting.  For instance, let's say your rent is $1,100 per month, but the homes you are looking to purchase sit in the range of a $1,600 monthly mortgage payment - save the extra $500 per month and see how well you fare.  You might even - gasp - save that extra $500 per month for a downpayment!

7.  Don't Get Emotionally Attached
To all you right-brain thinkers out there, this one's a doozy.  As a Realtor, you see it all the time - a young couple walks into a beautifully staged home.  One loves it ("the Lover"), one hesitates ("the Logic").  Enter the guilt trip from the Lover as to why the Logic needs to even think about it, start an argument, make the Realtor uncomfortable, and everybody walks out mad.  Sound too familiar?  Unfortunately for the Lover, buying on emotions will break your heart in the end.  All buyers need to understand that there is a HUGE difference between emotions and instincts - you're buying a home, not dating it.  If you're going to be attracted to anything, get attracted to the logistics of the home...not the pretty outfit it had on the first night you met.

8.  Let's Get Physical
And, no, I don't mean the Olivia Newton-John song.  I mean give your prospective home a physical.  ALWAYS hire an inspector to go beyond skin deep - they are your "i" dotter and your "t" crosser.  All home inspectors now must be licensed in Illinois, so take advantage of that - they will be the ones that can tell you whether the homeowner did a band-aid job or truly fixed an issue.  It generally costs less than $200, but can be worth thousands of headaches solved.

9.  Research Before Bidding
Your Realtor should know there is a secret science to bidding.  There are two major things your opening bid should be based on: 1) what you can afford, and 2) what you truly believe the property is worth.  Is it an aggressive price?  Is your offer within 10% of what other homes sold for in that neighborhood?  Your bidding should depend on what the market is doing, and your Realtor should be the expert.  Here's an added tip - every seller respects a bid that's an oddball number (like $359,367) and takes it more serious...it shows you've done your homework.

10.  Stalk Your Neighbors...
...in a good way.  When seeing a home during an Open House, everything is perfect.  But that is during a quiet weekend.  Drive through the neighborhood during the week to get a real feel for it.  In my opinion, you should see a prospective home at least once in the morning, around noon, and at night to really learn the neighborhood.  Look for amenities - does the area have sufficient street lights?  If you have a young family, is there school bus stopping nearby?  What about public transportation?  Even if you don't have a family, buying a home in the right school district could affect your value up to 20%.  It's definitely something worth considering.

Series: 20 Best-Kept Real Estate Secrets - Part III

Welcome back to the last session we have for Sellers this summer.  No matter what the economy is doing, these tips are useful in any market.

6.  Don't Over-Upgrade
Before you start knocking down walls in a "what-started-as-a-do-it-yourself-just-turned-into-my-nightmare" sort of way, double think it.  Big Mistake.  When it comes to a home, minor improvements are more important in the end than the major ones.  Simple fixes are re-painting walls and getting inexpensive new curtains.  Always ask yourself, "What things ar getting the most use in this home?"  Handles, closet tracks, leaky faucets...fix those first.  When buyers see little problems like those, it makes them think more is wrong.  Besides, you can spend $40,000 on a new kitchen that won't fit that perfect buyer's lifestyle, anyway - so just make sure there is no water on the floor.  Leave the dreaming to them.

7.  Take the "Home" Out of Your House
As much as everybody rants and raves about your bubbly personality, take it out of your home.  The more personalized your home is, the less buyers can see themselves in it.  Your pride in your home could cost you in the long run.  Get rid of about 1/3 or your things, showcase your floor plan and maximize space.  Also, consider using a home stager to set it up in the best possible light - it could be the difference between something they "may" like and something they "have to live in."

8.  Kitchen First
Remodeling your kitchen will, on average, get you about an 85% return on your investment.  Even minor fixes can make a so-so kitchen shine - paint the walls and change the hardware on the cabinets.  If you can't afford to replace all of the appliances, try to put in at least one stainless steel appliance.  That way, you'll have buyers saying, "At least we won't have to buy a "fill-in-the-blank" instead of "We'd have to re-do the entire kitchen."  Lastly, save the bright blue and yellow kitchens for the Greek Isles - keep yours neutral.  As nice as it may look to the eye, the buyer's mind is figuring out exactly how much it will cost to fix it.

9.  Always Be Ready To Show
Here is a reality that not many Realtors will tell you as a seller:  You are now on buyer schedules.  Unfortunately in this day and age, that might mean you will have a showing at 7:00 or 8:00 in the evening.  That also means you could have a showing at 7:00 or 8:00 in the morning, which means the home needs to be in tip-top shape at all times.  On average for today's market, it typically takes between 8-9 showings for every bid you get.  So DVR that "CSI: Miami" and get out of that home!  Buyers can't see their new lives in your home with you on the couch.

10.  First Impressions are the Only Impression
Though your new soaker tub/whirlpool in the master bath is a great new feature, buyers are judging the exterior of your home before they even walk through the door.  The average buyer takes a measly 8 seconds to decide on buying your home...so you know what that means?  Your entranceway could be one of the most important "humps" to push them over.  Fix it up, clear the clutter, and make it inviting.  After all, no buyer will remember your fancy new tub if they have to step over muddy shoes, backpacks, and coats.

That's it for the Selling Side!  I hope everybody learned a little (if not a lot)...and keep on improving!

Series: 20 Best-Kept Real Estate Secrets - Part II

Welcome back to the Series of the Summer!  Let's take a look at the buyers today, shall we?

BUYING SIDE
1.  Keep Your Money Where It Is
Congrats on the new BMW that will match perfectly in the driveway of that home you have an offer on - unfortunately, the car might be the only place you have to live in once the mortgage underwriters see that on your credit.  Loan Status: DENIED.  In the 3-6 months leading up to the purchase of a home (no matter what the price is), don't change anything in your financial DNA.  Lenders want to see a complete and risk-free paper trail, so keep your assets where they are.  The age of technology we live in doesn't leave much room for error on your end, so don't try to paint that "false picture" by randomly shuffling your birthday cash advances you convinced your grandma to send you into your "New Home" account.  It won't get you very far.

2.  Get Pre-Approved
Chances are, any Realtor that is worth your time will make sure you have a pre-approval letter from a lender.  This is done for a few reasons:  1) to make sure you aren't falling in love with a home that is out of your price range, and 2) to make sure you aren't using the Realtor as a tour guide.  It's also good to remember the difference between a "Pre-Qualification" and a "Pre-Approval."  A Pre-Qual only requires basic information, and generally does as much good as spinning a "Wheel of Fortune" to see what they will give you - unreliable.  A Pre-Approval requires an actual mortgage application and financial background, giving the lender a pretty clear picture of what you're capable of.  So go ahead - flex those financial muscles and show 'em what you got.

3.  Draw The Line
Save the awkwardness at the Fourth Of July BBQ with the neighbors.  Get a property survey done to make sure you have a good idea of where your property lines are.  Some Realtors might say it's a nuisance, but it will be completely worth it in the end when you figure out your land actually goes back another 20 feet from where you thought.  If you don't have the documentation from the start, you could have extra legal troubles, fees, hassles, and costs down the road when your neighbor decides to build an amphitheater in his backyard that has most of rows "R" through "V" in yours.

4.  Don't Time the Market
Trying to guess when the market is at rock bottom is like trying to guess the number of jellybeans in that jar at the carnival - with some careful studying, you can be close, but you'll rarely be spot-on.  Don't obsess with it - Real Estate goes up, then down, then back up again, etc.  Instead of waiting for "THE" low, just buy "IN" the lows.  People often ask me when the best time to buy is, and my answer is always simple:  The best time to buy is when YOU find your dream home...period.

5.  Bigger Isn't Always Better
Won't your family be so impressed this Thanksgiving when they see you have the largest home in the neighborhood?  Absolutely - but future buyers probably won't.  The biggest homes in a neighborhood generally only appeal to a small audience.  Your home value (even if it is huge) will only go up as much as the other homes around you.  Real Estate 101:  Buy the worst home on the block, and make it a fixer-upper.

Again, I hope you're writing this stuff down.  Back to sellers next week!

Series: 20 Best-Kept Real Estate Secrets

I've decided to do a four-part series to share with you all the best-kept secrets in the Real Estate industry.  Some you may already know - but some will shock you.  I will have 10 buyer secrets and 10 seller secrets in all, so enjoy!

Selling Side

1.  Underprice It

Risky?  Yes.  Worth it?  Absolutely.  This strategy, according to reknowned real estate mogul Barbara Corcoran, is the single best strategy when selling your home.  All you have to do is take market value, shave off 15%-20% with your asking price, and you will be stampeded with buyers and multiple bids, even in the worst markets.  Even if you price it around market value, think about re-evaluating it after about 30 days.  And ALWAYS remember - 9 out of 10 times, the first offer you get will be the best offer.  NEVER refuse that first bid.

2.  Clean Your Closets

Yes, buyers will open those closet doors, and every closet should be half-empty.  Storage and closet space is at a premium, and every square inch of storage should be celebrated.  Go ahead, get a forward-shot at the moving process, and clean out those clothes you probably never wear anyway.

3.  Light It Up

The second most important thing to buyers (after location) is good light.  In order to maximize the light in your home, take down drapes, clean windows, and up your wattage in your light bulbs.  Whichever area you and your Realtor decide has the most impact should contain the focus light.  Save the "mood lights" for the Olive Garden, and crank it up!  Also remember that in this busy world, some buyers now have to look at homes after sunset, so don't forget outdoor lighting - it makes a big difference.

4.  Play the "Agent" Field

Awesome - you found out your college buddy is a realtor while you were throwing back Jose Cuervo at the bar.  Working with him to sell your home should be a breeze!  Wrong.  Hiring the wrong broker could be disastrous.  You have a right (and a responsibility) as a consumer to examine your options.  Interview more than one agent (even if it is your friend).  One of the best things to do is make the Realtor sell your home back to YOU - after all, if he or she can almost make you not want to move, can you imagine what they are capable of with a new buyer?  Make sure your realtor embraces every ounce of new technology available in order to best sell your home. 

5.  Beware of Pets

ANY pets should be out of the home for showings.  Nothing makes a buyer lose interest faster than the smell of pet food or hair.  In a recent poll, most buyers automatically assumed that, when a pet was present in the home, there was pee on the floor.  I was recently showing a buyer around a home when we noticed a cat.  Not knowing if my clients were allergic or not, I walked over to the cat to try and put it downstairs in the basement - needless to say, when the hissing and scratching started, my buyers didn't care how beautiful the hardwood floors were...we left.  When your home is a pet-free zone, it will sell much faster.

And so ends Part I...I hope you all are taking notes!

6 Worth-The-Price Fix-Ups

So you want to put your home up on the market.  In economic times such as these, you're going to want to try anything and everything that will be able to set you apart from the competition.  Do-it-yourself projects give sellers the biggest return for their buck.  Below are 6 very simple (& cost effective) ways to smidge ahead of that annoyingly perfect home for sale around the corner from you.

1.  Cleaning and Decluttering.

Cost:  $290

Return:  $1,990

Remove any personal items, declutter countertops, organize closets and shelves, and make the home shine like never before.

2.  Brightening.

Cost:  $375

Return:  $1,550

Take a Windex swipe at all of your windows - inside and out.  Think of replacing some of those curtains you've had for years.  Update lighting fixtures.  Remove anything that blocks light from the windows.

3.  Smart Staging.

Cost:  $550

Return: $2,194

If HGTV doesn't give you enough inspiration, think about hiring a professional stager.  Not only does it add a pair of fresh eyes to a home you've seen for the past few years, but it also gives you the chance to step out of your bubble and try something new.  Rearrange furniture, bring in new accessories, incorporate artwork, and play soft music in the background for all showings.

4.  Landscaping Enhancements.

Cost:  $540

Return:  $1,932

Punch up the curb appeal by adding bark mulch, bushes, and flowers.  For quality plants and flowers already around your home, make sure they are well-cared for and manicured.  If you are still stumped, try going to your local nursery for some inspiration.  Remember - color adds value.

5.  Repairing Electrical or Plumbing.

Cost:  $535

Return:  $1,505

Fix the leaks under the sink and remove mildew stains (especially because it makes people think of that terrible "mold" word).  Update the electrical system with new wiring for modern appliances, fix lights or outlets that don't work, and replace old plug points with new safety features.

6.  Replacing or Shampooing Dirty Carpets.

Cost:  $647

Return:  $1,739

Nobody wants to walk through a home thinking they're going to have to spend money right away.  Help clear the air by getting the carpets cleaned or replaced, giving your buyers the chance to truly see the potential for themselves in your home.  If you have hardwoods, see if there is something you can do for those late-night creaky spots.

Whether you hire out or do them yourself, these six things can make a huge difference in the way your home is seen.

Foreclosures and the Twin Cities

So for those who don't know, I have a brother that lives in the Twin Cities area of Minnesota.  I just recently read through this article and thought he would be interested in it.  Hopefully, you all are, too!

Since March of 2010, median sales prices of the homes in the 13-county Twin Cities metro area fell 15.2 percent to $140,000 from a report recently released by the Minneapolis Area Association of Realtors (MAAR).  Last month, distressed properties (most of them foreclosures) made up 55% of the closed sales.  Those closed sales fell 3.5%, the number of new listings coming onto the market fell 30.2%, and pending sales fell 17.6% year-over-year.

MAAR attributes these declines partly to the expiration of the federal homebuyer tax credit program that spurred sales in the Spring of 2010.  Though the outlook may seem a tad dismal, the association showed a few positive signs on the road to recovery.  The area has maintained strong corporate balance sheets, unemployment claims have slowed down, and there have been 13 months of solid job growth. 

So what does this mean to the sellers in the area?  They can expect their up-to-date home and on-time mortgage history to be compared with distressed, and more often cheaper, properties around them. 

In the metro area, sellers (including distressed properties) received around 88.6% of the original asking price last month, and was on the market for an average of 152 days, a 17.8% rise year-over-year.

According to recent comments from Realtors/Brokers in the Twin Cities, the fastest-selling properties are bank-owned because their pricing continues to be the lowest of all median prices.  The slowest-selling properties are townhomes, attributed to the low demand and high supply.

Looking into the future, worries lay beyond the Twin Cities area to the rest of the country.  Financing through the FHA is increasing as they raise the monthly mortgage insurance price, increasing interest rates seem to be looming, and the government is considering big changes to the mortgage market. 

Optimistically speaking, however, there are many buyers now realizing they can own for less than rent, and that attractive prices are here to stay for a while.

For those readers in the Twin Cities Area, including you, my dear brother, maybe it's time to start grabbing those deals.  But then again, when was the last time you listened to advice from your older bro?  =)

Loan Modification Programs - Success?

With another wave of foreclosures hitting the market, it might be time for a lot of homeowners to face a hard and difficult reality.  The big "F-word" is something nobody wants to speak about because of the harsh stigma attached to it.  When I asked some fellow acquaintances what the word "foreclosure" meant to them, some of the popular words were "poor," "dirty," and "lots of work."

That, to me, is unfortunate.  Those words place a stereotype on the millions of Americans that are going through a difficult situation, and are having to use this as a last resort.  Does that make them poor?  No.  Does it make them or their home dirty?  No.  In fact, I applaud the many people who have fought to the death to do everything they could to keep their home.

Unfortunately, the resources available to those homeowners have more bark than bite.

The Troubled Asset Relief Program (TARP) was funded by the government to help absorb the overwhelming number of foreclosures set to hit the market.  This past week, the Congressional Oversight Panel explained that TARP funds were to be used "...in a manner that protects home values, college funds, retirement accounts, and life savings; preserves homeownership and promotes jobs and economic growth; maximizes overall returns to the taxpayers of the United States."

So was it Mission Achieved?

One of the ways TARP was set to protect home values (both of those consumers in financial crisis and those who weren't) was through the Home Affordable Modification Program (HAMP).  It was supposed to prevent three to four million foreclosures.  To date, the plan is on track to help only 700,000 to 800,000 homeowners.  That would be about 25% of the goal - you be the judge.

Another program initiated to help was HOPE for Homeowners.  Established in 2008, it permitted the FHA to insure refinanced distressed mortgages.  Due to poor initial design, lack of flexibility, and reliance on voluntary principal, it was only able to help a handful of families refinance.

Success is measured on different scales by different perspectives.  TARP was set up to help home values from being crushed under the blanket of foreclosures.  In my opinion, the only thing it seemed to do was delay the inevitable.

Foreclosures vs. Your Home Price

Yes, it's hard.  It seems, now that we're coming out of the Eye of the Foreclosure Storm, that you see them everywhere.  You see domain names such as cheapproperties.com or stealahome.org.  The media sends a flurry of information down our televisions, computers, radios, and smartphones telling us that we're in for another wave.

Through all of this mess - has anybody told you how that affects YOU as a homeowner?

Unfortunately, there are two ways that a foreclosure or short sale can impact your home price.

1.  Distressed Properties impact the appraisal of your home
If there is a low amount of distressed properties in  your area, it is likely that your property value will be minimally impacted.  In fact, some experts say you may have appreciation due to this phenomenon.  By definition, a "low amount" would be anywhere between 10%-15%.  Once the foreclosure or short sale market hits more than about 30% of your market area, it is safe to say that these become the new "norm."  Buyers will look at all prices around you, and make decisions based on the "bang for their buck" ideal.

2.  They are discounted competition directly next to you
Of the five negotiable parts of a contract, price is, perhaps, the biggest component.  Every consumer, whether it be a home or a grocery item, wants the best deal.  According to RealtyTrac, foreclosures (on average) sell for a 41% discount and short sales for a 19% discount.  Though most people think these "distressed properties" are trashed and gutted, at sizable discounts they turn out to be more appealing than a normal sale.  Every buyer purchasing a distressed property is one less buyer for normal sales - and less demand in the market with an oversupply of homes means lower prices for you.

If you're a buyer, the field is all yours.  As a seller, it will be important to discuss with your real estate professional your financial bottom line.  This not only paints a bigger picture for you, but also helps guide you through a tough market to list a home in.

Staging Secrets

There is no question that staging sells homes.  Your best option would be to hire a stager, which can be not only inexpensive, but also pay off huge in the long run.  If you can't, here are a few tips to stay ahead of the home down the street you're competing with.

1.  Remove the Photos

As buyers are walking through your home, the ONLY thing you want them to feel is themselves in your space.  It's difficult for potential buyers to do this when they're looking at an entire wall of your annual ski trip to Vail.  Use nature prints as a sure-shot.  If you're on a budget, buy a few photographic calendars.  Replace the personal photos you have in your frames with the nature photos from the calendars, and you'll have a neutral look without having a blank wall.

2.  Accentuate the Positives

What do you like best about your home?  In most cases, it's the thing that pushed you to purchase it in the first place.  Accentuate those areas to make potential buyers linger in those spaces to make sure they're truly soaking it all in.

3.  Ditch the Extras

I'm sure the kitten laying at the foot of your porch door to keep the drafts out is cute - but not everybody will think so.  Get an early start on packing, take your extra items (which include any items you don't use on a regular basis) and box them up!  Also avoid politically- or socially-charged material.  You don't want a buyer to walk away simply because they disagree with your views.

4.  Paint.  Paint.  Paint.

Your daughter has absolutely loved her neon pink walls for the last few years - I have no doubt.  It's time for a change.  You want potential home buyers to see your house with as little extra work as possible, so help them out.  All colors should remain neutral.  Paint will always be a good investment when trying to sell a home, so utilize yours with a color scheme that is not only comfortable for YOU for a few months, but also appealing to would-be buyers.

5.  Go Away.

As an agent, there is probably nothing more uncomfortable than walking through a home with buyers while the sellers are sitting in the family room.  In fact, I showed a home to some buyers where there were two small (and energetic) children running around.  When I say "running around," I mean the type of young boys that come behind you from out of nowhere and punch you in the leg.  My buyers, who were newlyweds that had obviously not thought about starting a family yet, asked me if we could go...immediately.  Typically, clients take about 20-30 minutes to tour a single home, so do yourself a favor and make yourself scarce.  Nobody can imagine relaxing in their new family room with the noise of you and yours.

Real Estate Recovery?

Over the past few years, there have been thousands of news stories covering the housing market.  Through all of the statistics and advice given out, the general public must be lost.  It seems as if the outlook for the housing market changes, depending on who's eyes you might be looking through.

Harry Truman once said "It's a recession when your neighbor loses his job, it's a depression when you lose yours."  After watching this roller-coaster of an economic adjustment, this phrase rings true more and more often.

S&P's Case-Schiller Home Price Indices based on peaks and troughs in the market trends.  The have labeled the spring of 2009 the bottom of the housing market, but many experts say that another nationwide bottom - a second dip - will be announced soon.

What is interesting, in my opinion, is that the National Bureau of Economic Research recently stated that the "recession" has been over for more than a year.  According to them, the "recession" was over when the economy stopped contracting and began to expand.

So why are people not dancing in the streets?  It's simple...

Perception.

The current housing crisis continues to be "real" to the general American public when things "hit home" - literally.  It wasn't until the general American lost their job and realized they couldn't sell the home for what they owed on it.  It wasn't until their mortgage payment began increasing and they realized they couldn't refinance the loan because of a low appraisal at their current balance.  It wasn't until a listing agent sat down with them and told them what the comparable sales looked like for their neighborhood.

The Case-Shiller sees recovery as a return of home values to their mid-decade peaks.  Alan Greenspan, on the other hand, thinks recovery won't be here until housing prices rise another 10% from the status quo.

Is it easy to see how important perception is?  Every analyst and expert will shout something different about the exact definition of "recovery," which means it will only get more confusing.


If you, as a consumer, are looking for the experts to give you a date signaling the end of this market adjustment, you're searching for the impossible.  The fact is, most homeowners in America won't think the market has "recovered" until their mental target value for their home is reached.  Most buyers, alternately, won't think recovery will be here until they've been priced out at the value they recently purchased.

In every household, there is only one person who can dictate where the recovery is at to-date - you.

In the Eye of the Foreclosure Storm

The recent foreclosure statistics are making their rounds in the media, and giving a lot of people what could be seen as a false hope for the short-term future of the housing market.  Many of the headlines report that foreclosures have decreased over the last few months.  Though, technically, this is true - it is not in any way a sign that the housing market is about to slingshot back.

The issues regarding robo-signing, faulty paperwork, and other challenges have the banks trying to correct many of the problems that were brought to the surface in recent months.

For the past three (3) months, fewer than 300,000 properties are receiving foreclosure filings after 20 straight months where the total each month exceeded that same number.  And, though less foreclosures are actually hitting the active market, the percentage of loans in foreclosure rose to equal the all-time high.

Picture it like this:  Due to the overheated market between 2001-2005, foreclosures in the past few years have flooded the market.  At this point, most states (especially Judicial Foreclosure states like Illinois) have built a temporary dam to keep the market from remaining under a flood plane.  The keyword in the previous sentence is "temporary."  Those loans that are on the sidelines in foreclosure right now or facing it in the near future are about to hit the market again - and with vengeance.  The "dam" was never meant to be permanent.

Though it sounds alarming, it really isn't so bad.  The shadow of the overheated market will continue to linger in Real Estate for a while, but shouldn't stop you, as a consumer, from continuing on the path of the American Dream.  MSNMoney.com reported that, from January 2000 to June 2010, Real Estate still gave a 43% return on investment, which is more than DOW, S&P, and Nasdaq combined.

At the end of the day, check your options.  Homeownership may not be as scary as you might think.

Make An Offer

 

After hours on the internet, miles in your Realtor's car, and more homes running through your head than you know what to do with, you've found your dream.  Time to make it your own.  But where to start?

Know What's Included

Go through the contract with your Real Estate Agent and make sure that you know exactly what you're getting.  Does the dishwasher stay or go?  Are built-in shelves left with the home?  What about air conditioners?  As silly as a few of these questions might sound, the majority of issues that put a closing to a halt revolve around seemingly miniscule issues regarding what's personal property the sellers will take and what stays with the home.

Determine Your Financing and Your Own Personal Limit

In this market, buyers need to get a pre-approval letter from their lender that states you will have the funds to meet the seller's price.  There is one thing a buyer should remember - the number given to you by the lender does not have to be the number you are comfortable at.  Know your budget, and remind yourself of the expenses you'll have in addition to the monthly payment, including utility bills, property taxes, etc.  Just because a bank will give you $300,000, it doesn't mean you won't find a perfect home that costs $250,000.

Examine the Home Carefully

Before making an offer, estimate major improvements or renovations the home will need to undergo.  Check for more serious issues, such as moisture in basements or turned-up edges in wood flooring.  Discuss with your Agent possible issues the seller might fix before closing, or decide to do the repairs yourself.

Make A First Offer

Contrary to what most homebuyers believe, the first offer is not only determined by the dollar amount you would like to pay, but also by comparing listing prices and final sales prices of other comperable homes in the area.  Buyers should typically offer 5%-10% below the list price to show their serious inclination to purchase. Do not make an extremely low offer unless you are prepared for outright rejection.

Decide on Earnest Money

Some sellers determine a buyer's ability to back up their offer by their Earnest Money Deposit.  The cash you have included with your offer shows good faith.  The earnest money should gover about 1%-2% of the purchase price, and will be used later toward your downpayment.

Consider Contingencies

A contingency is a condition that the purchase offer will only go through if certain issues or demands are met.  Common contingencies are that the home must pass a professional home inspection, or the buyer's current home must first be sold before they can purchase the one in question.

Be Patient

After the first offer, most buyers can expect a counteroffer.  Counteroffers will go back and forth between buyer and seller until both parties agree upon a deal that satisfies their needs.  Be patient!  If you are over-anxious, you run the risk of showing the sellers that you'll be willing to go higher than your offer.

All of the items above should be discussed with your agent.  He or she should know how to handle all of these situations to make sure you're getting the best deal out there.

So buckle up and enjoy the ride!  In the end, it could land you your dream home.

Boost Your Curb Appeal

Though it might be hard to imagine it now, Spring is definitely on its way.  With a new spring comes a new burst of buyers that will be eager to settle in before summer hits.  In order to shake of the winter blues in your front yard and add some life, here are six simple ways to boost your curb appeal to attract buyers.

1. Punch Up the Windows

You can easily highlight the architectural elements by painting the outside trim with colors that set them off from the rest of the home.  For an extra punch, go ahead and add shutters or flower boxes.

2. Dress Up the Yard

A good visual mix can make small lots look larger.  Try sprucing up the front with ornamental grasses, flowers, stones, and other landscaping materials.  If you're looking for easy maintenance (which could also be a selling point to a potential buyer), use native plants - they need less water and fertilizer.

3. Tend to the Roof

Make sure the roof is in the best shape by replacing weathered or missing shingles.  If you have a porch, this is a must.

4. Accentuate with Paint

When choosing a color scheme, decide on one that calls attention to key architectural details.  No matter what type of home you have, there are colors that can make it pop.  Depending on the color of your home, a red front door has been known to draw lookers.

5. Entrance Exam

Consider adding a portico or porch.  Either will frame the front door, and a porch can add extra living space for a fraction of the cost of an insulated addition.

6. Shape Up Siding

Check to see that shingles, clapboards, and masonry are in good conditio.  Spotless siding helps a home's details stand out.

Fixing up the exterior of your home is a sure way to boost the appeal - and ultimately the value.  Experts have shown that the right colors can increase home value by as much as $10,000.  So whether you decide to hire a painter/contractor or flex your Do-It-Yourself muscles, tackling these projects will give your home a better chance of selling quickly in the not-so-far-away Spring.

Waiting for Home Prices to Fall?

Yes, the whirlwind of the real estate market has kept many people on their toes wondering what will happen next.  There are a lot of buyers that are waiting - and watching - in hopes that they will catch a good home at the lowest price it will ever be at.

Unfortunately, waiting for the rock bottom price of a home is like trying to plan a space shuttle launch - a lot of factors go into it.  If you are a buyer, you naturally want a guarantee that you are getting the best price possible.  Waiting, however, is not the best decision.  KCM Blog, a popular real estate blog, recently pointed out that there is a major difference between the "price" of a home and the "cost" of a home when it finally comes down to mortgages.

Allow me to show you their example.

The National Association of Realtors reported that home sales rose 15.4% in the 4th quarter of 2010, and also showed that home prices remained stable during the year.  Most buyers would be happy that home prices have not increased.

HOWEVER...

Interest rates during the last 90 days have risen from 4.17% to 5.05%.  This might not sound like a lot, but KCM illustrates it very simply.  "The price is the same, it just costs more."

Take a home that costs $170,000 over a 30-year fixed rate mortgage:
...@ 4.17% interest, monthly payments equal $828.36

...@ 5.05% interest, monthly payements equal $917.80

By sitting on the sidelines for the last 90 days, the purchaser loses:
- $89.44 per month
- $1,073.28 per year
- $32,198.40 over the 30-year life of a mortgage.

At the end of the day, even if prices fall another 10% this year, the cost of the home will increase if interest rates rise more than 1%.  Buyers should stop worrying so much about the price of a home and should be more concerned with the cost of the home that is dictated strictly by the interest rate.

Caution vs Fear

Depending on the person being asked the question, the answers regarding the housing market will drastically vary.  In the recent months, the housing industry has been on shaky ground.  This new "Market Adjustment" is just that - getting us back on track to fair market value.  With that said, I think it is important for both buyers and sellers to distinguish the difference between caution and fear.

"Fear," by definition, is an unpleasant emotion caused by the believe that something or someone is dangerous, likely to cause pain, or a threat.  On the other side of the coin, "caution" means care should be taken to avoid danger or mistakes.

Do we all see the difference?

The media has historically done a bang-up job instilling fear into the hearts of the general public.  Sometimes, rightfully so.  Headlines surrounding the housing market in recent months have tended to show the economy in a negative light, making people hesitant to make a move.  However, whether you're buying or selling a home, don't let fear paralyze you and prevent you from making a sound decision.  As Real Estate professionals, it is our fiduciary duty to ensure that every decision you make is one in a positive step toward a financial and personal future with your home.  Any agent that makes you feel any different is not even worth your time.  Always remember that we are with you every step of the way.

Here is the bottom line: the market will be just fine.  Regardless of what you're hearing in the media or from your friends/family, a Gallup poll just released said that 67% of Americans think this is a good time to purchase a home.  The idea of American Home Ownership is still alive and well - and it's up to you as a consumer to make an educated decision about where you truly want to be.


And if you're still a little freaked out, drop me a note.  We can solve the housing market together.  One way or another, somebody has to.

Welcome!

I figured I would start out the first issue of my blog by introducing myself.

My name is Jonny Schmidt.  I was raised in Topeka, Kansas with my mom, dad, & brother.  I was a swimmer for my entire life, getting a scholarship to swim at the University of Georgia for four years.  While at college, I majored in International Affairs with an Emphasis in Humanities and German.  Before graduating, I had an amazing opportunity to study abroad with a Semester at Sea - I visited 11 countries in five months, ranging from the edge of Japan through Egypt to the tip of Gibraltar.  It was definitely a life-changing experience.  Once graduation came, I moved myself up to Chicago, the city I've been in love with since 8th Grade.

I have many goals for myself in the Real Estate industry.  My first goal is to become a Broker within the next few months.  (And, yes, I'm publishing this to make you all hold me accountable!  haha)  My second, and probably loftier goal, will combine two of my biggest loves - people and international culture.  By the end of the Summer 2011, I want to be on my way to receiving my Certified International Property Specialist (CIPS) designation for Real Estate.  As I learn more about this new idea, I will definitely keep you informed.

As for the name of my group, my ancestors have been members of the Holdeman Mennonite Church in Kansas.  They came to this country from northern Europe in 1876.  I truly believe that, though I do not practice in the Mennonite Church, the values and beliefs my parents instilled in me came from the root of all that these honest, hard-working people represent.  I am proud to call myself an ancestor of the Holdeman Mennonite Community - a people of peace, humility, and selflessness.  The "Holdeman Group" was so named to remind me of the kind of man I want to be - both in business and personal life.

Well, if you've made it this far, I applaud you.  I hope that you will continue to enjoy this blog as much as I hope to enjoy writing it.  I look forward to hearing from you at any time - and never hesitate with any questions you might have!

And...in case anybody was wondering...no, that is not me in the little Mennonite photo.  =)