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Builders Finally Ramp Up on New Homes, but Can Buyers Afford Them?

A fresh infusion of new homes hit the market as the spring home buying season kicked off in March, adding a touch of relief to a housing market that’s been short on, well, homes. Still, the most cash-strapped buyers—typically first-timers—aren’t likely to be able to take advantage of the new additions.

About 621,000 newly constructed homes were sold in March—up 5.8% from February and 15.6% from the same month a year ago, according to a joint report by the U.S. Census Bureau and U.S. Department of Housing and Urban Development. Realtor.com® looked only at the seasonally adjusted numbers, which have been smoothed out over 12 months to account for seasonal fluctuations.

But the majority of those residences with that new-home smell are well out of the price range of many first-time buyers. That’s because high land, labor, materials, and regulatory costs  drive up prices on these homes.

“The good news is, new home sales are surging,” says realtor.com Senior Economist Joseph Kirchner. “But the bad news is, the percentage of affordable homes” under $200,000 isn’t going up as well.

The median price of all new homes was $315,100 in March. That’s 33.3% higher than the median price of an existing home, although the lack of supply of all types of housing has driven up prices across the board. Existing homes sold for a median $236,400 in March, according to the most recent National Association of Realtors report.

Home builders doubled the number of abodes costing $150,000 or less that hit the market in March, compared with the previous month and year. But these inexpensive homes still only make up a minuscule percentage of the new home market—just 6%.

“A lot of that [increase] is because there are more homes [going up],” Kirchner says.

But the percentage of new residences costing between $150,000 and $200,000 went down—from 13% in February to 10% in March. Only 16% of all the new homes on the market in March cost less than $200,000.

The majority of new homes cost between $200,000 and $299,999 (about 28%), and $300,000 and $399,999 (about 24%). About 13% were between $400,000 and $499,999; 14% were between $500,000 and $749,000; and 5% were luxury homes costing $750,000 and up.

The most new homes to hit the market in March, about 323,000, were in the South, according to the seasonally adjusted numbers in the report. That was an increase of 1.6% from February and 5.9% from March of 2016.

Quite a few new abodes also hit the market in the West. About 175,000 homes were for sale or sold in March, up 16.7% from the previous month and 32.6% from the same month a year ago.

About 84,000 new homes went up for sale in the Midwest, down 4.5% from February but up 23.5% from March 2016.

And the Northeast received an additional 39,000 new homes in March. That’s up 25.8% from February and 21.9% from the same month a year ago.

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U.S. Home-Price Growth Climbs at Fastest Rate in Nearly Three Years

U.S. house prices continued to show no signs of slowing, hitting their highest in nearly three years as demand remains hot, especially in the Pacific Northwest and Dallas.

The S&P/Case-Shiller 20-city index rose 5.9% in the three-month period ending in February compared to the same period a year ago, an acceleration from its 5.7% yearly increase in January. This is the highest rate since July 2014.

The 20-city index was up 0.4% for the month, or a 0.7% gain when seasonally adjusted.

Economists had forecast a 0.8% monthly gain and a 5.8% yearly gain for the 20-city index.

Metro Monthly change (%) 12-month change (%)
Atlanta 0.4 5.6
Boston 0.4 7.6
Charlotte 0.5 6.1
Chicago 0.2 6.2
Cleveland -0.3 4.5
Dallas 1.1 8.8
Denver 0.4 8.5
Detroit 0.3 6.2
Las Vegas 0.4 6.3
Los Angeles 0.4 5.1
Miami 0 6.7
Minneapolis 0.1 5.9
New York 0 3.2
Phoenix 0.4 5.3
Portland 0.8 9.7
San Diego 1 6.5
San Francisco 1.2 6.4
Seattle 1.9 12.2
Tampa -0.5 6.9
Washington 0.2 4.1

The national index, which just a few months ago regained the high last seen during the housing bubble of a decade ago, rose 5.8% for the year, a 32-month high.

The largest price increases are still in the Pacific Northwest, including Seattle and Portland. Dallas replaced Denver in the top three with an 8.8% increase.

Only Cleveland and Tampa saw prices fall in the February period. Prices were flat in New York and Miami.

Separately, the Federal Housing Finance Agency also released home-price data for February, which is based on mortgages backed or guaranteed by FHFA-regulated Fannie Mae and Freddie Mac. It showed a seasonally adjusted 0.8% rise for February and a 6.4% year-over-year improvement.

Over 12 months, the Mountain region — Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona and New Mexico — had the fastest growth of 9.5%.

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Remodeling by the Numbers: Americans Double Down on Home Improvements

Homeowners who have long hated their grungy floors, salivated over their neighbors’ fancy outdoor patios, and wanted to give their sagging homes a general face-lift since they moved in are opening their checkbooks wide.

Americans more than doubled what they spent on home improvements in the past year, dropping about $5,157 on average, according to a recent survey from home services marketplace HomeAdvisor. That’s up almost 57% from February 2016 to February 2017.

HomeAdvisor surveyed 500 homeowners aged 25 and up who had completed home maintenance or improvement projects within the past 12 months.

Homeowners are “feeling wealthier than before because of the improvement in their homeowner equity” as the economy and the real estate market have improved, says HomeAdvisor Chief Economist Brad Hunter. “People have more access to home equity loans and lines of credit.”

The biggest generations are the biggest spenders

So who’s likely to drop the most money on these renovations? Millennials and baby boomers. Members of Generation X, who were the most badly burned by the last housing bust, spent the least.

Many younger buyers were compelled to have work done because they tend to buy older (and cheaper) properties that need more repairs. Typically, they’re taking care of the most pressing projects first—like that leaky old roof. Then, over time, they’ll get around to putting in a new backsplash. And they often try to save a few bucks by doing whatever they can themselves.

Millennials spent an average of $5,046 on home improvements, compared with the $4,771 that Gen Xers plunked down. Baby boomers, who are more likely to have the cash to add a fourth bathroom or to open up the floor plan, spent the most—an average $5,604.

Boomers aren’t getting any younger—and they know it. So in addition to remodeling their kitchens and bathrooms, they’ve begun thinking about aging in place.

“I have boomer clients who are fixing up their homes for themselves, because they see their parents [struggling] in their own homes. So they think, ‘Wow, I think I’d better get my house ready in advance,'” says Dan Bawden, remodelers chairman at the National Association of Home Builders. “They say, ‘I love my home, I love my neighborhood. I’m going to stay here till they carry me out feet first.'”

Bawden’s company, Legal Eagle Contractors, in Bellaire, TX, helps them prepare by removing tubs and replacing them with wheelchair-accessible showers outfitted with grab bars. The company also removes stairs by the entrances, adds ramps, and swaps difficult-to-turn doorknobs with levers that can be pushed with an elbow.

New and established homeowners are most likely to splurge on remodeling

It’s not just age that determines who spends the most on remodeling. Brand-new homeowners and those who have been in their homes for more than a decade are most likely to invest in home improvements, according to the survey.

“When somebody buys a new place they want to personalize it,” says Hunter. “They paint, they refinish, they refurbish, and then they also may say, ‘I want to update the appliances.'”

Meanwhile, the established homeowners are more likely to have pricey but important maintenance projects and repairs.

Those living in the West and Northeast spent the most on home improvements, at an average $6,005 and $5,381, respectively. That’s often because their homes cost more, so they have more equity that they can tap to fund that fancy new deck or those sleek kitchen appliances.

Plus, home maintenance and remodeling work often costs more in pricier areas because labor and materials are also more expensive.

Higher mortgage rates are actually good for the remodeling market

Rising mortgage rates and the dearth of abodes on the market could spur even more homeowners to remodel, according to the survey. That’s because it might cost current homeowners more to trade up to a new home than to upgrade their current residence.

“They really like their neighborhood, like their neighbors,” says longtime remodeler Bill Brackmann, president of Brackmann Construction in Belton, MO. In some cases, “it was more efficient to make the home they’re living in the home they want to be in.”

Despite demand, remodeling could slow down

While homeowners may be demanding an open floor plan, sunroom, or new hardwood floors (with those must-have distressed wide planks for a rustic look), it might become more difficult to find a remodeler going forward.

The shortage of skilled laborers is a very real problem. Just as there aren’t enough construction workers putting up new homes, there aren’t enough entering the remodeling field. And that makes it tough for remodelers to take on more jobs.

“We worry about not having enough skilled labor,” says remodeler Bawden.

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Steer Clear: 7 Living Room Design Looks That Buyers Hate

Home decor is all about reflecting your own personal style. It’s an opportunity to use your home as a blank canvas and paint a masterpiece that is decidedly you. And that style is never more apparent than in your living room—the spot where your guests gather and your personality is most on display.

We’ll never tell you to betray your decor desires in this room (or the rest of your home). But if you’ve gone nuts painting your living room in wild colors or spent thousands laying down Moroccan tile, bear in mind how potential buyers might perceive your choices.

Buyers need to picture themselves living and loving that space: throwing parties, entertaining guests, enjoying a lazy Saturday with a book. If your favorite living room design looks are dated or divisive, buyers might give your home a pass. So ditch these seven polarizing decor choices while you still can—before they sink your chance of a sale.

1. TV looming over the fireplace

Marion Residence

No matter which side you fall on in the great TV-over-the-fireplace debate, none of that matters when it comes time to sell. Find somewhere else for your flat-screen TV—at least temporarily.

“Today’s buyers are interested in beautiful, serene rooms with seating revolved around a focal point of beauty,” says Chicago interior designer and stager Kara O’Connor. A personality-free black box is neither serene nor beautiful.

Heads up: If you’ve already mounted your television on a wall or over the fireplace, you may have to remove the evidence after you take it down. No buyer wants to see unpatched holes in your walls.

2. Dead things

Obviously you’re not leaving dead mice lying around your living room (we hope!). Perhaps you should get rid of the enormous steer head hanging over your fireplace, too.

“We totally get it. Cowhides and taxidermy are super kitschy and trendy,” says Justin M. Riordan, a Portland designer with Spade and Archer Design Agency. “The combination of creepy and beautiful is all the rage. Unfortunately, for many, the creepy is far more powerful than the beautiful.”

Real or not, you don’t have to say goodbye to your animal skulls. Just tuck them away until the home is sold. Far away.

3. Blond wood

Fire Island Home

Don’t stain your hardwood just because you’re listing your home, but if you’re thinking about doing it anyway, O’Connor has some advice: Go dark.

“Dark, wide-plank floors are ‘in,’ and blond wood is ‘out,’” she says. “If the floors are dated, I encourage refinishing. The impact is huge.”

Alongside new baseboards and neutral paint, deep chocolate floors will give your home the modern edge that could attract on-the-fence buyers.

4. Saturated walls

Complementary Colours

Yes, your deep teal walls look rad alongside your dark wood credenza and velvet chaise. But all potential buyers see are dollar signs.

“More likely than not, your home’s next owner has some very distinct taste in furniture, which they recently spent quite a bit of money on,” Riordan says. “They are not going to buy new furniture to match your saturated wall colors.”

Many buyers do repaint before moving in, but painting over saturated tones requires more coats, more time, and, naturally, more money. And some buyers don’t want to deal with any of that.

To get the highest selling price—and the most interested buyers—paint the entire place in simple neutrals.

5. Outdated furniture

Is your vintage look intentional?
Is your vintage look intentional?

vicnt/iStock

Buyers bring their own furniture. But picturing their gorgeous modern furniture in your space can be daunting if everything you own is outdated and overwhelming.

“If the furniture distracts the buyer from the square footage, a focal point, or hardwood floors, then it should be carefully edited out,” says Jill Hosking-Cartland, an interior designer in Windham, NH.

Not only might they struggle to see themselves in your place, they might also worry about the quality of your home.

“Old furniture can leave a buyer with the impression that there is a lack of attention to routine maintenance and updating,” Hosking-Cartland says.

Work with your Realtor® to stage your property using updated, on-trend furniture.

6. Narrow baseboards

We're all 'bout that baseboard, 'bout that baseboard.
We’re all ’bout that baseboard, ’bout that baseboard.

Stockernumber2/iStock

New baseboards and crown molding can take a room from blah to bangin’ with an afternoon’s worth of work. But make sure the sizes and designs you choose look modern.

“Crisp, white baseboards that are a minimum of 5 inches high are preferable to the dated, 2- or 3-inch baseboards from the ’90s and early 2000s,” O’Connor says.

Teeny-tiny baseboards might not be a deal breaker, but they can make a room feel kind of off. Beware of going too big—though it is possible to overwhelm a room with your molding. Find the right size trim for your space before you embark on that weekend project.

7. Faux finishes

You might hate ordinary paint, but funking up your living space with a faux finish can be a sticking point. Even if your DIY job looks amazing, buyers see only another thing they need to change. Paint over your fake Venetian plaster, reclaimed wood, or “textured” walls before the first showing.

“Asking a buyer to adopt your specific design style is risky,” Hosking-Cartland says. “Most buyers see these polarizing design elements as work they will have to do and spend money on to make the home a reflection of their own personal style.”

 

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7 Important Things Home Sellers Often Forget to Do

When you’re selling your home there’s so much to do: find a Realtor®, do touch-ups, get that balky air conditioner fixed, look into staging… It’s no wonder that sometimes things fall between the cracks. Big things. (We’re not pointing fingers, promise!) Our arsenal of experts—aka real estate agents who have worked with many home sellers—identify the to-do’s that sellers typically overlook. We promise you, these tasks are well worth the time it will take to complete them (which isn’t very long at all).

Heed this sound advice, and there’s a good chance selling your house won’t be nearly as stressful as everyone tells you it is.

To-do No. 1: Google your address

Not all sellers scour the Internet to find out what’s being said about their property, but they should. Nearly all buyers—90%—search online during their hunt for a home, according to the National Association of Realtors. You should be aware of what your online listing looks like, since it will influence the kinds of concerns buyers will have, says Avery Boyce, a Realtor with Compass Real Estate in Washington, D.C.

“Is the site’s estimated value very different from your asking price? It might be because tax records have the wrong information about the number of bedrooms or bathrooms your house has, and this is easily fixed,” Boyce says. Consider this too: Google Maps’ street view of your property may not show improvements that you’ve made, so you’ll want to be sure to include those updates in your listing.

To-do No. 2: Account for improvements and issues

“If you’ve owned your home for a while, make a list of all the problems you’ve solved while you’ve lived there,” says Boyce. This could include chimney fires, water damage, or a flood in the basement. Whether you solved the problem or not, you should disclose this information to the buyer so you don’t wind up in a lawsuit after the sale. Disclosing “invisible improvements” that you’ve made, like re-grading or adding a French drain system, can also be a great source of comfort for buyers, adds Boyce.

“The same goes for sewer lines or tanks, radon remediation, or leaky skylights.”

To-do No. 3: Check your real estate agent’s references

An agent’s bad behavior or incompetence could cost you time, money, and peace of mind, so it’s well worth taking extra steps to find the best real estate agent for you. Ask friends for recommendations.

Check that the people you’re considering have a current real estate license—with no complaints filed against them. Meet with the agent and reach out to a few of their references directly.

“Real estate agents should be happy to provide a number of references for a new client to call,” says Marianne Leonard Cashman a Realtor with William Raveis Real Estate in Andover, MA. As far as talking to your friends about a real estate agent recommendation, here are some questions Cashman suggests asking:

  • Did you have confidence in your real estate agent?
  • Do you think he/she had good knowledge of the local market?
  • Did your agent communicate well and keep you informed during the entire transaction?
  • Do you think that he/she negotiated well on your behalf?
  • Did your agent have good vendors who could assist you?
  • Did your agent returned calls/emails in a timely fashion?
  • Would you recommend this person? Why? (Or why not?)

To-do No. 4: Insist on social media marketing

You staged your home beautifully, picked a competitive price, and listed the property, but there’s something else you’ll need to prepare before you’re fully ready to sell—a social media marketing plan. Video tours, floor plans, and photo galleries promoted on Facebook, Twitter, and Instagram are must-dos, advises Cashman.

“You want to make sure that your agent is using all avenues to attract the right buyer for your home,” she explains. “Make sure your home has a presence on your agent’s website, their agency’s website, and is promoted on various sites that will market the home and give information about open houses.”

To-do No. 5: Make sure the doorbell rings

Ah, attention to detail. It’s those little cosmetic repairs that could cost you your home sale. If buyers see that you can’t even be bothered to repair a busted doorbell, they’re automatically going to think about what else may need fixing and view the home negatively.

“First impressions make all the difference,” says Cashman. “A well-kept home, starting with the view from the curb, gives the perception that the seller has great pride in the home and has taken good care of it—which translates into less energy and costs for the buyer as they prepare to move in.”

To-do No. 6: Clean inside everything

Storage is a huge selling point for homes. So be warned: Buyers are going to poke around inside closets, drawers, cabinets, ovens, refrigerators, and even the dishwasher, whether they’re cleaned or not—so you’d better make sure they are clean.

“Spending the money on a service to deep-clean your home will come back to you at least 10 times in your sales price,” says Boyce. Even if you’ve swept up and scrubbed all surfaces to a shine, you’re not done until dust, crumbs, and creepy crawlies are cleaned out from within the small spaces too.

To-do No. 7: Clarify which items are not included

You don’t want a buyer to fall in love with your house because of the custom window treatments and then rescind their offer when they find out the curtains aren’t for sale.

“The law says that anything bolted to the wall or ceiling goes to the buyer unless specifically excluded in the contract,” says Boyce. “If you want to take your flat-screen TV, chandelier, or custom pot rack, be sure to label it as soon as the house goes on the market, so that buyers don’t bank on owning that item and wind up disappointed.”

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‘I Want to Buy a House’: A Guide to Taking the Real Estate Plunge

Maybe you’re renting in an overpriced neighborhood and are sick of writing a huge rent check. Maybe you’re living in a yurt and miss having normal walls. Wherever you wake up, the same thought runs through your head every morning: “I want to buy a house!” But perhaps that want hasn’t yet translated into how to actually go about buying a house. That’s where this handy checklist on preparing to buy a home comes in.

Step No. 1: Boost your credit score

What do these three numbers have to do with buying a home? Well, pretty much everything. Your credit or FICO score—which reflects how dependable you are at paying bills—directly affects the interest rate on your mortgage and the amount of your monthly payments.

Most lenders require a minimum score of 620 for a mortgage (the U.S. average is 687), so you’ll want to do everything to lift your number before applying for a mortgage. The things that drag down the score include carrying an excess of debt, missing bill payments, or applying for too much credit. So can plain old mistakes.

“If you find out there are items on your credit history that you think are incorrect, immediately start working with someone to mitigate these issues and contact all three of the largest credit-reporting agencies directly,” says Joshua Arcus, president of Siderow Residential Group. These agencies are Equifax, Experian, and TransUnion.

Step No. 2: Save, save, save

A home is almost certainly the biggest purchase you’ll ever make, and it’s a good idea to have a decent financial cushion for everything from a down payment to closing costs.

“Save money any way you can and, whatever you do, don’t buy things you can’t afford,” says Los Angeles Realtor® Jacqueline Gunn. And put off any big purchases or anything with a recurring payment—like that sexy new sports car—until after you buy a house.

“You need to show your expenses are low to afford more home,” she says.

Step No. 3: Figure out your budget

Think carefully about your entire budget—from student loans to groceries to your monthly Netflix subscription—when considering buying a home.

“It’s not only a mortgage payment you’ll be responsible for; it’s also homeowners insurance, repairs, and upkeep as well as real estate taxes,” says Naomi Hattaway of 8th & Home Real Estate. Add up every last expense to determine what maximum monthly output you can swing without stress.

Step No. 4: Find a good lender

You need to know exactly how much purchasing power you have to determine the top home price you can afford. To figure that out, you’ll need to find a mortgage broker. Take the time to interview three or four lenders. Talk to both local banks and credit unions, as well as national financial institutions.

“The interest rate shouldn’t be the only criteria when it comes to choosing a mortgage provider,” says Jill Frank, a Realtor at Coldwell Banker Success. “Ask about fees, other services that are included, and ongoing customer service.”

Choose a lender that makes you feel comfortable, answers your questions, and takes time to educate you on the process of getting financially ready to purchase a home. This may include paying off debt, establishing a work history, and gathering documents.

Step No. 5: Get pre-approved

After you choose a lender, make sure you get pre-approved, not just pre-qualified—that’s a big difference that could mean an offer being accepted or not.

“Being pre-qualified means you’ve only discussed your finances with a broker,” says Gunn. “No one has actually reviewed your financials.”

Pre-approval means your mortgage broker knows concretely you can afford a home based on the financials you’ve provided.

Step No. 6: Scout neighborhoods

Look at properties in great resale areas with good schools, parks, and transportation. Make sure to also drive around the areas in the evenings and weekends to get a complete picture of what the neighborhood is like. Once you’ve identified an area where you’d like to buy, get to know the local real estate market. Search online for homes in the area to see if the asking prices are within your price range.

Step No. 7: Work with a great Realtor

The next step is to find a licensed Realtor. Ask friends and relatives to recommend people they have worked with previously, or research agents online. Meet with a few until you find someone who really understands what you’re looking for. The real estate professional you pick should understand what homes will fit with your budget, lifestyle, and priorities.

Step No. 8: Start looking at homes

If you’ve made it through Steps 1 through 7, congrats! Now it’s time to let the fun begin by actually getting out and looking at potential homes. In addition to looking online, go to as many open houses as possible.

“When you see something you like, ask your agent to help you find comparable houses in the area to help determine if the home is priced appropriately,” says Gunn.

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6 Costly Mistakes First-Time House Flippers Make

When you’re flipping a house, time is money. And you don’t have time to make a lot of rookie mistakes.

That’s what Steve Cederquist learned when he first began renovating and flipping properties in 1994.

“I bought a house with a bad foundation and lost $30,000 on the deal,” says Cederquist, a general contractor who’s now a veteran house flipper and president of Cornerstone Property Services in Huntington Beach, CA. “I didn’t think I’d have to do much to a 1,200-square-foot house. But it cost me a ton of money.”

No house flipper is born wise. So we talked to several pros who outlined mistakes newbie flippers often make. Avoid these pitfalls to ensure your profits come out on top.

Mistake No. 1: Not getting a home inspection

This one’s a biggie. Even if you plan on making major changes to the house, you still need an inspection. Of course, if you’re going to tear down the whole thing, there’s no need for one. But house flipping usually involves making cosmetic changes—maybe opening a wall or remodeling a bathroom. It’s a makeover—not a complete rebuild. So you need to get it checked out before you buy.

“Never buy as is,” Cederquist says. “I can’t tell you the number of times people lose everything because they don’t do the safest thing: getting a home inspection.”

Inspections can turn up all kinds of problems. Some issues, like cabinet doors that don’t close properly, you won’t care about if you’re planning to rip and replace the kitchen anyway. Others, such as a cracked foundation, can cost you dearly.

At the very least, an inspection can identify problems you can use to bargain down the price. Every dollar counts toward your bottom line; whatever money you save on the purchase price will help you turn a profit when you flip.

Mistake No. 2: Overestimating your renovation skills

Every dollar saved on labor is a dollar you earn when you flip a house. But all too often flippers think they’re better plumbers, drywall hangers, and carpenters than they really are.

“This ends up being a major drain of time and resources, because you must redo work and spend twice the amount of money fixing it,” says Allen Shayanfekr, co-founder and CEO of Sharestates, an online crowdfunding platform for real estate financing.

There’s a simple answer to your DIY delusions of grandeur, Shayanfekr says: “Consult an expert prior to undertaking any major project.”

And make sure to ask for an estimate in writing. That way you’ll know what you’ll have to spend to make the house attractive to buyers.

Mistake No. 3: Underestimating total costs

Inexperienced flippers often add the purchase price to renovation costs and figure the sum is their break-even point. If only.

But the true cost of your flipping adventure involves much more. Think: state and federal taxes on profits, real estate commissions, title searches, transfer taxes, inspection and appraisal costs, and a bunch of other fees that show up at closing when you buy, and again when you sell your property.

Do yourself a favor and thoroughly research the total cost of your project (don’t forget permit fees, which can be substantial) and then add a cushion—10% to 15% is customary.

“Be prepared to pay over your expected fees when coming to the closing table,” Shayanfekr says. “Better safe than sorry.”

Mistake No. 4: Being a jerk

Even if you’re determined to do this on your own—you’re a whiz at mitering crown molding, after all—successful flipping requires some level of interaction with others. You’ll need to build a trusted team of craftsmen, suppliers, lenders, and real estate professionals that you can call on time after time.

Not only do you need to find people you can depend on to get the job done quickly and on budget, but your teammates must also be able to trust you to treat them with respect, pay on time, and not make their lives a living hell by changing your mind repeatedly.

“People want to do business with others they like and trust,” says Cody Sperber, who has flipped more than 1,000 properties in 15 years and has started a mentoring program called Clever Investor, based in Tempe, AZ. “So many deals have materialized because I listened and was empathetic. Not because I was shrewd and smart.”

Mistake No. 5: Jumping the gun

Some flippers put a “For Sale” sign on the property before completing renovations, hoping a buyer will be able to envision how gorgeous the house ultimately will be.

That’s a big mistake, says Bill Golden, an Atlanta-area real estate agent.

“Many people think they can get a jump on things by getting folks interested before it’s done, causing multiple issues,” Golden says. “Many people don’t have vision and can’t really see how things will look once they’re done. Also, missing molding, trim, and other details that may seem minor to you can reflect poorly on what the buyer perceives the quality of the renovation to be.”

Don’t list the project until it’s move-in ready. It will save time in the long run, because potential buyers won’t nag you about missing finishes you already plan to include.

Mistake No. 6: Designing a flip like you’re going to live there

Flipper rule of thumb: Never fall in love with a property.

Unlike your own home—where you’ll raise a family, build memories, and make modifications that suit your needs—flips are short-term projects that must appeal to the widest possible market.

When you design your flip, take yourself out of it. You may love aubergine, but stick to whites and neutrals when you pick paint colors. Research design trends, walk through open houses of new construction, and survey real estate agents to find out what’s selling and what’s not. If you don’t create an attractive yet blank canvas, your flip may languish on the market—costing you money with each painful, passing day.

“Don’t get attached to the house, because you’re not going to live there,” Cederquist says. “Keep it generic, what’s popular. Then stick to a design and budget.”

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What Is a HUD Home? A Bargain With One Huge Catch

If you’re hoping to score a deal while house hunting (and who isn’t?), one bargain basement option well worth exploring is a HUD home. So what is a HUD home? Simply put, it’s a place owned by the U.S. Department of Housing and Urban Development, but there’s some backstory here, so allow us to explain.

Long before a home becomes the property of HUD, it typically was owned by a regular homeowner who’d made this purchase with an FHA loan. FHA loans are easier to qualify for than a conventional loan because they require a low down payment (as little as 3.5%). However, if the owner ends up unable to pay his monthly mortgage, he ends up in foreclosure, which means the home goes to HUD, which then must figure out how to unload this home and make back its money. That’s where you come in!

The process of buying a HUD home varies from a conventional sale in a couple of ways, so here’s what you’ll want to know before you buy.

Benefits of a HUD home

The government doesn’t want to own these foreclosed homes any longer than it needs to, so HUD homes are priced to move, often below market value. Plus, HUD offers special incentives to buyers in certain markets to sweeten the deal.

For example, the HUD “Good Neighbor” program offers HUD homes in revitalizing areas at a 50% discount to community workers (e.g., teachers, police officers, firefighters, and EMS personnel) who plan to live in the property for at least 36 months.

Other perks: Low down-payment requirements or sales allowances you can use to pay closing costs or make repairs. So be sure to inquire about the possibilities; it could be an even better bargain than how it first seems. Another bonus for home buyers is that HUD gives preference to owner-occupants who intend to live in the home for at least one year, so odds are good you’ll beat out investors to boot!

How to buy a HUD home

HUD homes aren’t listed on conventional real estate websites, and can instead be found at hudhomestore.com, where you can shop for homes by state or ZIP code. You never know what you might find, in what location and at what price.

Listings typically contain photos, an asking price, and—here’s where things get different—a deadline by which you should submit your offer. HUD homes are sold through an auction process; once the deadline is past and bids are in, HUD reviews its options. If none of the bids is deemed acceptable (usually because it’s too low), HUD extends the auction deadline and/or lowers the asking pricing until a match is made.

All offers are considered, but in almost every case, the highest acceptable bid wins, says Mark Abdel, a real estate professional with Re/Max Advantage Plus in Minneapolis–St. Paul. Which begs the question: How much should you offer? Well, that all depends on how hot the local market is and the condition of the home (more on that next).

Risks of HUD homes

HUD homes are sold as is—meaning what you see is what you get. If the leaky roof or electrical needs repairs, it’s all on you to cover the costs. That’s why it’s critical to get a home inspection before you put your bid in.

“A quality home inspection will alert you to what types of repairs or improvements need to be made, which you should factor into your bid accordingly,” advises Abdel.

That’s not to say that HUD homes always sit in disrepair. Each one, once HUD takes it over, is assigned a “field service manager” who keeps a watchful eye on the home to make sure it’s secure and provides maintenance while the home is unoccupied. The field service manager may even oversee cosmetic enhancements or repairs, depending on the home’s condition, before the bidding process begins. Some HUD homes are even move-in ready, so never presume you’ll end up with a clunker; you could luck out!

Where to get HUD home loans

All financing options are available for HUD homes, including FHAVA, and conventional financing. If you’re buying a HUD home that needs repairs, check out a FHA 203k loan, which can allow you to include the renovation costs in the loan. Your real estate agent can help you determine what programs you might be eligible for.

Also: In order to represent you in your bid for a HUD home, your real estate agent must be officially registered with HUD. Many are, so ask your Realtor® or else you can specifically search for HUD-registered agents at hudhomestore.com.

 

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FAMILY SAFETY TIPS TO CONSIDER WHEN YOUR HOME IS FOR SALE

When you’re selling your home and your house is on the market, it’s almost inevitable that strangers will enter your house. Even if you don’t host an open house or showing, there may be strangers coming in and out to appraise your home, do renovations, clean the house or perform other necessary jobs related to the sale of your house.

Although the vast majority of these folks will be well-intentioned potential buyers, you have no way of knowing for sure who is and is not targeting homes for sale for all the wrong reasons. The good news is, you can take precautions in order to keep your home and family safe. Here are a few things you can do to protect your home and family:

De-personalize your home

Remove all family photos, diplomas, kid’s drawings and other display items that may inadvertently give away personally identifiable information. For example, while a school photo may seem innocuous, it could give away information like what school your child goes to, what sports they play, or what grade they’re in – all of which can be used by a stranger to potentially track down and approach your child.

Check all of the walls, shelves and display areas of your home to be sure you’ve cleared the house of all such items to help keep your family life private.

According to home staging expert Darlene Parris, depersonalizing your home also allows buyers to “picture themselves making their new home out of your home for sale,” so you’ll be helping to make your home more presentable to potential buyers too.

Speaking of photos, taking pictures of each room before and after showings is also recommended. This should help you quickly identify any out of place or missing items, especially for children’s rooms, since kids may be less likely to notice if things have gone missing. If necessary, they can also be used as evidence for a police report or insurance claim.

Protect your confidential information

Things like prescription medications, checks, or bills and letters that contain confidential information should be locked away or removed from your home completely. Don’t forget to check your trash as well, especially if you don’t shred your bills or take special precautions when it comes to sensitive data.

And be vigilant; monitor all of your accounts for fraudulent activity and consider placing a fraud alert on your credit report. In the United States, this can be done by contacting one of the three major credit bureaus and is free of charge.

“An initial fraud alert can make it harder for an identity thief to open more accounts in your name. When you have an alert on your report, a business must verify your identity before it issues credit,” according to the Federal Trade Commission.

In Canada, report fraud to the Canadian Anti-Fraud Center by calling them toll-free at 1-888-495-8501 or by using their online reporting system.

Secure your devices and other valuables

Computer security expert Avi Rubin warns that “anything that has software in it is going to be vulnerable” and can be compromised, so tablets, phones, memory drives with personal data or any electronic devices that are connected to your email and social accounts should be removed from the house completely.

Your smart TV or refrigerator could also make you vulnerable to more tech-savvy criminals.

“Attacks such as those launched by smart TVs and fridges do not at this point threaten people’s lives. However, they do compromise people’s privacy insofar as they reveal information about victims that they might not otherwise want disclosed,” says security journalist David Bisson.

Upgrade the password and login information for all of your devices, and consider installing locator apps on all of them as well.

Other valuables like family heirlooms, jewelry and fur coats should also be locked away in a safe, safety deposit box or other secure location.

Talk to your agent

Ask your real estate agent to walk you through what they do during an open house and go over the details of the safety procedures that they follow. Check to see if they keep a visitor’s log, whether they use a lockbox to store your house key and how often they change the code, etc. Suggest enhancements if you’re unhappy with any of their policies.

“As an industry, we collectively work very hard to promote safety awareness among our members,” says Chris Polychron, president of the National Association of Realtors.

Real estate agents are particularly knowledgeable when it comes to safety and will have your best interests at heart as well, so an honest conversation voicing any concerns will be beneficial to both parties.

In case of emergency

If there is an incident at your home, or you suspect theft or vandalism, call the police immediately. The police should also be able to work together with your real estate agent, using visitor logs and other information gathered during showings.

You can also go online to create an emergency or safety profile to help expedite the information gathering process when you dial 9-1-1. Tools like Smart911 allow you to create profiles with information about your home and family that may be valuable to first responders.

“Even the simplest of details can help our officers during an emergency,” says Sgt. Brent Kock of West Des Moines Police. “From knowing the access points to the home, whether there is a pet we need to be aware of when approaching or entering the home, or just knowing the name of the person in distress can enhance the safety of our citizens and our officers.”

Check with your city or local police department to verify which tools or apps are available in your area. For example, in Toronto the police have an app that allows users to file damage to property reports, amongst other things. Edmonton and Ferguson also have similar apps.

Taking practical steps to eliminate any opportunities for wrongdoing is the best place to start. Work with your real estate agent to establish an action plan, and maintain an open channel of communication so you can alter the plan as needed.

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CHILDREN’S BOOKS TO HELP YOUR CHILD ADJUST TO MOVING

According to child psychologists, children can experience moving as a type of loss. “A child loses friends, a home, and her early childhood program, the losses often resulting in feelings of sadness and anxiety or even anger,” says professor Marian Marion, Ph.D.

Equipping children with coping skills and teaching them how to manage the stress of moving could help ease their sadness and anxiety, particularly if these lessons are delivered in a relatable form, like a children’s story.

Here are eight children’s books to help your child adjust to moving. Click on each book cover to learn more about each story.

Moving to a new home is one of the most stress-inducing experiences that a family can face, but turning it into an adventure can help ease some of the tension. What are some strategies that you have used to help adjust to a new home?

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