It’s once again popular to tackle those large remodeling projects.
Now’s a perfect time of year to create a plan for how you can tweak and hack your home to be a happier place. Here are a few inexpensive suggestions:
1. Paint like a scientist. Studies show that painting rooms colors that are consistent with their purpose actually makes a home’s residents happier than they were before the paint job. Spending a weekend shifting to crisp and clean green bathrooms, soothing blue or cream bedrooms, and warm browns, golds, oranges, and reds for dining and living areas turns out to be one of the least expensive ways you can use your home to give your family an emotional boost.
2. Fix (or toss) what’s broken. If your coffee machine has been sitting on the counter for four months waiting on a trip to the repair shop, you have drawers that don’t close all the way, your dining table wobbles or your shower needs regrouting, you are incurring a little drain of energy, getting a little injection of frustration every single time you look at or try to use these items. Throw out or repair items that don’t work — stat. Just let them go.
Then, create a little inventory for home projects that need to happen, and get a handyman or the appropriate contractors on the horn and get bids so you can budget and plan for getting them done.
Q: I am on a mission to buy a home. I’ve wanted to own a home my entire life, and thought I would miss the opportunity to buy while the market was down, because I had no real savings when the market crashed. I think I’m ready, though, and prices still seem low. What should I be doing now to make this happen in 2012?
A: The recession has done lots of favors for buyers-to-be, including dropping prices and interest rates to bargain levels. But it has also created a lending and housing market climate in which loans are tough to get, tensions about buying into a down market run high, and transactions are harder and longer to close than they have ever been.
Here are the things to do now, to buy a home this year:
1. Fix credit problems. More deals than ever are dying on the vine, and credit problems are a top reason home-sale transactions fall out of escrow. Detect and correct errors on your credit report now by reviewing the federally mandated free reports you can get at AnnualCreditReport.com.
2. Study up. Do some research, both online and offline, into things like:
Areas: Start your online research into decision points like tax rates, school districts, neighborhood character and even prices in various areas. Check out NabeWise.com for some local insight into neighborhood flavor and personality.
When you start connecting with local agents, ask them to brief you on neighborhood market dynamics. They can give you a deeper view into need-to-knows like how long homes typically stay on the market and whether they generally go for more or less than the asking price, so you can be smart about how you search vis-à-vis what you have to spend.
Agents: This is the perfect time to ask your family and friends for a referral to an agent they know, have used and love. Then, follow up by doing an online search for the agent’s name and seeing what sort of online reviews and activities you find. When you’ve narrowed the field down to a few, call them up and set up a meeting to find out if you’re a good fit.
Distressed properties: In some areas, more than 40 percent of the homes on the market are short sales and foreclosures, and they involve a very different timeline and set of facts than traditional home sales. Read up and talk with the agent candidates you interview about what you should expect from these types of listings, to minimize surprise and manage your expectations way in advance.
3. Save even more. Sounds like you’ve worked hard for a number of years to save enough cash that you think you’re in the clear when it comes to funding your down payment and closing costs. Studies show that after months of saving, people often let up and relax into a spending season. Even at your early stage in the process, it’s easy to start noticing and buying the furnishings and touches you want to install in your new home.
Although you shouldn’t feel deprived or forgo amazing and affordable deals on things you know you’re going to need, rest assured that no matter what amount of cash you have on hand, when you start house hunting, making offers, closing your transaction or moving in, the time will definitely come when you’ll wish you had more.
You might want to ratchet up your offer a bit to best another buyer, or you might just end up with a place that needs a little sprucing up. It might be months before you know exactly what you’ll need extra cash for, but now is not the time to press the gas pedal when it comes to your monthly spending.
4. Purge. Now’s the time to sell, donate or give away as much of your personal possessions as you can. Use the proceeds to pad your cash cushion, or tuck the donation receipts away for your tax records next year.
Start here, and chances are good that your house hunt — and purchase — will be in full swing by spring, if not sooner.
Tara-Nicholle Nelson is an author and the Consumer Ambassador and Educator for real estate listings search site Trulia.com.
If you’re shopping for a home with a bargain-basement price, a short sale could be the answer.
This is where a lender allows borrowers who can’t keep up with the mortgage payments to sell their home
for less than they owe on the property. The bank or mortgage company takes whatever you pay to purchase
the home and forgives the remaining debt.
How low can you go and still expect a lender to approve the deal?
Lenders usually will accept offers that net at least 82% (after expenses) of the home’s current fair market value, regardless of what the borrower owes, says Tim Harris, co-founder of Harris Real Estate University in Las Vegas.
Why would a lender do that?
Because it will lose less by allowing a short sale than by going through a foreclosure.
Taking advantage of a short sale is less risky than buying a foreclosure, because so many repossessed homes need tens of thousands of dollars’ worth of repairs. The worst of the bunch have been deliberately vandalized by angry owners just before they were evicted.
Here are 4 smart moves for buying a short sale property:
Smart move 1. Make sure you’re a good candidate for a short sale.
Short sales are all about presenting the lender with a deal it can’t refuse. Banks and mortgage servicing
companies are most likely to approve buyers that:
• Have a substantial down payment.
• Have been preapproved for a mortgage.
• Place no contingencies on their contract, such as having to sell their current home before
proceeding with the purchase.
Smart move 2. Hire a real estate agent who’s experienced in short sales.
You need someone who can steer you away from short sales that aren’t likely to succeed.
Vincent Bindi, a real estate broker for ShortSalesASAP in Orange County, Calif., says your real estate agent should interview the listing agent to determine whether the seller has done everything that’s needed to win lender approval.
You need to know whether the home has been aggressively marketed — the bank won’t like it if the seller hasn’t made a good-faith effort to get a reasonable bid — and whether the bank has received a broker’s price opinion, which it will use to determine the home’s market value.
Smart move 3. Offer the right price.
Short sales aren’t the time or place to do a lot of dickering.
Lenders don’t have the time or staff to evaluate an endless bunch of bids, each a little higher than the last. If you deliberately lowball a bank or mortgage company, it will just write you off as a waste of time.
You need to come up with a cheap but reasonable offer, which the bank or mortgage company will accept, in one try.
Start by estimating the fair market value of the home for yourself, using comps (values of comparable properties that have sold near the home in the past few months).
Take the condition of the home into account and reduce your estimate if the home needs repairs. It’s a buyer’s market, and you don’t have to treat a fixer-upper like it’s in pristine condition.
Calculate 82% of the home’s value, throw in a few thousand dollars to cover the lender’s cost of doing a short sale (ask your agent what that typically is for your area), and you have a good starting point.
Now look at the quality of your comps.
If they’re straightforward deals, and the homes spent at least three or four months on the market, then you’re good to go.
But if all of the comps are foreclosures that sold within a few weeks of hitting the market, you’ve got to assume those were damaged homes being dumped at fire sale prices.
You’ll have to adjust your offer upward, perhaps all the way to the full fair market value calculated with those comps.
Check how close your offer is to the asking price on the home. Remember, the sellers won’t get any of the money, so they have no incentive to demand an unreasonable price.
They’re just trying to find a price you’ll pay, and the bank will accept, to relieve them of their debt.
If you’re close, then you’ve probably come to the same conclusions as the sellers and their real estate
If not, then your agent needs to have another talk with their agent to find out why.
Smart move 4. Be patient.
It almost always takes longer to close a short sale, because it takes so long for lenders to review and accept
We’ve heard of deals closing in as little as five weeks when the lender has preapproved the short sale and asking price and you agree to meet that price.
But that rarely happens.
Most sellers don’t seek the lender’s approval for a short sale until they have a signed purchase contract in hand. (Here’s a step-by-step look at what sellers must do to complete a short sale.)
More often than not, it takes two to four months to get a “yes” or “no” from the bank or mortgage servicing company.
Although lenders say they’re trying to process these requests more quickly, there still aren’t enough loss mitigation specialists to deal with the rising demand for short sales, and we’re not seeing a big improvement.
By Bonnie Biafore | Interest.com Contributing Editor