Smart Moves

For years, Marty Gruer has worked in a job promoting homeownership across America. But her daughter and son-in-law -- both 26 -- are still struggling to save for a first property of their own.

The pair, who live in a high-cost area, can't afford to purchase a starter home, despite extreme budgeting.

Gruer, a homeownership expert for NeighborWorks America, a nonprofit community development corporation based in Washington, D.C., says the financial challenges facing numerous young wannabe buyers are daunting. Many are loaded with student debt and face rising home prices. What's more, as their rents continue to rise, they have less discretionary income to stash away for a down payment.

But not all factors are working against first-timers.

Besides the continuing availability of low mortgage rates, Gruer says more young purchasers are now eligible for down payment assistance programs. One source of information about these -- along with homeowner education seminars -- is the NeighborWorks website: (neighborworks.org).

Here are a few pointers for novice purchasers:

-- Let jealousy move you to action.

Sid Davis, author of "A Survival Guide for Buying a Home," says that when it comes to financial decisions, those in their 20s and 30s are heavily influenced by their social circles. So once one friend buys a house, others in the same group are often motivated to do the same.

Besides the problem of affordability, many young would-be buyers are held back by a fear of commitment signified by the traditional 30-year mortgage, according to Davis.

"They're petrified about taking the plunge, fearing they'll get in over their heads," he says.

But as Davis tells many young clients, the beauty of a fixed-rate mortgage is that their payments will stay constant, even as their incomes likely rise.

"With the passage of years, those house payments seem to shrink, especially if your place appreciates," he says.

-- Avoid immediate gratification to achieve your larger home-buying goal.

Suppose that while you're still a renter, you're invited to a housewarming party at the home of friends. Part of you likes seeing your friends successful, but another part feels diminished by comparison.

In this situation, Davis says some renters resort to the short-term gratification of making other prestige purchases that are easier to obtain than a home. They may buy a luxury car or an apartment full of new furniture, financing their purchases with credit.

Such purchases weaken your chances of achieving your dream, Davis cautions, because you may not be able to obtain as large a mortgage as you'll want or need.

The problem is that lenders look at your overall debt load when judging your worthiness for a mortgage.

"Big balances that appear on your credit reports can hobble your chances for a home. Yet in most cases, a house is a much better investment than a car or furniture," says Davis, a real estate broker since 1984.

-- Start your home-buying campaign by visiting a mortgage lender.

Are you a potential homebuyer whose credit reports were tarnished by poor decisions in your youth? Regrettably, youthful financial indiscretions have a way of lingering on your record long after your circumstances and habits change.

While there's no quick fix for a poor credit score, Davis says your standing can be restored over a period of weeks or months through methodical effort.

"Most people just have to keep plugging away until they reach their objective of a higher credit score," he says.

Davis says your best ally in reestablishing good credit is a mortgage lender or broker willing to provide sound advice.

"Even now -- with more protection for borrowers -- it's helpful to get guidance from a professional who can tell you the letters to write, the phone calls to make, and the emails to send," he says.

-- Never lock in a personal relationship just to buy a home.

These days most couples want both their incomes counted on a mortgage application to qualify for a larger loan. But Davis has witnessed the calamitous consequences that can occur when those eager to qualify for a home move in together or marry just to speed the buying process.

"Make sure your relationship is doubly strong before you go for joint ownership. Otherwise, the implications of a breakup can be exceedingly messy," he says.

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

After a routine medical scan, a divorced woman in her 50s discovered she had cancer. She needed intensive treatment that would cost a small fortune beyond what her health insurance would cover.

Due to her financial bind -- plus a yearning to live closer to family as she fought the illness -- the woman decided to liquidate her townhouse and move as soon as possible. But because the sale was unexpected, and due to her lack of cash, she let her house go on the market in "as is" condition, with disappointing results.

It's not an unusual occurrence, according to Claire Prager, a real estate broker in the field since 1988.

She says the real-life story of the divorced woman is a common scenario she's witnessed many times during her career.

"Even people with private health insurance can exhaust the funds they need to get their house ready for market if their illness has cost them their job and savings. I've seen people in this situation with $2 million houses who are flat broke and must sell," says John Rygiol, the broker-owner of an independent realty firm.

Realtors routinely advise sellers that it's wise to spend money on cosmetic improvements. That's because sellers can typically recoup more than what it costs them for minor upgrades, like painting and carpet replacement, which make a strong visual impact.

But that doesn't mean homeowners with few resources can't increase their odds of netting more for their "as is" property with little or no cash expended. Even those who must rely on volunteers to make their homes presentable are better off than sellers who do nothing to improve the looks of their place, Rygiol says.

Here are a few pointers for sellers:

-- Ensure that your place is at least clean and cleared out.

"It's unbelievable the bad reaction people have to a house that's messy," says Rygiol, whose business is oriented solely to home purchasers.

Through his years selling real estate, Rygiol has observed buyers' reactions when they visit a clutter-ridden home.

"Even if your health crisis keeps you from participating, you should be able to find people to help tidy your place. Those who can't do the work themselves should locate people in their community to assist," he says.

If your family and friends are dispersed around the country and unable to help, Prager suggests you start your search for volunteers by looking on the Internet for a support group, such as a cancer survivor network or a nearby faith-based organization.

As you embark on a cleaning and de-cluttering blitz, she recommends you focus first on removing excess furniture and personal items that make it hard for those viewing your place to picture themselves living there.

"For example, I'm talking about all those photos and notes attached to your refrigerator with magnets and all those many family mementos. Get all these items packed up and put away in a storage area, such as your garage," Prager says.

Once you've cleared away your superfluous items, make sure your home is sparkling clean. A clean house is a powerful lure to get visitors to walk through the entire house rather than making a quick exit at the front door, she says.

-- Focus your painting on the most visible parts of the property.

It's unlikely you'll find volunteers to take on a large-scale house-painting project without compensation. Yet Rygiol says you should be able to recruit people who will donate their time and money to assist with relatively minor painting and touch-ups.

"Paint can cost as little as $20 a can. But if you're selling 'as is' and can't afford to paint much, focus on the highest-priority areas in the property by at least painting your front door and entryway," he says.

-- Find a listing agent skilled at home staging.

Home stagers are people hired to rearrange and supplement furnishings to make properties seem more appealing.

Mark Nash, the author of "1001 Tips for Buying and Selling a Home," says many stagers charge at least $300 or more for a minor redo. But if you lack the funds to pay a stager, he suggests you look for a listing agent willing and able to provide such services without charging you a fee to do so.

"An increasing number of agents are trained in the art of staging and some are getting very good at it," he says.

How can you be sure that agents who claim expertise in staging will do a good job? Nash recommends you ask them to email you "before and after" photos of properties they've staged.

-- Make sure you calculate your listing price with your urgency in mind.

Despite their desire for a quick sale, Rygiol says some sellers are still tempted to "test the market" with an original list price at the high end of their neighborhood range.

But he says those in this predicament are better off pricing accurately from the outset. This means they're selling at the precise current market value of their property, or a notch below to attract bidders.

"Go around your neighborhood and look at for-sale signs as indications of the strongest and most successful agents in your area. Then call three of these top agents and ask them to come over and recommend a totally realistic selling price," Rygiol says.

He says you shouldn't necessarily select as your listing agent the one who suggests the highest list price of the three, perhaps as a form of flattery. Rather, listen intently to their advice on how your "as is" property should go on the market.

"Tell your agent you want to sell in 90 days or less, and ask what price and marketing plan will get that job done," Rygiol says.

Prager says that "as is" sellers who are realistic about the current market value of their property are the ones who fare best and sell most quickly.

"Selling a house is like everything else in the retail world -- the best price sells fastest," she says.

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

Given the real estate recovery that's strengthened the hand of sellers in many U.S. markets, homebuyers no longer have access to as many terrific bargains as they did even five years ago, in the wake of the economic downturn.

"There's much less low-hanging fruit for buyers now," says Tom Early, a veteran real estate broker who was twice president of the National Association of Exclusive Buyer Agents (naeba.org).

But Early says it's sometimes still possible for buyers with a strategic plan to get a solid property without overpaying -- even in some of the country's most coveted markets.

Take the true story of an actor and actress in their late 20s who spent seven months seeking to buy in a part of Washington, D.C., that offered easy access to the theaters where they work. They were lucky to get down payment help from their parents, but they still had to compete with other buyers in a city where multiple bids are now common.

To make sure they'd be credible to sellers -- and wouldn't back out of a deal for financial reasons -- the couple obtained mortgage pre-approval before they went out shopping. Then they systematically compared alternate neighborhoods to determine the best one they could afford. Finally, they began targeting particular properties --focusing on houses that had languished unsold for a lengthy period.

They kept an eye on the place for several months, waiting until it went vacant and the owner was eager to liquidate. At that point, the couple picked up the property for a price their agent estimated to be at least 5 percent below market value.

"A stale listing can represent a huge opportunity for buyers, assuming they swoop in at the right time when the owner is really motivated and will negotiate," Early says.

But Mary T. McCall, a long-time real estate broker, cautions that any buyers considering a property that's lingered on the market for a lengthy time without bids should make sure to rule out any possible hidden problems.

"Almost without exception, buyers are well advised to get an in-depth inspection from a professional in the field," says McCall, a past president of the Council of Residential Specialists (crs.com).

Here are a few other pointers for buyers:

-- Carefully time your bid for a "stale" property.

Before they bought a home, the actor and actress lived in an apartment with a month-to-month lease. Therefore, they could afford to take their time to locate the right property.

As it happened, the opportune moment to bid on the bungalow occurred between Christmas and New Year's Day, when potential rivals for the purchase were busy with holiday festivities. That worked to the young couple's advantage.

Early says that during vacation periods many "test-the-market" sellers, including those free from pressure to move, take down their "For Sale" signs. Most who are left are highly motivated to cut a deal.

But how do you know which sellers have a strong need to sell soon? Early says many owners, along with their listing agents, are remarkably frank about their motivation to move.

"It's amazing just how candid many people are about their reasons for needing to sell. They'll tell you if they have serious financial problems or major health issues, or if they're going through a marital breakup, even if that weakens their bargaining position," Early says.

-- Consider buying a "spec home" from a builder.

Early, who's sold homes since 1982, says he's helped many purchasers score a good deal on a brand-new property that the builders constructed without specific buyers in mind. These are known as "spec" properties.

Though many such homes have already been snatched up by eager buyers, Early says there are still more available for those who hunt them down.

"Seek out builders who still have several spec houses in their developments. They need to sell these homes to pay off the bank for their construction loans. Their urgency could result in a good deal for you," Early says.

-- Realize that the potential for a great deal in a hot market is limited.

Through strategic planning, the actor and actress were fortunate to have snagged a better-than-average markdown on the bungalow they chose in Washington -- a city favored by young home purchasers and with a relatively strong economy, due to a stable federal government employment base. But not all Washington buyers are equally lucky. Because of the popularity of this area, many must pay at least list price to avoid losing out in a competitive bidding situation.

Early says there's no shame in offering list price or slightly more in such a hot area -- assuming you've done your homework and are convinced you're not paying more than a couple of thousand dollars above true market value.

"You can't let emotion cloud your judgment. But if you've found a house you dearly love, years from now you won't regret that you ran that extra mile to make it your own," Early says.

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