Smart Moves

Do you hanker to trade your modest home for a majestic manse with a regal entrance, tall ceilings, a gourmet kitchen, five bedrooms, and a circular driveway out front?

If so, real-estate experts say you shouldn't expect the kind of discount you might have obtained just a year or two ago. But you can still do well on an upper-end home purchase in 2013.

Granted, many sumptuous properties are no longer available at the fire-sale prices of a few years ago. But buyers of high-end real estate can still get plenty for their money, says Karl E. Case, an economics professor emeritus at Wellesley College and co-founder of the Standard & Poor's/Case-Shiller indices, which track home price trends throughout the country.

"Interest rates are wonderfully low now, which means you can get a lot for your monthly mortgage payments. And if you buy a house you love, one real return on investment comes from the pleasure of living there," he says.

Case says that inventories are becoming very tight in many popular communities in the upper end of the price spectrum.

Why are grand houses currently in short supply in some areas? Case says one reason is that a large segment of the baby boomers have yet to downsize.

"Rather than sell during the recession, many redid their big houses. Because they improved for the long haul, they're staying put and not selling, at least in the near term," Case says.

Another factor limiting the supply of trade-up properties is that relatively few new houses were constructed during the economic downturn, Case says.

The growing shortage of high-end homes means that interested buyers may not be able to command the same level of leverage they did during the recession. But as a move-up buyer, you'll still fare well if you take a strategic approach.

Here are a few tips:

-- Seek out highly motivated sellers.

Though it may come as a surprise to some, the owners of upscale homes are no different from any other sellers -- some are a lot more driven than others, says Dorcas Helfant, a real estate broker and former president of the National Association of Realtors (www.realtor.org).

Hurried sellers, who may be moving due to a major lifestyle change such as a career shift or a divorce, are much more likely to negotiate in earnest.

"With inventories starting to shrink, sellers are more confident. Some are getting multiple offers. But even in these neighborhoods, you still have better odds of negotiating with sellers who are motivated to move," Helfant says.

If you politely question sellers on their reasons for moving, many will give you or your agent candid answers.

Helfant says it's often pointless trying to negotiate with sellers who convey a carefree attitude about their timing. You're much more likely to strike a favorable deal with people who must move.

-- Don't rule out properties that have gone "stale."

On occasion, genuinely motivated sellers hold out longer than they should, reducing their overly high list price only after desperation sets in.

"Even in premium neighborhoods, people who overshoot on price and then fail to sell for many months can be forced to drop their price below market value after buyer interest drops off," Helfant says.

Their problem is that homes that linger too long on the market become stigmatized.

"It can take a while for some otherwise motivated homeowners to realize they've been asking way too much. But if you're willing to wait, you might be rewarded for your patience," Helfant says.

-- Make your offer as clean as is possible.

Helfant tells the true story of some clients who traded up from a mid-sized bungalow to an impressive colonial. They were successful in obtaining $50,000 off the price for a fairly valued property because they wrote a "clean contract" on the place. They offered cash and promised to close in 30 days.

Why was the offer so appealing to the owners? Because they were under deadline pressure to move across the country for a job transfer and needed a sure-bet sale in a hurry.

"Motivated sellers are sometimes highly responsive to a bid that makes it easy and quick to close," Helfant says.

-- Consider making a counteroffer if the market warrants it.

Multiple offers are now more common than they were a year or two ago. But there are still neighborhoods, including high-end ones, where buyers continue to rule. Helfant says you can usually be more aggressive when negotiating with sellers in an area with lots of homes for sale.

Obviously, those seeking to buy a large or luxurious home have the most to gain on a percentage basis from tough negotiating.

-- Keep your eye on your ultimate goal.

Among those hoping to take advantage of low mortgage rates are older people who want what Helfant calls their "last-hurrah house." Such buyers often want such luxury features as elaborate gardens, at-home fitness centers and large, customized garages to house motorcycles and sports cars.

Getting a good deal is always a plus for homebuyers. But for older buyers, acquiring the exact place they want -- whether a country estate or a downtown loft -- can be even more important.

"Remember when you trade up, you're buying for lifestyle. You're looking for that perfect location, that perfect view or that perfect refuge from the world where you can find peace. So it's more than just the price that counts," Helfant says.

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

Are you planning to sell your home in the new year? If so, real estate specialists say it's crucial that you do all the repairs and improvements needed before your property hits the market. That means fixing every leaky faucet, gash in the walls and shaky stair railing.

"These days, buyers have less and less tolerance for houses with problems. They want instant gratification. They don't want to move in and have to wait weeks or months to get a house up to standard," says Sid Davis, a longtime real estate broker and author of "A Survival Guide to Selling a Home."

Davis says it's never too early for sellers to get serious about home repairs and cosmetic improvements. But as he notes, finding competent and reliable contractors can take time -- especially now that a housing recovery is underway.

Though spending on home improvement dipped steeply in the aftermath of the recession, the outlook for the remodeling industry is now more positive, according to Harvard University's Joint Center for Housing Studies. For the first half of 2013, it projects double-digit growth in home-improvement spending.

Davis recommends extreme caution when hiring contractors for pre-sale work. Here are a few pointers:

-- Request contractor referrals through your listing agent.

For their clients' use, many established agents maintain lengthy lists of contractors, ranging from carpet cleaners to air-conditioning repair services. Such a list can be a valuable starting point for home sellers, says Eric Tyson, a personal finance expert and co-author of "House Selling for Dummies."

"Agents have a lot of pull with contractors, because they can send them lots of work over time. So the contractors know they'd better not mess around or delay the jobs an agent sends them," Tyson says.

But he says you "shouldn't take as gospel" the positive experiences your agent has had with any given contractor.

"The contractor may have slipped in the quality of his work or gotten too busy. So you'll still need references for every contractor you hire for a major project and also get at least three bids," Tyson says.

-- Make sure all your questions are answered before hiring a contractor.

"To be sure a contractor is organized and on time, you've got to meet with him before hiring him. A face-to-face meeting helps rule out sloppy or disorganized people," Davis says.

To ensure you don't get squeezed out of a contractor's schedule by a larger job, he says you'll want to find out whether the company is overbooked. You also need to know who will perform the work.

-- Insist that the contractor's promises are put in writing.

Davis says that those who know a contractor well often make the mistake of counting on verbal guarantees. But he says there's no substitute for a written contract that provides details on all aspects of the job, including price, timing and scope.

"Without a written agreement, you'll never get anywhere in small-claims court if the contractor turns out to be a con man. So unless it's a very small job -- like a plumber replacing a faucet or an electrician fixing a light fixture -- you'll want to have everything in writing," Davis says.

Davis also recommends you include in your agreement language indicating that the firm carries all the proper insurance coverage on its employees and subcontractors.

"Suppose one of the workers falls off a ladder and gets badly hurt. Without insurance, you could be held to blame and face a major lawsuit. Remember that any good contractor will carry insurance and be happy to show you documents to prove it," Davis says.

-- Don't let your contractors cut corners on government requirements.

Not all home repairs or upgrades require government permits to ensure compliance with local codes. For instance, your electrician probably won't need government oversight to change a light fixture and your plumber likely won't require it to replace a broken water heater.

But in many areas, major projects may be held to a higher standard. Examples could include the installation of a new bathroom or deck.

Perhaps you think you'll get a better price from a contractor who asks to circumvent government requirements. But as Davis says, skirting the law can be risky, especially for homeowners with plans to sell.

"It can come back to bite you if your contractors fail to get the proper permits for big jobs. That's because your buyer's mortgage lender may demand to see those permits for any major work you've done," he says.

-- Refuse to pay for the entire project at the outset.

It can be perfectly legitimate for a contractor performing a major project to ask for a partial payment at the front end, particularly if substantial material costs are involved.

For example, you could be asked for a down payment on a roofing installation job to pay for the purchase of shingles. And a house painter might reasonably request that you pay for paint, rollers and brushes before the work begins.

But Davis warns against covering the full cost of any work -- including all labor costs -- before it's completed. Those who pay for the whole job at the outset lose all the leverage they'll need later if the contractor fails to complete the work as promised.

"In most cases I recommend that people pay no more than 10 percent of the labor costs at the beginning. Good contractors have credit lines. They don't need your advances to get a job rolling," he says.

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

Are you a wannabe home seller who planned to get your place on the market during the spring-summer selling season but are only now ready to sell? If so, don't despair. It's still very possible to strike a good deal this winter.

Real estate specialists say that although housing cycles are always in flux, there's no one "right" season to sell.

"General economic factors -- like the health of the job market and consumer confidence -- are much more important than seasonal variations in determining how much a home is worth," says Fred Meyer, a veteran real estate broker and appraiser.

While buyers are typically more numerous in the warmer months, sellers are as well -- and that means stiffer competition for your property.

"After nearly 50 years in the real estate field, I'm amazed at how it all seems to even out from one season to the next," says Meyer, who sells property around Harvard University.

Winter home-seekers often tend to be more earnest, according to Eric Tyson, a personal finance expert and co-author of "Home Buying for Dummies."

"On-the-fence buyers disappear in the winter. Most people making winter moves are doing so for work -- either a job change or transfer. These are very serious, highly motivated buyers," Tyson says.

Here are a few tips for wintertime sellers:

-- Realize that your home's value doesn't depend on the season.

Mary Biathrow, a longtime real estate broker, says the factors that most influence price are independent of time frame. How much you get for your home depends more on the desirability of your neighborhood, the quality of your local schools and the condition of your home.

No matter when they sell, she urges owners to avoid the most common of home-selling pitfalls: pricing on the basis of wishful thinking.

"Too many sellers are in denial about the value of their property. If their house is worth less than before the recession, they don't want to face that fact. Also, many people are in denial about all the repairs their home needs to be ready for sale," says Biathrow, who's affiliated with the Council of Residential Specialists (www.crs.com).

"Nowadays, buyers are educated on price. They spend a lot of time previewing homes online before they even call an agent and to start looking around," Biathrow says.

She says younger buyers are especially tech-savvy and can tell right away if a house is overpriced.

-- Don't worry about moving your kids during the school year.

A common fear of winter movers is that their kids have to make a change during the school year. They fret that their offspring will have a tough time adjusting both in the classroom and on the playground.

But William L. Bainbridge, president of the SchoolMatch Institute, which provides comparative information on public and private schools (www.schoolmatch.com), says children who make a mid-school-year change usually fare better than those who move in the summer.

One reason is that mid-year switchers are often showered with attention from teachers and classmates alike. In contrast, those who start a new school in the fall usually receive less academic and social support, says Bainbridge, a professor of education.

"Changing during the school year is a highly exaggerated problem. Kids are very adaptable. Most do just fine in their new schools," he says.

So long as you've picked strong and appropriate schools for your children, he says you needn't worry about a winter transition. The only major exception involves students in high school who are taking challenging pre-college classes, including Advanced Placement (AP) courses. He recommends they wait until the end of a school semester or term to transfer.

-- Remember that the math could work in your favor when trading up.

As the economic recovery continues, home values have already begun rising in many neighborhoods. But if you're living in an area where a housing recovery has yet to take hold, you might be tempted to wait until next spring or beyond, hoping your place might regain the value it lost.

However, Biathrow says this strategy may not be the best approach for sellers who now find themselves in the financial position to move up to a larger or fancier home in the same general area.

The reason has to do with simple math. Assume, for example, that in your neighborhood both starter homes and upper-end properties have lost the same percentage of their value since the recession hit. In that case, the discount you obtain on your trade-up purchase will more than outstrip the cut you take on the home you've sold.

"In a weak market, buyers moving up can do better than sellers moving down," Biathrow says.

-- Go light on the decor if you're selling during the holidays.

Have you decided to take the plunge and sell around the winter holidays? If so, Biathrow recommends you keep your decorations simple.

"Unless your rooms are large, this year you won't want a huge Christmas tree and a lot of bows and boughs everywhere in the house. Too much decor makes a home look overfilled. And no one wants to buy a place that seems crowded," she says.

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