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01) Green and Clean
02) Aspire and Inspire 03) Banish the Blues 04) Blood in the Water 05) BTB 06) Casappraisalitis 07) Crafty Credit 08) Held Captive By My Condo 09) If Only Life Were More Like HGTV |
Green and Clean
Q. Since we are not moving anytime soon (HA!), we've decided to renovate our 1985 master bath. We want to incorporate green design, but don't know where to begin. Any suggestions?
Elizabeth. Congratulations on your decision to “go green,” but I understand your trepidation. Bathroom renovations are hideous enough without having to learn a whole new eco-friendly vocabulary. Relax: creating an environmentally responsible bath is a snap if you follow these tips.
Bathrooms are water guzzlers. To minimize water consumption, choose sensory-activated faucets and low-flow toilets. Low-flow toilets got a bad rap when they were first introduced, but the technology has greatly improved. Instant efficiency is achieved when you replace your current toilet, which uses five gallons of water per flush, with a dual flush, which uses a maximum of 1.6 gallons.
As for floors, linoleum (yes, it is eco-friendly) and tile are good options. For vanity tops, natural stone is beautiful and green. There is a wide selection from which to choose, from the ubiquitous granite to a quartz composite known as engineered stone. For shower and tub tile, consider the fabulously juicy colors of recycled glass tiles. Be sure to use non-toxic tile sealants and caulking.
Most cabinets are made of wood that contains urea-formaldehyde, which can release harmful chemicals (VOCs or volatile organic compounds) into your home for years after installation. The alternatives are solid wood cabinets or wood substitutes such as wheatboard, formaldehyde-free pressboard, or MDF (medium density fiber board). Finish the cabinets with a non-toxic stain or paint.
As for lighting, fluorescent bulbs are the energy-efficient standard, but a bit harsh for the entire bathroom. Consider fluorescent lights for general lighting and install halogens adjacent to the mirror and over the sink. Adding dimmer switches to existing light fixtures is an easy-to-install energy saver, too.
Q. I recently visited an Open House where clearly the owner was unfamiliar with the concept of “staging.” Will her poor housekeeping affect how long her house is on the market and the sales price?
Elizabeth. Yes, to both!
Consider the following scenario. Homebuyers Dawn and Dave are considering two properties. The first house has blooming plants and a freshly painted front door. Inside the carpets are clean, the kitchen is spotless, the closets are spacious, and the paint colors are soothing.
Dawn and Dave love it! They want to live like this. The fact that Dawn and Dave haven’t mopped their kitchen floor in six months is irrelevant. This is what they aspire to. They vow to eliminate their clutter and live more elegantly and neatly.
Thus inspired, Dawn and Dave drive to the second house. House number two has a broken bicycle in the front yard and dying shrubbery. The carpets are stained, the kitchen looks like a war zone, clutter is rampant, and the living room is painted lime green. In fact, it looks a lot like Dawn and Dave’s current home. They don’t want to live like this.
Despite the fact that house number two is bigger and less expensive, Dawn and Dave immediately buy the first house.
Why? Because the first house was staged to appeal to both the aspirational and inspirational needs of house hunters. Dawn and Dave may never change their slovenly ways, but house number one encouraged them to think they could.
When staging your home to sell faster and for more money, capture the prospective home buyers’ mind and soul and reap the rewards.
Q. Although I am not planning to sell my home anytime soon, all of the dismal news about the real estate market is making me nervous. What should I do?
Elizabeth. What better way to banish the blues than tackle a home project! Here are three activities which will not only keep your mind off the gloom and doom but will enhance the value of your home when you do sell.
Conduct an energy audit of your house.
What better time to review your utility bills! Replacing your old appliances may actually save you money. Household appliances are more energy efficient than ever before. For example, a new refrigerator uses about 50% less electricity than a 1990 model and a clothes dryer 70% less. Consider a ceiling fan, programmable thermostat, and new or additional insulation for further efficiency.
Clear out and contribute.
Look around your house. You know you have too much stuff. The satisfaction of a neater home coupled with the knowledge that you have donated to the community should be sufficient impetus for a joyful Saturday of de-cluttering.
Plant bulbs.
’Tis the season. Save money by buying in bulk. (This is an exception to the above-mentioned tip!) You can easily pay one-third less per bulb if you buy in lots of 1,000 instead of 10 or 25. So get together with friends, neighbors, or fellow garden club members to buy in quantity. Any leftover can be sold at your group's fundraising events (a money-saving suggestion from HGTV).
Q. I recently saw a wonderful house for sale, but it is out of my price range. However, with an abundance of houses on the market, I thought I’d make a lowball offer. What do you think?
Elizabeth. A lowball offer is not your best strategy, despite the surplus of inventory in many neighborhoods and the “blood in the water” headlines.
A lowball offer is defined as any offer less than 90% of the asking price. Such an offer may be competitive, but you are bidding on a home, not a strip mall. In residential sales, the offer is not just about the price. The offer also contains an underlying comment on the seller’s lifestyle and identity. A low bid says, “You are not worthy.” Expect the offer to be rejected outright or countered with bad grace. Subsequent negotiations will be hand-to-hand combat. To the seller, the buyer is a chiseler; to the buyer, the seller is an arrogant fool. Not a promising start.
A lowball offer might be appropriate if the property is truly priced too high, has been on the market several months, or needs updating. In this case, I suggest you and your agent include a well-documented explanation with your proposal. In fact, the listing agent may be secretly delighted with your offer. She knows the house is badly priced, and a legitimate low bid may provide a much-needed dose of reality for her seller. In addition to documenting your price with comparables, you can enhance the offer in other ways such as with a fast and/or flexible closing date, large earnest money check, pre-approved mortgage, or all cash offer.
If you LOVE-LOVE-LOVE the house, do not risk a low bid. Make a decent offer and close the deal. Don’t mess with your dream house.
Sometimes sellers won’t budge on the price despite the evidence that the house is priced incorrectly. Owners of a unique property or those testing the market are not likely to negotiate.
I know it is tempting to see deals around every corner, but lowballing is not the way to get one. A better strategy is to do your homework and make a thoughtful bid based on all the available information.
Q. I just read the most depressing article in the newspaper about the housing market. Inventory is up, the number of days to sell is up, and foreclosures are up. Looks like the only thing not up is prices. What gives?
Elizabeth: What are you doing reading the newspaper anyway? Peddlers of doom and gloom! Although all of your observations are for the most part correct, well-maintained and realistically priced homes are still selling quickly, and there is an abundance of choices for buyers. It's back to basics (BTB) for buyers, sellers, and Realtors.
Here are my 10 BTB tips:
- Quit reading the newspaper and request specific, local sales data from a trusted Realtor. (That would be moi!)
- Retain a first-rate mortgage professional.
- Hire professionals for all home-related jobs: inspectors, stagers, and landscapers.
- Analyze the housing market in your area and neighborhood.
- Establish a realistic sales price and/or purchase price.
- Make a PAC. (Don't know what this is? You must have missed my column on the subject. If so, let me know and I’ll email you a copy. )
And for sellers in particular:
- Calculate how many months of housing inventory there is in your neighborhood and your price range. (Again, the source of that data would be moi!)
- Maintain a meticulous home.
- Identify your target buyer.
- Create a personalized and creative marketing plan (in writing).
Cheer up! You’re living in Middle Tennessee, not Florida!
Q. A neighbor of ours was bemoaning the fact that his house has gone down in value by $43,000 in the past two months. Where on earth did he receive such specific information and why?
Elizabeth: I don’t want to minimize your neighbor’s concerns, but I suspect he is suffering from a case of casappraisalitis.
Many people suffer from this disease, which is caused by prolonged exposure to media coverage of the mortgage crisis and HGTV. The symptoms are familiarity with foreclosure statistics and serious addiction to one or more appraisal websites. It can be highly contagious.
That being said, there is nothing wrong with knowing what your home is worth, especially if you plan to sell it in the immediate future. There are many websites that allow you to calculate your home’s value based on information culled from public records. But beware—these sites can be habit forming, and based on my own experience, not entirely reliable.
To determine the value of a high-end, traditional home in Forest Hills, I consulted five of the most popular appraisal websites.
The results varied widely. The difference between the highest and lowest estimates was a whopping $572,464. And Homegain.com has no record of the address at all, which would certainly surprise the current residents.
Most of the sites offer a range of values and provide sales data for up to thirty comparable homes. Eppraisal.com offers the most recent similar sales. Realestateabc.com pegs sales from as far back as 2004, which are not useful.
On many sites, you can recalculate the valuation by changing the selection of comparable homes. For example, you might delete the old sales or the homes you know are dissimilar to yours. On several sites, you can adjust the value of your own home by adding in a major kitchen remodel, for example.
Cyberhomes.com is undoubtedly the site your neighbor consulted. It provides the standard estimated value, and then helpfully lets you know what change this represents over the past two months and the past seven months. In the case of my designated house, the past two months have brought a change downward of $71,508. Seven months ago, the value was up $54,432. Provocative information? Yes. Meaningful? Maybe.
Although the websites offer valuable data, nothing beats the hands-on experience of a Realtor. Where the online sites fall short is in the selection of appropriate comps. The unique characteristics of a home or home sale are not reflected in the public records on which the websites depend.
For example, a house sold for less than market value because of a divorce, an awkward backyard, or relocation. Or alternatively, your neighbor’s house sold for more than a similar home because of its distinctive architectural style, sophisticated art gallery, extreme privacy, or famous gardens. This is pertinent information that your Realtor takes into account when considering comps, but the websites don’t pick up.
The websites are a great starting place for your research, but not the final word. And to prevent catching the dreaded casappraisalitis, limit your exposure to these sites to 1x annually.
Eppraisal.com
Realestateabc.com
Homegain.com
Cyberhomes.com
Zillow.com
HGTV’s “My House Is Worth What?”
Q. As you suggested a few months ago, I checked my credit using the free service offered by AnnualCreditReport.com. My credit score is lousy! Now what?
Elizabeth: I am sorry, but better to “know the score” than be surprised when you are turned down for a job or a car loan.
Your credit score is based on five factors. Here are a few strategies for improvement in each of these areas. However, don’t expect your score to bounce back overnight. Like those few extra pounds, it took time to put ’em on, and it takes time to get ’em off.
The simplest way to improve your score is to pay your bills in full and on time. (This is easier if you cut back on shoe purchases, too.) It takes only a few missed payments or submitting the minimum due each month to sink your score. Consider automatic bill paying if you have a history of late payments. Payment history accounts for about 35% of your score.
A less obvious tip is to maintain a low “credit utilization” level. This refers to the balance- to- limit ratio on your account. In plain English, this means don’t max out your credit cards. In fact, don’t carry a balance greater than 50% of your available credit line. It is actually better for your score to carry a smaller balance on several cards than consolidate all of your debt onto one card. This factor comprises 30% of your score.
The third strategy is to build up a lengthy credit-using history, and no, this is not an excuse to go on a spending binge at the Green Hills Mall. It means don’t cancel dormant cards, as keeping them open supports your credit record. Furthermore, keeping little used cards in force lowers that important balance-to-limit ratio. Credit history is 15% of your score, and one of the few things in life where being old works in your favor.
The balance of your score is split between two categories: new accounts and debt diversification. While maintaining a disused account is good, opening a new account is somehow suspicious. Yet another reason to resist the lure of 20% off all your purchases if you open a J. Crew credit card today.
Debt diversification is the final component of your credit score. This seems counterintuitive, but having several credit cards, a car loan, and a mortgage make you more desirable in the eyes of creditors. Go figure.
Be a credit-crafty consumer and you can save thousands of dollars on your car insurance, mortgage, and cell phone plans, and you might land that new job, too.
Q. I want to sell my newish condominium so that I can move back to my hometown of Chicago. Unfortunately, units in my building are selling for less than I paid two years ago. Any advice?
Elizabeth: Yes, don’t! Ok, seriously, before you assume the worst, do your homework. The first step in evaluating your options is to forget the purchase price of your unit. What you paid for your condominium two years ago in no way reflects the current market value. Sad, but true.
Review the past 6-8 months of sales in your building. For each sold unit, ask the following questions. What was the original asking price? How many price reductions were posted prior to the final sale? What was the final sales price? What is the cost per square foot relative to the final sales price? What is the ratio of closing price to the most recent listing price? How many days was the unit on the market? What is the condition and location of the unit?
The next step is to compare your unit to all others currently for sale in your building. Go to every open house. Be a nosy neighbor! How does your unit compare with respect to location in the building, condition, upgrades, floor plan, square footage, outdoor space, parking, and natural light? What perks are the sellers offering to buyers? Furnishings? Payment of 6 months of homeowners’ fees? Closing costs? Owner financing? Don’t forget the incentives to the agents.
Based on the data about sold and active listings in your building, you can establish a competitive asking price for your impeccably maintained residence. Ideally, the asking price should be lower than every comparable unit in the building. If a prospective buyer wants to live in the building, your condominium has to be the only smart choice. Best price, best condition, most flexible closing. This may be challenging in a building where a bank owns units. Lenders price to sell – fast. After all, they are not (willingly) in the real estate business. Assuming that there are no bank-owned properties in your building, can you sell your home for an amount sufficient to cover your debt?
If you don’t have to write a check at the closing table, go for it. Don’t be held hostage by your home! The good news is that Southwest flies regularly and reasonably to Chicago. You could conceivably go home every weekend, for less than the loss on your condominium. And remember, this too will pass.
If Only Life Were More Like HGTV
Q. After a weekend of watching HGTV, I am eager to begin some quick, easy, and inexpensive home improvement projects. Do you have any suggestions?
Elizabeth: Not to dampen your enthusiasm, but life, sadly, is not like HGTV. In HGTV-World, a crew of hunky, personable young men transform the home from doghouse to show house in a ½ hour. They shop for bargains. They are as comfortable with nail guns as they are with fabric swatches. The boys even clean up after themselves.
However, most of us do not have a crew of young men at our beck and call. Real-World home improvement projects are slow, arduous, and pricey. So lacking a dream team, here are some suggestions for do-it-yourself home enhancements.
Define The Room
We all have a multi-functional room in our house. It is a guest room, TV room, hobby room, and office. But it serves none of those functions well. Analyze your requirements and make over the room accordingly. If you rarely have guests but work from home every weekend, then an office is the best use of the space. Your in-laws are delighted to exchange the sofa bed for the comforts of a hotel. (Really!)
De-clutter
GET ORGANIZED. For every item, take one of four actions: donate, trash, store, or keep. Be ruthless. That poufy skirt may come back in style, but you will be too old to wear it, so let it go. Turn On The Lights
Realtors recommend turning on all the lights when showing a house. Why? Because a brightly lit home looks fresher (and more saleable) than its gloomy counterpart. If you can’t install recessed lighting or chandeliers in your house, acquire additional lamps. Thrift stores are a great resource, and many shops will lend you the lamps before you buy them.Ditch The
Oversized Furniture
Just because West Elm is selling a chair that could seat a family of four doesn’t mean you have to own it. What looks stylish in the enormous showroom will look merely crowded in your 15’ x 15’ living room. Give the Papa Bear chair to the owner of a McMansion and shop for an appropriately sized substitute. Because it is hard to appreciate the scale of furniture in the showroom, take the measurements of your room and a tape measure with you when you shop.Paint The Back Door
The back door is the busiest entrance to the home, but often the most neglected. Why not apply a vibrant color or a whimsical design to the door you use the most often? The groceries won’t be any lighter, but your spirits will be.
Happy Home-work!
Q. I see a lot of lease option signs around town. What exactly is a lease option? Is it a good choice for a buyer?
Elizabeth: A lease option (also known as lease purchase or rent-to-own) is not a new concept, but more prevalent in a soft real estate market. A lease option allows a prospective owner to rent the house or condominium with the option to buy it at a future date, using the rent towards the purchase price.
Under the right circumstances, a lease purchase benefits both the current owner and the prospective owner. The current owner or developer receives much needed cash flow and warm bodies in the property. This is particularly attractive for owners of multi-story condominiums, as a fully occupied building avoids the dreaded “see through” effect. A well populated building also improves security, building maintenance, and the neighborhood.
Rent to own is a viable alternative for buyers who don’t have a sufficient down payment to buy or have poor or nonexistent credit. Buying a bit of time gives these buyers an opportunity to build up savings or (re)establish their credit.
Terms vary from owner to owner. Some contracts stipulate a fixed time to commit to the purchase if the buyer wants to use all the rent towards the purchase price or closing costs. In the case of a condominium, maintenance costs are typically deducted from the monthly rent that is applied to the purchase price. Read the lease carefully. And you thought a test drive applied only to vehicles!
Q. My husband and I live in a small house with three children and an aged Labrador retriever. We agree that we need more space, but that is the only point on which we agree. We have been house hunting for months, but are no closer to finding our dream home. Help!
Elizabeth: You and your husband need to make a PAC: Prioritize And Communicate your most desired home features. Looking for a home without a PAC is like driving from Nashville to Park City, Utah without a map. You might get there, but you could just as easily end up in Park City, Kansas (known for first rate BBQ, not heli-skiing). A PAC is vital for first-time buyers, but experienced homeowners can benefit from its use as well.
You may be tempted to skip the PAC conversation because you already know what your husband wants in a home! Guess again. While seemingly content with his minuscule closet, your husband secretly dreams of customized shoe racks. Never assume you know your spouse’s closet fantasies!
Of course, before you discuss the fun stuff, you and your spouse should review your finances. Talk to a trusted lender and establish a price range for your home search. Don’t venture out with a loosey-goosey budget.
I suggest that all homebuyers take the following PAC exercise. The ensuing discussion can be enlightening. (Like couples therapy, only free!)
Individually, prepare three lists—do not look at your partner’s list until the exercise is completed!
My home must have the following features (include neighborhood requirements).
This list should be short, 2-6 items.
It would be nice if my home had the following features. This list can be a bit longer.
In a perfect world, the following features would be ideal. Blue-sky thinking.
Get together with your partner and compare lists. Hmmm. This is the hard part. Prepare The List that represents your agreed-upon “must haves.”
Without a firm list of “must haves,” it is easy to get off track. Many a buyer has been snared by the allure of an aubergine, 4-Oven Aga. Stay focused. Serendipity is fine for a trip to the mall, but not for house hunting.
No matter how spectacular the view from the 3-bedroom, 1-bath ranch, it is not the right home if you have agreed that a 4-bedroom, 3-bath colonial is essential for family harmony. Correspondingly, if the home has all the desired amenities plus a bonus feature such as a screened- in-porch, get out the checkbook!
Make a PAC. Prepare The List. Buy the perfect house!
Q. My neighbor sold her house last year in one day despite the fact that her kitchen should have come with a warning from the health department. However, I have heard that houses are not selling as quickly this year. What can I do to make my house more saleable?
Elizabeth: The days of desperate buyers and lazy sellers are over for the most part. Inventory is up, the number of days to sell is up, and mortgage rejections are up. So what’s a savvy seller to do?
Panic not. It’s back to basics for everyone. First, talk to your Realtor about sales activity in your neighborhood, your timeline for moving, and your equity position in the home. How your home is priced to other houses in your neighborhood determines its salability before you put up the “For Sale” sign.
Having established a competitive price, it’s time to consider the three linchpins of a listing: accessibility, marketing, and staging.
If you want to sell your home, make it convenient for prospective buyers and their agents to see it. Caveats in the MLS such as “no showings during naptime” or “pit bull not vicious” are not helpful. Selling your house is going to disrupt your family’s routine, but you need to get over it, and make your home accessible.
As for marketing, despite or in addition to the internet, the tried and true “For Sale” sign in your yard still works wonders. Talk to your agent about hosting an open house for the Realtor community, as the agents touring your home are your connection to buyers; other agents sell the vast majority of listings.
Finally, I can’t emphasize enough the importance of presenting your home in the most appealing manner, as we all know how critical first impressions are. Keep your home warm and inviting, but not too personal. You want prospective buyers to imagine themselves living happily in your home, which they cannot do if evidence of your unique hobby is everywhere.
Move the pets. Let me say that again: move the pets.
Buyers often see many houses in one day. At the end of the day, you don’t want them to remember your house as the one that smelled like a cat, but rather the one that said, “Welcome home.”
Q. Based on an inspection, the prospective buyers of my darling home submitted a lengthy list of repairs. I could just cry! They are pick, pick, picking my precious house apart. Really, the demands are ridiculous. It is a 20-year-old house. What do they expect?
Elizabeth: It is not your “darling home.” It is a product for sale. From now on refer to your house by the street address—distance yourself, girl!
The Inspector’s Motto is pick, pick, pick. The inspector is paid by the buyer to scour the property for flaws. And since the inspector is potentially liable for his comments, he is thorough. Ideally, the buyer and the buyer’s representative review the inspection for major defects or safety hazards in the home. Cosmetic items and normal wear and tear should be reflected in the offering price. (Unfortunately, “cosmetic items” occasionally become the subject of dispute. When the buyer points out, accusingly, that your light switch covers are plastic, consider how bad you look in an orange jumpsuit before you respond other than with a sweet smile.)
To guarantee a quick sale for top dollar, your home must stand out shiny and bright from all the other houses. All the faults you no longer notice, such as the crumbly front steps, the window that won’t open, the cracked tile in the bathroom, and the leaky dishwasher must be repaired or replaced.
To avoid the anxiety you are currently experiencing, I suggest that sellers obtain a pre-inspection report. This is simply a home inspection which is conducted on behalf of the seller before the home is placed on the market. Know your home’s flaws upfront! Based on the pre-inspection, you can make the repairs or not depending on your budget and time frame. (Remember to disclose where necessary.) An accurate representation of your home provides peace of mind and the information needed to price and market your home most effectively.
My advice to you: fix it, forget it, and move forward! Your next HOME is waiting!
Q. In preparation for selling her house, my neighbor had it professionally staged. My house is not on the market, but I would love to achieve the same clean and restful look. Can I stage my own house?
Elizabeth: Absolutely. There is no law that says you can stage your house only when you sell it. The de-cluttered and well-organized look of a staged home is appealing anytime. Having only this past weekend organized my mother’s kitchen, I can speak authoritatively about the joys of alphabetizing cookbooks and organizing casserole dishes by size and color. (No, really!)
When it comes to organizing a space, the biggest hurdle for most people is where to start. Most of us begin the process with all good intentions, but become discouraged when we don’t get instant results.
Uber-organizer Michele Matties, owner of No Worries Professional Organizing Services in Boston (noworriesorganizing.com), suggests starting with a small project that can be completed relatively quickly with very visible results. This could be sorting out a closet or cleaning the oven. This success inspires you to move on to the next task.
Michele is also a passionate practitioner of no stuff left behind. Everything goes in an appointed place (essential tool: label maker) or is thrown away, recycled, donated, or sold. Decisions must be made! This is where a professional’s assistance can be helpful. Left on our own, we dither, we make excuses, we think we will actually use the thingamajig, and then we put it back in the overstuffed cabinet! The professional can suggest, gently of course, that we can treasure Aunt Eleanor’s memory without necessarily keeping her collection of shot glasses from around the world.
So on the next rainy day, take the first step to a fresh space by cleaning out just one room. Before you know it, your house will be “move-in ready.”
Those Confusing Condominium Fees
Q. My husband and I are fed up with watering, weeding, mowing, and fertilizing our lawn and gardens only to share the fruits of our labor with the deer! We are condominium-bound. But we have questions about the monthly condominium or association fee. What does it cover, and how do we know it’s not going to skyrocket the minute we move in?
Elizabeth: Ah, the joys of communal living! As a 20-year veteran of condominium living both in New York City and here in Nashville, I am particularly qualified to respond to this question.
In evaluating condominium fees, the two key questions are:
What does the fee cover?
Is the fee adequate to meet the expenses of the complex?
Association fees vary based how much “common” property the residents share. In a high-rise apartment such as west Nashville’s Windsor Towers, the residents share a building. In a cluster-home complex like Green Hills’ Sugartree, the “common” property is limited to the exterior grounds and clubhouse.
In general, the association fee includes all or some of the following elements:
Insurance (association directors and officers, property, general liability, flood)
Common area, exterior, and ground maintenance
Pool, tennis court, and clubhouse maintenance
Some utilities
Staff payroll (security guard or doorman)
It is difficult to compare monthly association fees at various residences without knowing which expenses are included. For example, the insurance premiums may be allocated in the monthly fee at one facility or billed as a separate annual assessment at another.
So where do you find this information? Your Realtor can direct you to the best source of accurate information, which is the management company or the president of the homeowners’ association. Once you’ve determined what expenses are included in the maintenance fee, you want to know if the fees are sufficient to cover the association’s obligations.
The question of adequacy is a bit trickier than merely knowing that trash pick up is or is not included. And it is unlikely that the individual unit owner will have the information.
These are the questions for which you need answers:
How much is the association fee, and what is the payment schedule (monthly, quarterly)?
When was the last fee increase and by how much?
How many homeowners are delinquent in their payments?
Is there a reserve fund set aside for future repairs? If so, what is the current balance?
When was the last major capital improvement? How was it funded?
Any expenditures or repairs anticipated in the next 12 to 24 months?
The condominium’s managing agent has the answers to most of these questions. But even so, I suggest that you request the condominium’s financial package and minutes of the past six Board meetings. (The Board minutes can shed light on issues of concern to the residents.)
In addition, you should plan to serve on the Board of Directors of your condominium. You will probably hate every minute of the experience. (Communal living does not necessarily bring out the best in people.) But no matter what the burden, you must serve, especially if you are concerned about the association fees. How else are you going to stop the lobby renovation, which includes the installation of a gilded, Baroque- style fountain and aviary?
The due diligence required to buy a condominium is not much different from that of a house. The main distinction is that you are evaluating two properties, your individual unit and the overall facility. The good news is that Nashville offers a wide selection of condominiums. Shop around, and enjoy the lawn-free life!
For a future column: How are the fees in newly constructed condominiums determined, and how accurate are they likely to be? And what’s with the parking charges?
Q. I keep reading that some cities have years of housing inventory. What is the significance of this, and how does our market stack up?
Elizabeth: An analysis of the number of unsold homes in a given region is one benchmark that real estate professionals and economists use to evaluate the health of the market. In any business, excess inventory is never a good thing. But unlike a surplus of inventory at Darlene’s Designer Dresses, houses can’t be easily unloaded at T.J. Maxx (yet). Clearing out the surplus housing stock will take more than a red tag sale.
The significance of inventory is related to a measurement that real estate professionals call absorption rate, which is the rate at which the market is selling properties. How long would it take to sell the current inventory if no other homes came on the market? A balanced market is 5-6 months.
For example, if 12 homes sold in the last 12 months in a given market that means that the market will absorb 1 house per month on average. If there are 10 homes currently on the market, there is a 10-month supply.
In Davidson and Williamson Counties, inventory varies widely by price range, with the biggest backlog in the $1,000,000-plus price range.
Although there are several factors to consider when buying or selling a home, the inventory of unsold homes in your price range and neighborhood is a key determinant in trending and pricing.
Q. I paid $280,000 for my house two years ago and spent an additional $4,000 on improvements. I think my house is worth at least $284,000. My Realtor disagrees. What is the value of my house?
Elizabeth: Your house is worth what a buyer will pay for it – today. This is known as market value. It is not the amount you paid two years ago, nor does it necessarily include the cost of the improvements. But value is more complicated than this simple definition implies.
Value is the hot topic these days and not just in real estate. Everyone wants a good value, whatever that means. In their advertising, retailers eagerly point out that value is not just the price. More checkout lines, knowledgeable staff, lifetime warranty, or one-stop shopping all add value to the consumer’s purchase or experience.
In real estate, it appears that market value is the principal consideration. Pick up any consumer magazine and there is least one article on how to make your home more appealing to the elusive “market.” This is a bit of a guessing game because stagers, Realtors, builders, sellers, and magazine editors know only what buyers were willing to pay for yesterday. What they are willing to purchase today is anyone’s guess. Will coffee bars in the master suite be a meaningful selling feature in five years?
But a house is more than a coffeemaker. It is a home. What are the non-monetary measures of value? The joy of getting your baseball-obsessed son into a school district that has an outstanding baseball team, a house that includes an apartment for your mom, big sister not having to share a bedroom with the baby. These have value, too.
As Warren Buffet says in his 2009 letter to investors, “Price is what you pay; value is what you get.” What does value mean to you?
When "Free" Does Not Mean "Without Charge"
Q. Since obtaining a loan is more of a challenge lately, I checked my credit report before talking to a lender. Having seen those cute commercials for FreeCreditReport.com, I ordered a report from their website. My credit score is fine, but the report was not free. In fact, I was automatically enrolled for a credit-monitoring service at a cost of $14.00 per month. Is this legal?
Elizabeth: I too love the FreeCreditReport.com ads. The lyrics are clever and the jingle is catchy. Who wouldn’t contact them? However, as you discovered, the ads are misleading, but sadly, entirely legal.
The only authorized site from which to obtain a free credit report is AnnualCreditReport.com. (Thanks to the Fair and Accurate Credit Transactions Act of 2003.) From this site, you may obtain one free credit report each year from the three major credit bureaus, Experian, Equifax, and TransUnion. But even gaining access to the approved site can be tricky. There are several sites with deliberately similar names, including one called AnnualCreditReportInc. “Free” apparently does not mean “easy,” either.
Now more than ever, it is important to know your credit score, because it is not just lenders that are basing decisions on credit-based scores. Your credit score is used by auto insurers to calculate your premiums and by utility companies to determine the amount of your security deposit. Using your score as a guide, landlords and employers evaluate your reliability. Know the score!
