Monthly Archives: August 2014

Buy or Build?

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I hear it from buyers all the time, “For that price, I should just build my own dream house!” Maybe you should. But building a house comes with its own set of woes that may not be suitable for your current situation. Let’s take a look at some of the pros and cons of building a house.

Pros

  • The number one reason for building a house is so that you get exactly what you want from a house: floorplan, number of bedrooms, architectural style and design… right down to each and every last finish.
  • Because the house is new, it will have met all the latest building and safety codes so as an owner, you can be less concerned about the foundation, pipes, wiring, etc. Plus, you will get brand new appliances and not be so concerned with having to make repairs to an older home.
  • In certain markets and scenarios, building a house can be cost effective but it requires the owner to be fastidious with the budgeting and accounting.

Cons

  • There are a number of additional costs that need to be factored in, i.e. the carrying cost of the land during the construction, the construction loan, rent for the current abode, and more.
  • Very few construction projects are completed within the proposed timeline. Plus, there are issues that come up that are beyond your control, such as delays in city inspections or permitting. When the project is delayed, it costs you money and, most likely, stress.
  • Can you wait 18 months or 2 years for your dream house? Will your needs and wants have changed in that timeframe?
  • Chances are, you work and have a family. Building a house is an enormous strain on your time. Do you have the time or the patience to select all the finishes? Even if you hire a designer to help with those decisions, the designer will still need to meet with you to obtain your approval. What if you and your spouse don’t agree on fixtures and details? Can your family bear the anxiety and stress that comes with managing a construction project?

Now, buying a house is a relative cake walk to building especially if you’ve put together a good team of people to help with the purchase, i.e. your Realtor, your mortgage broker, lender, etc. The issue is that you are stuck selecting in current inventory and generally, every house has flaws that you can’t quite reconcile. And truth be told, a pre-existing house will never be 100% your taste or vision, so you are likely to embark on a construction project of some type even if you buy. Then there’s the frequent issue of not being able to remodel to your liking because of HOA regulations and restrictions or dilemmas presented by the home’s original structural engineering. All these scenarios are likely when it comes to buying an existing house.

So should you buy or build? It just depends on… you.

 

After the Listing Agreement: What to Expect

Red For Sale Real Estate Sign in Front of House.

You’ve decided to sell your house.  You’ve selected an experienced real estate agent to represent you and the “For Sale” sign has been placed in front of the house.  What next?

Selling a house is usually not a quick and easy process.  It takes longer than most imagine, can be emotionally taxing, and have some unexpected costs associated with it.  Knowing could happen next can help manage your personal expectations.  Here’s  a look at what you can expect once you’ve signed a listing agreement.

Prepping the House for Market

Most agents put their listings up in the local Multiple Listing Service (MLS) along with a set of beautiful photographs of the house to entice potential buyers.  Your real estate agent will hire the photographer and set the appointment.  All you have to do is tidy up, de-clutter and remove personal effects from sight.  Your real estate agent may also suggest some quick easy fixes to get the house photo-ready and primed for imminent showings.  Most sellers underestimate the time and effort required to get the house to market.

If you’ve already moved out, then staging might be a good idea to warm up the environment and give the buyers a sense of how to live in the space.  Whatever the case, the homeowner and the agent need to work together to make sure that the home is aesthetically ready for market, and that it is consistently maintained in tip-top condition during the selling period.  This is not an easy feat if you are actively living in the home with your family!

Open Houses

Your agent will want to hold the house open for colleagues and area agents.  This usually takes place on a weekday and it’s called a broker’s open.  The idea is to expose the house to as many agents as possible so they can start bringing forward suitable buyers.   Then, from time to time, your agents might suggest holding the house open for the general public.  It is best for the homeowners not to be present during an open house so that agents and buyers can tour the home freely and with ease.

Showings

During the first 2-3 weeks, you should be getting phone calls from your agent asking you to vacate your house while he/she brings through potential buyers.  If your agent placed a lockbox on your house, area agents and their clients may drop in on you during times you’ve specified as available for showings.

After a few weeks, traffic may taper a bit and showings may become a little less frequent.  Do not worry if the number of showings decreases, as the dip is rather typical.  Average days on market can be 60-90 days in a normal market.  If the market is slow, buyers will take their time.  It’s a positive sign of real interest when the same buyer returns for additional showings.

Next Steps

In my experience, after about 6 weeks, sellers tend to get anxious.  The initial excitement of being on the market has waned and keeping the house immaculate at all times has become tedious.  Unless you are in a very difficult market, if you haven’t netted any serious interest in 6 weeks, it might be time to assess a change in course or next steps.  The housing market can change quickly, so it may be worth a look at updated comps to determine if the house is competitively priced to sell.   Additionally, it may be in the best interest of everyone involved for the house to undergo some light improvements or cosmetic updates such as flooring or paint.

As real estate professionals, we hope that every house gets sold quickly and with minimal intrusiveness to the homeowner’s life.  But the truth is, the process of selling a house is laborious and can have many twists and turns.  Staying informed and knowing what to expect is key to a positive transaction.

Reasons Homes Don’t Sell

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As a homeowner with a house on the market, your dream scenario is to have the house sell within days and with multiple offers. If you are selling during a housing boom, that can very well be the case.  But under current market conditions, the buying-frenzy scenario isn’t as likely, especially if you are inadvertently making any key selling mistakes.

If you’ve had your home on the market for several months and haven’t seen much activity or any offers, you might want to step back and identify the reasons why the house isn’t selling.

Price is too high

The most common reason for a home not selling is that the list price is too high.  Enthusiastic real estate agents who are eager to win your business may suggest a too high asking price.  Or often times, you as the seller have high expectations given your history with the house.  Whatever the reason, if a house is priced too high, it will limit traffic to the house and hinder buyers from making an offer.  Make sure when selecting an agent to work with, that you don’t necessarily go with the agent that suggests the highest price. Agents wishing to win your trust should have a lengthy comp list of recent sales to justify their suggested price.  The fact is, your home is in competition with other homes in the neighborhood, and what buyers are willing to pay will determine the final sales price.

The condition of your home

If there’s healthy inventory on the market, your home could be in a decent amount of competition.  What sets your home apart from the competition is its condition.  The more you can do to make your house appealing to a broader audience, the better your chances are for a quick sale.  That means de-cluttering the house, de-personalizing the space, and neutralizing the rooms.  If you make upgrades to the house prior to listing, don’t get too personal with finish selections.  Other easy and cost-effective fixes that make a huge impact would be paint, flooring/carpeting and curb appeal enhancements.

Location, location, location

So cliché to say, but so true… location is king.  Buyers want homes zoned for good schools, in a safe neighborhood and have great community amenities.  If your house is in a less than ideal location, your real estate agent might offer up some improvements to minimize the home’s shortcomings.  But the only reliable way to overcome a difficult location is with a lower price that adjusts for the less-than-ideal location.

Soft marketing campaign

With 90% of buyers starting their home search online, you need to make sure that the pictures of your house are appealing.  Online first impressions are very important in this day of age of real estate.  Beautiful pictures lead to appointments with interested buyers.  Flat, lackluster photos will leave your home with few showings.  Additionally, an aggressive listing agent should be touting your home to the greater agent community and running ads in numerous publications.  As the seller, make sure you understand the extent of the marketing campaign and ask for marketing updates from your realtor periodically.

Limited Home Accessibility

To get your home sold quickly, it’s important that the home is widely exposed to other agents and potential buyers.  That means the house needs to be easily and frequently accessible for broker’s open, showings and open houses.  While highly inconvenient for you as the seller, being flexible and making the house accessible for potential buyers can help reduce your days on market.

If your house is languishing on the market, make sure you take a step back and survey your home from a buyer’s perspective.  Ask yourself if your home is priced appropriately amongst the competition.  Verify that your real estate agent has a comprehensive and strategic marketing campaign in place.  And make your home available for as many showings as possible.  If what your home needs is a quality rehab, take it off the market and make some updates to give it a fresh facelift.  A break from the market is often necessary to give a new lease to the listing.