Smart Moves

With a law degree from Georgetown University, Rory O'Sullivan expected to be further along the economic spectrum by age 29. But his hefty load of student debt, coupled with his modest salary, means he may have to wait to actualize his desire to buy a home of his own.

"Our generation is optimistic, but we're in a pretty big hole. We've been struggling and stumbling since the dot-com bubble burst in 2000, and then we got hit by the recession, so we're not in a position to take on a big mortgage," O'Sullivan says.

As policy and research director for Young Invincibles, a nonprofit group promoting the interests of "millennials" -- young adults between the ages of 18 and 34 -- he's acutely aware of the economic challenges facing many in his age group. As he notes, this population cohort is saddled with more than $1 trillion in student debt and faces a high level of unemployment and underemployment.

"We've had to lower our expectations. But we're still optimistic we can reach the American dream," O'Sullivan says.

Despite the economic challenges facing them, many millennials at the older end of the age range can now afford to buy real estate -- but only if they're able to obtain a place for a very reasonable price, says Art Godi, the co-owner of a real estate brokerage that caters to young adults.

Godi, a former president of the National Association of Realtors (www.realtor.org), says the real estate hopes of young adults are no different than those held by their parents' generation at the same stage of their lives.

"They want the same good neighborhoods that are safe and close to good schools for their children," he says.

Having come of age during tough economic times, young adults are more conservative than their parents were in selecting the right starter home, according to Godi, who entered the real estate field in 1961.

"Because jobs have been so insecure -- and still are -- young people are used to belt tightening. They're a lot more cautious about how much they spend and the credit card balances they run up," he says.

On the plus side, this cautionary approach to financial matters has made many millennials very aware of the importance of maintaining a good credit score, which helps make them eligible for favorable mortgage financing.

"Many young buyers have very, very good credit scores," Godi says.

Although all homebuyers want a good deal, he says millennial purchasers -- with modest incomes and little savings for a down payment -- need an especially reasonable one. He advises those trying to buy their first home to think strategically. Here are a few pointers:

-- Target once overpriced homes that were converted to rentals.

Ashley Richardson, a real estate agent affiliated with the Council of Residential Specialists (www.crs.com), reflects on a pattern of behavior she's observed among some sellers whose inflated sense of their home's value causes them to overprice their property when it's first put up for sale.

"Because they shot too high, their house just sits and sits. Eventually, they take it off the market and try to convert it into a rental. But they soon get discouraged with renting and throw in the towel on that, as well," Richardson says.

After going through the trauma of renting, many homeowners put their property back on the market again -- this time for a faster sale at a more reasonable price -- and are much more willing to negotiate than they were the first time, Richardson says.

If you're a young buyer willing to purchase a house that's served as a rental unit, you could get a discount of as much as 5 percent off its market value, she estimates.

-- Consider a home with an out-of-date decor.

Money-tight homebuyers -- including first-timers -- may wish to consider a category of homes a notch above the fixer-upper. Typically, these are overall well-maintained properties with solid electrical and plumbing systems. But their owners, though conscientious in some respects, have neglected the cosmetic aspects of the interior decor, which may force them to sell at a price well below market value.

"If the kitchen appliances are still functional, some homeowners just hang onto them indefinitely -- even though they're in dated colors like avocado or gold. They also hang on to dated bathroom tile colors and fixtures," Godi says.

But he cautions against taking on a home that needs major infrastructure improvements.

"Most millennials are a lot more proficient at the iPad than with a hammer and nails. They're not very handy," Godi says.

He recommends a thorough inspection to determine whether a home has fundamental problems -- such as a crumbling foundation. These are far more costly to fix than an unappealing decor.

-- Search for highly motivated sellers.

When it comes to real estate -- as with many financial transactions -- time is money. Sellers who want or need to make a hasty move are generally more willing to let their property go for a bargain price.

As a young, first-time buyer searching for an affordable home, it's important to realize that you probably won't need to pry or do anything sneaky to determine the motivations of sellers, says Tom Early, a past president of the National Association of Exclusive Buyer Agents (www.naeba.org).

"In some areas, sellers still broadcast their desire for a quick sale in the ads put out by their listing agents. Perhaps their ads will read: 'Seller Motivated' or 'Must Move Quickly,'" Early says.

If the ads don't reveal the sellers' motivation, a few casual inquiries placed by your real estate agent -- to the listing agent -- could do so.

Early says a solid buyers' agent can be especially helpful in assisting first-time buyers to shape a bid in keeping with the sellers' timing preferences.

"Flexible buyers who've been preapproved for a mortgage and can move quickly --assuming that's what the sellers want -- are in an exceptionally strong position to nab a good deal," he says.

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

A few years ago, a couple in their early 30s -- both sales managers -- made a hasty decision to buy a contemporary condo in downtown San Diego. They were captivated by the apartment's stunning views and sweeping "entertainers balcony."

But once the couple's first child was born, the condo proved an awkward and disappointing choice. Recently, they put the place up for sale. Looking back, they wish they'd been more thoughtful about their buying decision and picked a place better-suited for the family they intended to have.

Their story illustrates how a hurried housing selection -- especially when it involves a condo -- can sometimes prove a disheartening choice.

"In particular, first-time homebuyers need to thoughtfully consider the implications of choosing any property, but particularly a condo. It's only human nature, but some buyers fail to think ahead for their future needs," says Eric Tyson, a personal finance expert and co-author of "Home Buying for Dummies."

Of course, no matter the housing style you choose -- whether a condo, a townhouse or a traditional, detached property -- that choice can affect your lifestyle in major ways. But Tyson says those who've never before lived in a condo should be especially cautious about buying one.

"There's a much bigger pool of buyers for traditional family houses," he says.

Leo Berard, charter president of the National Association of Exclusive Buyer Agents (www.naeba.org), says for some categories of purchasers, a condo could be the ideal choice.

"Older buyers who no longer have children at home often relish the low-maintenance requirements of condo living because most condo communities take care of all exterior maintenance. That liberates them from a lot of upkeep and frees their time for travel or hobbies," Berard says.

Another category of buyers who could enjoy condo living are young to middle-aged purchasers who don't intend to have children and who seek an urban lifestyle in an area where it's possible to walk to restaurants, entertainment venues and public transportation.

"Living in a vital urban setting -- in a condo or rental apartment -- is very popular with an increasing number of buyers in their 20s through 50s and beyond," Berard says.

Are you considering a condo? If so, you may wish to ask yourself these questions before you go through with a deal:

-- Would a condo prove a practical, comfortable housing choice for you?

People planning to sell a detached house in favor of a condo should anticipate major life changes, Tyson says.

For example, condo residents -- and their visitors -- typically face more limits on parking. Maybe you and your spouse will receive just one parking space in an underground garage or outdoor lot. That could be acceptable to a single person who travels frequently for work, but it could be troublesome for a couple who love to throw parties.

If you enjoy gardening, condo living could cost you the chance to cultivate your own plot. But if you dislike yard work, freedom from pruning and mowing could give you the extra free time you seek to pursue other interests.

Another factor Tyson says potential condo buyers should consider is the availability of storage space. Although a recently built condo is likely to have larger closets than an older one, a detached house will probably have still more storage room, if only in the attic or garage.

-- Is now the right time to buy a condo in your area?

Tyson says many first-time buyers view a condo purchase as a way to obtain housing at a lower cost per square foot than if they were to buy a freestanding house. But that assumption may or may not hold true, depending on property valuation trends in your area.

"Land costs are high and rising in most metro areas. Therefore, it makes sense that buying a condo -- which doesn't come with land -- should give you more living space for the money than a single family house," Tyson says.

But there are some obvious exceptions. For instance, a luxury apartment in a ritzy section of Manhattan or inside Chicago's Loop would undoubtedly be more expensive on a per-square-foot basis than a house in most suburbs, even upscale ones.

However, Tyson cautions against making blanket assumptions about comparative housing costs without first asking your real estate agent to give you data on recent sale prices in the communities where you're looking.

"You'll want final sales prices for transactions involving like units that occurred no longer than six months ago, unless your market has been extremely stable," he says.

-- Are the condo fees reasonable for the complex you're considering?

Berard says monthly condo fees bear close scrutiny.

"If the fees are very high, that could mean management of the building is not effective in holding down routine building expenses. But low fees could mean upkeep costs are being deferred, which could make future owners vulnerable to steep 'special assessments,'" he says.

To get a feel for the quality of management of a condo building, Berard suggests you ask to attend a meeting of the condo association's board. Alternatively, try to obtain copies of minutes from recent board meetings.

-- Would living close to neighbors be a plus or minus for you?

Tyson says people vary widely in their level of comfort with condo living. Those who grew up in a suburban or rural area with a lot of land around their property may dislike the smell of cooking from a stranger's condo down the hallway. Yet people raised in an apartment building might be at ease in such a setting.

If you worry you might be uncomfortable living in a particular condo complex, you could do well to test these assumptions by taking a short-term rental within the same complex.

"Renting a condo for even a few months could give you all the information you need to make a sound decision about buying in that complex," Tyson says.

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

Donna Goings, who's sold homes since 1985, has a wide-angle view of the home-buying market. Thinking back, she says it's only been within the last 10 years that buyers have become acutely energy-conscious.

Due to increased environmental awareness, Goings, a realty company owner affiliated with the Council of Residential Specialists (www.crs.com), says, "There's more of a stigma on buying a large, energy-consumptive house."

Because of this new trend, Goings says it can be difficult to sell an exceptionally large property, one with more than 5,000 square feet, especially if it still has outdated heating and cooling systems or poor attic insulation.

Art Godi, a real estate broker and past president of the National Association of Realtors (www.realtor.org), says Americans are increasingly ambivalent about ownership of large homes, given the high costs of maintaining them.

Energy costs aren't the only issue. It's also costly to keep a large property clean and in good repair. Then, too, there are major expenses to maintain the elaborate landscaping that typically surrounds many McMansions.

Sid Davis, a veteran real estate broker and author of "A Survival Guide to Selling a Home," advises sellers of very large houses of the importance of setting a realistic list price, which could mean asking less per square foot than for a smaller property in the same area. It's also important that you market the place strategically.

Here are a few pointers for home sellers:

-- Consider the international market for your large property.

One way to widen the pool of prospective buyers for a large, upscale home is to consider potential purchasers from abroad who have the means to buy and maintain an expensive property.

"The Web has made selling property to foreign nationals a lot more realistic. Real estate investment has gone global. For example, there are now many Chinese, Canadian and Latin American buyers searching for homes in the U.S.," Davis says.

Of course, not every neighborhood can attract well-to-do buyers from other countries. Could your large place have international appeal? That's plausible if you're located within or near a cosmopolitan city, like Los Angeles, San Francisco, New York or Miami. It could also be viable if it's set in an area with great scenery and beach views, like La Jolla, Calif.

Though an increasing number of listing agents are now aware of the overseas market, few have been specially trained to sell homes to this category of purchasers.

"It's important that you find an agent with experience dealing with foreign buyers," Davis says.

As the market globalizes, there's increased interest in the field within the membership of the National Association of Realtors. By going to the organization's website, you can find agents in your area who've earned the designation of "Certified International Property Specialist."

-- Ask your listing agent to create a website for your house.

Those seeking to market a very spacious house are often well advised to obtain a professionally designed website for the place -- one that showcases the property to the well-heeled buyers who can afford it.

"Face the fact that it can cost money to market your home to discerning buyers. It's not enough for the listing to simply appear on your agent's website. You need your own online presence," Davis says.

Once your website is live, how do you attract traffic to it? Davis recommends that you and your agent invest in classy advertising in newspapers and magazines that target upscale audiences.

-- Promote the energy-saving features built into your place.

Does your large house have features such as a "zoned" heating and cooling system, which permits sections of the property to be shut off when not in use? Does it also have energy-efficient appliances, including a state-of-the-art refrigerator that will convey in the sale?

If so, Godi says these features should be promoted in your marketing materials.

Besides the use of online and print marketing materials, Godi suggests you advertise your energy-smart house with a rider attached to your For Sale sign.

-- Seek out contractors' estimates for energy-saving improvements.

Was your jumbo-sized house constructed with little attention to energy efficiency, and there's little you're willing to do to upgrade it before it hits the market? In that case, how can you allay the worries of potential purchasers who fear jumbo-sized utility bills?

Goings suggests you call in contractors for bids on energy-saving work, such as attic insulation and new windows. Then give these bids to prospects, so they'll know how much it would cost to redo your place to save energy. Also, give them copies of your recent utility bills.

"It always helps when buyers see the numbers. That way they won't be in the dark about the cost of all the changes they'll want and need to do to your house," Goings says.

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