Wednesday, December 19, 2012

Do in December, Sell in 2013

Source: Trulia

True Confession: I set a handful of New Year’s Resolutions every single year. Why? They work for me - I’ve got probably a 75 percent success rate. Some of this is in the science of setting the Resolution the right way in the first place, including the preparation.

Here’s my secret: I always get started in December. I like to use my holiday down-time to plan things out, gather up the resources or do the research I need, figure out what my challenges are likely to be and make a plan to deactivate them, set appointments with any professional I need to get on board to make my goals happen and even get some momentum built up with my new eating program, workout plan, financial goals or career endeavors. 

I aim to be like that old Marines commercial - by January 1, I’ve already done more than most Resolution-setters do all year!

And I’d like to help you do the same.  Let’s boost the chances that your home buying or selling goals for 2013 will be successful by devoting a little time in December to getting things lined up and in motion.  Here is my short list of tasks I would put on my December to-do list if I wanted to buy or sell a home next year:

1.  Handle your credit horrors.  Maybe you don’t have any credit horrors - kudos to you! But let’s get real, this year will be a year in which many post-foreclosure, post-bankruptcy, post-layoff Americans will find themselves sufficiently recovered, post-recession, to get back into the real estate market and buy a home. If you count yourself among the number of 2013 wanna-be buyers who experienced a financial glitch of any degree during the recession, December is the right time to start pulling your credit reports and doing a damage assessement and control campaign.

  • Visit (the only website through which you can access your government-mandated free reports) and order your own credit reports from all three reporting bureaus.
  • Review them all, line-by-line, checking for errors and discrepancies. It is extremely common for paid-off accounts to still be reporting as delinquent, for foreclosed mortgages to still be listed as open and past-due and for bills that were settled in collection to be reported as behind. Follow the instructions to dispute any such errors you see.
  • When you talk with your mortgage broker (see #4), go over the reports with them again, getting a read on precisely when your foreclosure, bankruptcy, delinquencies, gaps in employment or other credit woes will be sufficiently “seasoned” (i.e., long ago) to allow you to qualify for another loan, and get their advice on any action items, like paying a particular debt or set of credit cards down to $X amount will be important for you to complete before you try for a legitimate pre-approval next year.

In fact, this last point applies to everyone - whether or not you think you have any dings on your credit report. It’s essential to get clear on any of the work you’ll need to do to optimize your credit standing now, as the payoffs, disputes and other credit work that can move the needle on your score may take some time.

2.  Purge.  It’s time.  Time to get rid of all that things you know qualify as clutter - all of the stuff you know buyers won’t want to see when they tour your home, and all the stuff that you won’t want to move to your next place. If you donate your junk before the end of the year, you might be able to get a receipt and deduction for the taxes you file in 2013.  And tax break or not, getting all that stuff out of your attic, your closets, your shelves and your rooms will clear up loads of mental space and energy, minimize some of the overwhelm latent in the prospect of moving - and might even surface a few things you can sell to boost your down payment savings or your home staging budget.

Clutter clearing gets overwhelming when you simply lack the time, in the face of everyday urgencies, to invest a few hours or days to go deep, pull out all the minutae and memory-laden How better to spend those wintry days between Christmas and New Year’s than to clear out the clutter in your home - and your mind?

3.  Plan your prep. If you’re thinking of selling your home in 2013, now is a great time to start organizing your list (or spreadsheet, or Evernote file) of home preparation tasks that need to get done before you put the place on the market. Things like painting, carpeting, landscaping and other preparation tasks can be less taxing and less disruptive to your life if you have plenty of time to collect bids, sock away the cash to cover the costs and arrange projects at your family’s convenience or during off-seasons, when contractors might be wiling to charge a bit less.  

Talk with your agent before you put a plan in place; they can help you make good decisions which projects to do (and which to forego), as well as choosing finish materials and colors that will appeal to the broadest segment of buyers - to boot, they often can refer you to the most cost-effective contractors in your area for these sorts of pre-listing projects.

3.  Save. More. There’s no such thing as saving too much cash up for your down payment. If you have a home to sell, you have no idea how much you’ll take away from that transaction until it closes. And even if you’re currently renting, having maximum savings set aside allows you maximum flexibility in terms of selecting homes, competing with other buyers, covering closing costs (which can run as high as 3-4% on average for an FHA loan) and even handling post-closing repairs, appliances and property personalization.

4.  Collect your gift money.  Buyers who get gift money from a relative to apply toward their down payments are often subject to seemingly strange and definitely invasive documentation requirements - the most onerous of which is to produce copies of the gift GIVER’s bank accounts proving the source of the funds. If you know Mom, Dad, Granny or Aunt Bernie is going to chip in some cash toward your down payment in the Spring, consider asking them to go ahead and give it to you now, so you can put it in your own accounts and begin “seasoning” it as yours, which will help you avoid all those documentation demands.  

Your benefactor should check with their financial and tax advisors to be sure the gift is structured so as to avoid any tax implications, before they give it.

5.  Connect with an agent and a mortgage broker - stat.  Don’t wait until the month before you want to buy or sell to ring up your trusty agent and initiate the conversation. Ask around for referrals or find an agent here on Trulia Voices now, get a mortgage broker (or 3) on the phone, and ask them to help brief you long-lead topics like:
  • Whether your market is a buyer’s market or seller’s market, and how that translates into what you can and should expect when you plan to buy or sell next year
  • Whether there are any area-specific timing issues you should factor in as you map out your timeline
  • What - given the specifics of your financials, your savings, any past credit or other issues you have - you should be doing now in terms of paying bills down, settting savings targets, and such
  • What changes, if any, you should plan on making to your property before listing it
  • What sort of property you can get for your money in the areas you’re targeting as a buyer, and what kind of money you can expect to command for your property in your local market (this, obviously, will change over time - even over the few months or so between now and the time you list your home, but it still helps to have a general ides of the current market values).

6.  Go Open House hunting.  If you’re selling next year, it’s essential to get a real-life read on what the competition’s like, everything from what sorts of houses in your area are listed at various price points to what your target buyers are going to be seeing on their way into or out of your house.  There’s no reality check on your own home’s preparation and staging - its overall readiness for listing - like putting on a buyer’s shoes and taking a tour through similar homes in your area.  And there’s no time for this reality check like right now: when Open Houses are still a-plenty, you have more time to attend them, and you still have plenty of time to process your takeaways and incorporate them into your own property preparations.

Open House hunting is also helpful for those who have home buying on their 2013 to-do lists.  It’s the only way you can start understanding how to decipher the listings you see online into a reality-based set of expectations about a property.  It’s also the best way to get indoctrinated deeply into the realities of what you get on your local market at various price points, and it’s the most impactful strategy for starting the process of negotiating compromises with your co-buyers.

7.  Think hard about your deductions, if you’re self-employed. In the wake of the recession, most mortgage guidelines for self-employed borrowers changed, so that your income for purposes of qualifying is assumed to be the average of your last two years’ Adjusted Gross Income, as reported on your federal income tax returns.  That means lenders calculate your income after all your business-related and other deductions, not before.

So, yes, this does mean that maximizing your deductions may impact your ability to qualify for a home loan in 2013.  But them’s the breaks - better to know this before you file your tax return, in the event it might change something about how you file.  Loop your tax advisor, business bookkeeper and mortgage broker into your decision-making process about your 2012 taxes before filing, if you’re self-employed and plan to buy or refinance your home next year. 

Thursday, December 13, 2012

Find the Downpayment

If buying a home is on your New Year’s Resolution list for 2013, know this: your biggest challenge will almost certainly be coming up with your down payment and closing costs.

Whether you’re trying to scrape by with 3.5 percent for an FHA loan or you’re planning to put down a full 20 percent, saving for a down payment might be the largest savings endeavor you ever undertake, after retirement planning.

But don’t let that daunt you. Look at it as more of a challenge or a game than a slow-slogging deprivation-driven chore. In fact, I suggest that you add something to your scrounging and saving: scavenging. Finding your down payment money hidden in resources that are right in front of you can be a fruitful and fun angle to take on an otherwise overwhelming goal.

Use this short list of oft-untapped down payment treasure troves to open your eyes to funds that might be hidden in plain sight:

1. Your budget’s biggest line items. I like to get maximum bang for my buck. And I like to enjoy my life, too, so depriving myself of little luxuries without getting much mileage toward my goal is definitely low on my savings strategies list. But I’ve often found that if you take your top 10 or so monthly expenses, there are almost always at least one or two that you could slash significantly or totally do without, push come to shove: all without feeling as deprived as you would if you cut your daily coffee.

Home buying is one of those push-meet-shove-type situations. If you’re serious about coming up with your down payment funds, sit down during your holiday off-days, and backtrack over your monthly budget (if you have one) or your last month’s checking account statements. Isolate your top 10 budgetary line items and do an internal gut check on whether there is anything on this list that you can slash or eliminate.

If this seems obvious or silly to you, don’t scoff before you give it a chance. I have seen buyers do this exercise and decide to:

move home or to a cheaper place to eliminate rent
go from two cars to one to eliminate a car payment
cancel cable or switch cell phone service providers to get rid of a hundred bucks or more every month, pressing fast-forward on their down payment savings and home buying plans by many months, even years.

2. Your bad habits. Have you heard yourself say - out loud or internally - I’ve got to stop:
  • smoking
  • drinking so much
  • eating out so much
  • eating so much junk
  • watching so much TV
  • drinking so many sugary coffee drinks
  • impulse shopping
  • OSUI: Online Shopping Under the Influence (it’s a real thing - I promise!)- or anything in that vein? Well, each of these are bad habits that cost. And because they are often engaged in compulsively, they can cost much, much more over time than you have any idea you’re actually spending. 
Again, far be it from me to suggest that someone who works hard every day shouldn’t treat themselves to a coffee or lunch here or there. The fact is, if you deprive yourself too severely, there’s a good chance your efforts to cut back and save will be very short-lived, and possibly even backlash into binging behavior. But if there’s a habit you’ve been wanting to change for health or other reasons that also costs you a pretty penny, you might find it easier to make those changes when you know you’re doing it in service of your vision of owning a home.

So, make a project of it. Figure out roughly what you’re spending on your bad habit, and set up an automatic saving transfer from your checking account into your down payment savings account. Then, get and leverage some habit-changing resources, like those at or in one of my favorite books this year, The Power of Habit: Why We Do What We Do in Life and Business. Then, when you feel the compulsion to engage in your bad habit, come to Trulia instead and peruse new listings in the price range and neighborhood of your own target dream home - that will help you stay on track by staying mindful of what’s really important.

3. Your stuff. When you need to save money, there are really only two levers you can pull: you can spend less, or you can make more. Selling stuff you have and don’t use or need is a relatively painless way to make more money to go toward your down payment. If you’re really serious about home buying, put everything on the table.

I’ve known buyers-to-be who sold any and everything, including:
  • cars and motorcycles
  • clothes, costumes, shoes and handbags
  • hobby-related gear (bikes, tools and even costumes)
  • furniture and antiques
  • and electronics, CDs and even books (think: TVs, computers, old smart phones, etc.)
to fund their down payment and home buying-related debt elimination plans.

Don’t underestimate the amount of cash you can bring in from the stuff you already own. Millions of home owners worldwide are now renting out rooms or floors of their current homes for short periods of time on sites like Airbnb and VRBO. Sites like Getaround and Zimride allow you to rent out the extra seats in your car - or the whole vehicle, if you’re not too faint of heart!

4. Your skills and time. One way to make more money, as discussed above, is to liquidate the things you have lying around. Another way is to get to work! Spend your off-time, your evenings and weekends leveraging your professional skills or personal hobbies to bring in some extra cash. A friend of mine recently had a savings target she was trying to reach and actually sent her whole circle of friends an email detailing (a) what she was selling and (b) what sorts of projects she was willing to do to get there - she earned well into the four figures, in less than a month.

Maybe you can sew or knit stuff to sell on Etsy, grow things in your backyard to sell at the farmer’s market or, like one enterprising Mom I know, use your baking and cake decorating skills to monetize your kids’ classmates’ birthday parties. Or maybe you’re more interested in cooking, house cleaning, babysitting or dog walking - in fact, another acquaintance of mine has earned thousands of “extra” dollars dog sitting while she works at home. If that sort of thing is not up your alley, think about whether you can help people you know with their small business projects, like research, bookkeeping or office organizing projects.

Once you get serious about coming up with your down payment cash and decide to be creative about where to find that money, using your skills and your time creatively is a power-packed way to open the financial floodgates. Consider starting out with a simple email to your circle of acquaintances or by listing your services on a site like TaskRabbit.

5. Your loved ones. Some folks are fortunate enough to have cash-flush loved ones who would love nothing more than to help you have a home of your own. The best case scenario is to have some idea of what sort of gift money you can count on as far in advance as possible, as it will impact your own savings targets and your lender’s documentation requirements. If you have a parent, sibling or auntie who has mentioned their interest in giving you this sort of gift, it’s not bizarre to bring the subject up, express your gratitude and let them know that you’re planning to buy in 2013 so you can have a detailed conversation about logistics - including their financial, tax or estate planning pros, if it makes sense.

Alternatively, if your home buying plans are timed alongside your wedding plans, graduation plans or new baby due date, consider opening a down payment registry, so well-wishers can funnel their gift funds right into your real estate savings. For example, the federal Dpeartment of Housing and Urban Development (HUD) allows small gifts to be combined in a single savings account and eliminates otherwise onerous gift money documentation requirements with the FHA Bridal Registry program, which is available around weddings and “other legitimate occasions where substantial gifts are typically received by an individual or individuals.”

Touch base with your lender and agent to see whether there are any registry programs that might make sense for your situation.

Finally, buyers who decide to team up with their BFFs, siblings, parents or other loved ones to buy a place they can jointly own and/or live in might be able to structure things so that they have to come up with less down payment money than they would otherwise - the co-buyer comes up with the rest! Think about whether this sort of arrangement might help you and your loved one accomplish your respective financial and real estate goals, in one fell swoop.

6. Your employer. Believe it or not, some employers actually offer down payment and other forms of mortgage assistance to employees. In particular, universities and governmental agencies that employ first responders who are required to live locally for their jobs (e.g., police, fire and other emergency personnel) often have housing assistance programs that can include down payment funds or access to mortgage programs with lower down payment requirements.

Even if you don’t work for one of these sorts of agencies, if you are relocating for work, touch base with your HR department to find out whether there are any relocation benefits that can help you make up the difference between the cash you have and the down payment you need to make your move.

7. Your city, county or state. What you’ve heard is true: there are few, if any, down payment assistance programs still available on a national level. But many states, counties and cities offer their own down payment assistance programs, which are generally available to folks falling into one or more of the following categories:
  • first-time buyers (people who haven’t owned a home in the area in the last 3 years)
  • buyers in low- or moderate-income brackets 
  • or those buying homes in a particular part of town.
Your mortgage pro and real estate agent should be able to help you track down any such local programs applicable to you. In fact, this is one great reason to touch base with them at the beginning of your down payment savings adventure versus waiting until the end. But make sure you read up on the programs extensively before you decide to opt into one. Many of them run out of cash over the course of the year, so shouldn't be counted on; others may require you to repay any assistance received if and when you sell or move - things you should keep in mind at the outset.

Source: Trulia

Friday, December 7, 2012


The use of a Realtor is absolutely free unless and until I find you the perfect property.
You get all this:
  • every phone call I make on your behalf
  • all my contacts in the field
  • referrals to services you may need (plumbers, contractors, electricians, painters)
  • rapport with other Realtors that speeds things along
  • every email I send on your behalf
  • every home visit we attend together
  • my overseeing at walk through and inspection
  • my advice on pricing, layout, and anything you might like
Try to get an attorney to spend 1 minute on the phone for free! You get all this from me and I don't take any payment until the process is complete. It's my pleasure to find you the perfect home. I'm so committed that you pay me at the end. Great, right?