Smart Moves

Most homeowners reject the idea of renting out their property, even for a short period. They fear damage and nasty complications.

But Mary T. McCall, a long-time real estate broker, says the positives of a temporary rental could outweigh the negatives -- especially if you're convinced that home values are on the upswing in your area.

"This could be a wonderful time to lease, because there are so many good tenants out there now. These are people who -- due to hard times -- had to let go of a house through foreclosure or a short sale. They're just renting until they get their credit back," says McCall, president-elect of the Council of Residential Specialists (www.crs.com).

One group who could benefit from renting out their homes are older owners who want to check out a new location for retirement but don't have the funds to float a house payment in addition to a short-term lease in the new area.

The rent-rent option could also work well for those whose plans are unclear due to divorce, death or drastic career change.

Housing prices are on the rise throughout America. But McCall says the main reason some owners are now leasing is to buy time until property values increase even more.

"A single family home is like a precious metal --silver or gold. People know it has ups and downs but will go up eventually," she says.

To illustrate how well a temporary rental can work out, McCall tells the true story of a newly retired couple who own a pale-green ranch house but have moved to a custom-built house in their home state. Because they believe their property will sell for more in a year, they're leasing it to a divorced professor with three school-age children.

"The professor is keeping the place absolutely pristine. There are no problems whatsoever," McCall says.

But obviously some who rent out their homes aren't so lucky. Because horror stories abound, she urges homeowners to exercise caution before deciding whether to rent. Here are a few tips:

-- Gather information on your local rental market.

What if the supply of rental properties in your area outstrips demand? In that case, you'll want to factor this element into your plans.

As McCall notes, most realty offices have at least one rental specialist. This person can help you gauge the supply/demand ratio for rentals in your area and how much rental income your home would likely fetch.

You can also garner clues by looking at listings for rentals in your area as featured on the Multiple Listing Service. To view these, simply visit the website of the National Association of Realtors (www.realtor.org).

-- Check the numbers on the financial impact of renting your home.

Most homeowners want assurance that they'll at least break even on their rental or, better still, enjoy a positive cash flow after taking into account their mortgage payments, taxes and insurance costs, says Leo Berard, charter president of the National Association of Exclusive Buyer Agents (www.naeba.org).

When running the numbers on a possible rental, Berard says you should also factor in home upkeep costs.

"Don't forget that if your water heater breaks in the middle of the night or your air conditioner fails on Labor Day, you'll need to pay for a contractor to fix it," he says.

Also factor in the tax implications of becoming a landlord. To do this, Berard recommends you contact an accountant.

-- Make sure your home is vacant before trying to sell it.

Mark Nash, a real estate broker, says it can be tough to sell a home with tenants still living in it.

"Tenants can undermine your sale. If they don't want to move, they might deliberately make your house messy to discourage buyers. Or they might try to block showings," says Nash, author of "1001 Tips for Buying and Selling a Home."

To avoid complications, try to time the rental term to ensure the property will be vacant for at least two to four weeks before it goes on the market. With the tenants gone, you can quickly resolve any cosmetic or repair issues that might prove a barrier to a good sale.

-- Consider hiring a professional manager for your rental.

If you want to avoid the hassle of dealing with tenants on a day-to-day basis, Nash recommends you hire a professional manager. You'll still have to pay the repair bills, of course. But you won't need to field phone calls from unhappy renters demanding an immediate plumbing or electrical fix.

"Many people are naive about what it means to become a landlord. That's why a professional property manager can be a big plus," says Nash, who has owned a number of rental units in the past.

-- Try to damage-proof your property before the tenants move in.

When homeowners sell their property, most detach themselves emotionally. But that's not the case when they lease, Nash says.

"When you rent, the emotional cord hasn't yet been cut. You're still territorial about your place," he says.

No one can that promise your home won't sustain serious damage while it's leased. But Nash recommends you take several steps to reduce the risk. Repaint your walls with an easy-to-clean semi-gloss finish. Seal your hardwood floors with protective coating. And replace valuable light fixtures with inexpensive ones.

"When you're renting short-term, you don't have to worry about becoming a professional landlord. Just hang in there until the circumstances are right to sell," he says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

Five years ago, when a business executive in his 50s was hired as the CEO of a suburban hospital, his salary soared. To keep his commute short, he opted to live near his work, in a neighborhood of modestly priced homes. There, he and his wife found a vacant lot where they built the most opulent house for miles around.

The couple so relished the property that they continually expanded and improved it. They added several additions and ordered multiple upgrades. They also brought in expert landscapers.

But last year, after the husband's hospital was taken over by a larger one in a nearby city, he was given a new position at the acquiring hospital. Suddenly, his commute became exhausting, and the couple decided to move. So they called in a real estate agent to list their home, insisting -- against her advice -- that their house be priced high enough to let them recoup every dime they'd poured into it.

The property has had numerous showings, and buyers are impressed. But all have recoiled at the price tag. As a result, the couple's moving plans have stalled. At this point, they're frustrated, angry and uncertain what to do next.

This true story illustrates the difficulties faced by folks seeking to sell a swank property located in a community of mid-level homes, says Sid Davis, a real estate broker and author of "A Survival Guide to Selling a Home."

"Unless you bite the bullet and price it right, a house that's over-improved for the neighborhood ... can languish on the market for many months or even years," Davis says.

"Sure, people will come through your open houses because they're curious to see that big castle on the hill. But unless you price fairly, they'll soon disappear, never to be heard from again," Davis says.

The reason owners of over-improved houses can't recoup their investment is that location -- not size or features -- is the primary determinant of a home's value, says Fred Meyer, a veteran real estate broker and appraiser.

"The principle is that in a strong neighborhood the big houses will pull up the value of a small house. But if the neighborhood isn't strong, the small houses will pull down the big house," Meyer says.

Why do some homeowners spend more to expand and upgrade their property than is warranted by neighborhood standards? Davis says the most common explanation is that they anticipate living in the property indefinitely. But life, as we've seen, often turns out differently.

Do you intend to sell a home that has topped out neighborhood standards? If so, these few pointers could prove useful:

-- Avoid a "test the market" approach to pricing.

"Folks figure that if they start high, they can always come down later. Yet by the time they've cut to a fair price, their house is so stigmatized they can't even get market value. So they're punished in the end," Davis says

To avoid this outcome, he urges sellers to "bite the bullet from the beginning" with a price that reflects market realities and keeps their property from growing stale in the eyes of prospects.

-- Consider seeking the counsel of a professional appraiser.

If your house is the fanciest in the neighborhood, it may be tough to calculate its realistic market value. That's because selling prices are typically based off recent sales involving similar properties in the same community. And your place could be in a class of its own.

To get a grip on value, Davis recommends you hire a professional appraiser. In order to peg the price of an over-improved property, appraisers often visit similar neighborhoods nearby, searching for information on what other over-improved homes have fetched in recent transactions.

-- Seek to remove neighborhood eyesores.

Although it wouldn't help all owners of a high-end house in a modest community, Meyer says some sellers can benefit by assisting neighbors to improve a rundown property that's near their place.

Suppose, for example, that the home of your nearby neighbors is badly in need of a paint job or its driveway is filled with decrepit cars. In such cases, that property's shortcomings could be one factor holding down its value, and they should be addressed.

"It sounds like a bizarre solution, but it might make sense to pay your neighbors to fix up their home or to do the work for them. Explain to them how this could be a win-win solution for both of you," Meyer says.

-- Highlight features that make your over-improved house a good deal.

As Davis says, many houses that have been upgraded over neighborhood standards feature sizable additions that greatly increase living space.

"Lots of times, the owners have bumped out the back of their place to double the size of both their kitchen and family room. Also, they often expand the master suite, putting in a super bathroom with all the bells and whistles," Davis says.

He says that such enhancements deserve to be highlighted in the marketing materials prepared by your listing agent. Also, assuming your over-improved place is priced realistically, it's wise to point out that your price per square foot is less than that for smaller homes that have sold recently in your neighborhood.

"Good marketing won't make up for an overly high price. But there's no harm in touting the positives. Go ahead and tell buyers about the top-of-the-line appliances in your kitchen, your fancy granite countertops and that gorgeous family room with that zebrawood mantel imported from Africa," Davis says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

Record numbers of Americans now run small businesses from home. And many more companies let employees work part- or full-time from their residences. As a result, more people than ever maintain home offices -- and enjoy the convenience.

But what if you want to sell your property? Professional organizers say the untidy appearance of a typical home office makes a place unappealing to potential buyers.

"People can't picture themselves living in your house if it's filled with clutter," says Susan Pinsky, a veteran organizer and author of books on the topic.

Despite the importance of clearing out a home office prior to putting a property on the market, she says many people consider the task a daunting chore.

"It can feel overwhelming," says Pinsky, author of "The Fast and Furious 5 Step Organizing Solution."

Why is it so difficult to keep a home office looking neat?

Pinksy, who works with both business and residential clients, points to a paradox. At a time when vast quantities of information are available instantly on the Internet, many peoples still save many more papers, magazines and books than they need. They also hang on to lots of old technology.

Pierrette Ashcroft, who launched her own home-based organizing company in 2005, says that sifting through paper and book clutter can be the most laborious and time-consuming chore that confronts many home sellers. In fact, she recently struggled with this task herself after deciding to sell her colonial-style house and move to a condo apartment.

Are you a prospective seller who works from home? If so, these pointers could prove helpful:

-- Be ruthless when sifting through papers.

Many people who have home offices are plagued with boxes and bags filled with unsorted papers. These include business reports, computer printouts, junk mail, utility bills, credit card statements and clippings from magazines and newspapers.

Ironically, very few of the papers that people keep have value to their business ventures or careers, according to Ashcroft, whose clients include scientists, doctors and accountants.

"More than 80 percent of the papers that people save are never referred to again," she says.

Moreover, the room designated as a "home office" is often not the only space where business and professional papers mount up.

One of her clients -- a real estate developer -- even had stacks of business documents in the bathrooms of his house.

"Less is always more when it comes to selling your home," says Mark Nash, a real estate broker and author of "1001 Tips for Buying & Selling a Home."

Unfortunately, it can take more time and energy to go through papers than just about any other kind of clutter, he says.

One tactic that can make decision-making faster is to give yourself guidelines as to which items you'll save and which you'll toss. For example, small-business owners might choose to keep all their receipts for tax-deductible expenses -- such as office equipment and supplies -- but throw out those for clothing and food purchases.

-- Scan rather than file many papers.

Many people who work from home struggle to stay organized through the use of extensive filing systems. But Ashcroft says filing all but the most important papers is usually a waste of time and energy.

She urges those who are trying to de-clutter a home office to try to scan many of their documents into their computer rather than trying to store them in filing cabinets.

"I'm practically paper-free in my own home office. I use a rapid scanner and can scan up to 200 papers in two minutes," Ashcroft says.

-- Handle your book collections rationally.

Many people from all types of professional backgrounds maintain bigger libraries that they ever need or use for reference, Ashcroft says.

"People have an emotional attachment to books," she says, noting that bulging bookshelves are often found throughout a home, not only in the home office.

She cites the story of one client, a doctor, who left the medical profession to pursue her passion to become a potter. Even though she never intended to return to medicine, she kept a huge collection of medical books that she never opened.

The problem for bibliophiles preparing to sell their home is that shelves crammed with books make a property seem less appealing to buyers. What's more, it can be costly to pay a moving company to transport your books --especially if you're making a long distance move.

Ashcroft says home sellers with substantial book collections are wise to go through them before their property goes on the market -- dispensing with any tomes they no longer use or treasure. Remember, too, that many books can now be quickly and easily downloaded onto an e-reader.

-- Resolve to avoid taking your bad habits with you to your next home.

Ashcroft has worked with a number of clients who failed to complete the hard work of going through papers and files before selling a home. Instead, they simply packed them in boxes and stashed them in their garage.

It's better to box up and remove superfluous belongings than to leave them in the main living area of a property. But failing to cull through them in advance merely postpones the problem rather than resolving it, Ashcroft says.

Assuming time allows, Ashcroft recommends that home sellers weed through all their paper and technology accumulations in advance of a move, thereby giving them a fresh start.

"It's so much easier to pare down your clutter before changing houses. And you'll probably have a more successful sale," she says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)