Smart Moves

After completing a Ph.D. from an Ivy League university and landing a job with a government agency, a scientist of 31 never imagined he’d be spending his free evening and weekend hours cleaning houses and landscaping for extra cash. But a zeal for homeownership has led him to do just that.

“I grew up poor, my dad is gone, and my mom is living on disability, so she can’t possibly help me buy a house. What’s good is that my parents taught me a strong work ethic, so I’m not afraid to roll up my sleeves and work hard to get what I want. Right now, a house tops my list,” the scientist says.

In the aftermath of the financial crisis of 2008, housing analysts predicted many millennials would reject homeownership as a goal. But that hasn’t happened, says Ashley Richardson, a seasoned real estate agent affiliated with the Council of Residential Specialists (crs.com).

“The only difference in home-buying patterns between the millennials and their parents is that, nowadays, kids wait longer to buy,” Richardson says.

But for a generation saddled with student debt and facing high housing costs, there are often steep financial barriers to homeownership. That’s why they must be resourceful and, like the scientist, build a savings account by whatever means possible.

Are you cash-tight yet you hanker to take advantage of the low mortgage rates still available to buyers? If so, amassing a war chest of cash could make your home-buying offer even more competitive.

“As always, cash talks. People with more cash can get better deals, especially in areas where multiple bidding is the norm,” Richardson says.

Seeking to increase your income is just one element in the equation. The other is to cut spending. Here are a few pointers for those embarking on a crash savings program to buy a home.

-- Reflect on your attitudes about spending.

What stops people from reducing their spending? Financial planners say emotional impediments are often to blame.

“People come to financial advisers hoping for a miracle. But we’re not miracle workers,” says Shawn Koch, a planner affiliated with the Garrett Planning Network.

Koch says many people attempting a crash savings program first need to deal with the reasons behing their bad money habits, such as impulse spending or a sense of material entitlement. To help conquer these impediments, she recommends a book called “Money Harmony: Resolving Money Conflicts in Your Life and Relationships” by Olivia Mellan, a psychotherapist.

-- Begin with an inventory of your current spending.

A major obstacle to saving for a home is uncontrolled day-to-day spending. But before you can decide how to reallocate your funds, Koch says you need to review where your money has gone for a period of several months. This can be done either with pen and paper or a personal finance tool such as Quicken.

Such a review can bring surprises. For example, Koch says many of her clients are shocked to learn how much they’re spending on restaurant meals, carry-out food and coffee breaks.

Doing a spending inventory can be time-consuming because you must sift through credit card and checking account statements. Indeed, for those who don’t routinely track their spending, this process could take the better part of a weekend. But Koch says it’s essential to determine where cuts are possible.

-- Develop a budget that allows room for your savings goal.

Given the ever-rising cost of living, Koch says it’s hard to trim expenses enough to allow for a serious savings program. Still, she urges savers to examine their largest outlays, including regular supermarket spending.

“Grocery store food can ... add up fast,” says Koch, who recommends that clients buy fewer processed foods, do more home cooking, monitor food waste closely and consider taking bag lunches to work.

Transportation costs can also put a big dent in most household budgets. Koch advises savers to challenge their long-held assumptions about car ownership. Would public transportation or carpooling be a realistic alternative for commuting that could lead to hefty savings for gas, insurance and car repairs?

Koch also recommends you examine your cellphone outlays.

“Do you really need the latest iPhone, or will the phone you’ve owned for a couple of years still meet your needs? You can always upgrade to a better phone after you’ve met your other money goals,” Koch says.

For those who need guidance, Koch recommends “The Budget Kit: The Common Cents Money Management Workbook” by Judy Lawrence.

-- Sign up for an automatic savings plan.

Many people who live paycheck to paycheck find it hard to summon the discipline to extract a chunk for savings. And they fear automatic withdrawals from their pay.

But financial planners say automatic withdrawals can be the answer for people who aren’t methodical savers. And they say those who have direct debits taken from their pay rarely miss the money. Meanwhile, their savings accounts add up quickly.

“With an automatic debit plan, you just set it and forget it. That’s a big plus for anyone trying to save money for a house,” Koch says.

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

Before retiring, many people look forward to blissful years without work demands. But a huge job awaits retirees who wish to downsize and must declutter to sell their property.

Take the true story of a doctor who’d worked in an executive post at a large medical center. He and his wife, a structural engineer, both left their jobs at age 70, excited at the idea of foreign travel. But first they decided to sell their family home, a seven-bedroom Tudor.

That decision came two years ago, and the couple’s passports are still gathering dust. Why? Because they’re bogged down by the process of decluttering, and hence their house has yet to go on the market.

Mark Nash, a longtime real estate analyst and broker, doesn’t know this retired couple. But he’s assisted many retirees with large homes who must confront the challenging purging task before they can move.

Many older sellers “spend too much time on a process they could expedite,” says Nash, the author of “1001 Tips for Buying and Selling a Home.”

Such people need a game plan, says Kristin Bertilson, the owner of “Queen B Organizing.” She’s helped dozens of sellers sift through their accumulations quickly.

To reduce the size of the task at hand, Bertilson suggests that her clients apply objective standards. For example, they might decide to keep all the pieces with their kids’ handprints but toss out craft projects that are falling apart or hard to store.

She also helps clients downsize by encouraging them to confront the true costs of shipping their belongings to the new location -- a sobering realization.

“When people get an estimate of $1,200 to move furniture, they find it easier to let go of all the excess pieces,” Bertilson says.

Nash urges home sellers to undertake the stuff-purging process as soon as they know they’ll be moving. That’s because a decluttered home is much more appealing to buyers.

Here are a few pointers for retired sellers:

-- Get a preliminary handle on your overall clutter situation.

Some downsizers try to grapple with the decluttering process without a plan. But those who do a preliminary inventory of their problem are more efficient, says Dorcas Helfant, a past president of the National Association of Realtors.

“Sellers who have a room-by-room picture of all their possessions can make faster decisions about how to streamline it all,” she says.

Your listing agent can assist in deciding which items should be removed to make your home show-worthy. These will likely include some bulky furnishings, like recliners.

“A house filled with furniture can look a lot smaller than it truly is,” Helfant says.

-- Formulate a plan of action.

Nash says those who are most efficient at decluttering follow a step-by-step action plan.

To begin, he recommends you plot the space in your new property before deciding on the volume of items you can take with you, assuming, of course, that you've already bought your new home.

A few years back, Nash left a 3,200-square-foot bungalow for a 760-square-foot condo, requiring him to drastically reduce his total belongings. To gain a more precise estimate, he bought graph paper and plotted the layout and storage space.

“The drawing allowed me to plan a place for everything I expected to take with me, down to my bike and favorite clothes. That made it clear which things would be impossible to keep in my new condo,” he says.

-- Sort your accumulations systematically.

During their years in a property, many homeowners unwittingly acquire a large array of similar items. Early in the purging process, Nash suggests that sellers sort like items to determine which they have in excess.

“I’m talking about all that stuff you went to the store to buy because you didn’t know you already owned it. After you see all the rampant duplication, it’s easier to cut out extras,” he says.

Once you have the like items in each room categorized, use what Nash calls the “three-box system” to cull through them efficiently. One box should be labeled “keep,” a second “give away or sell,” and a third, “I don’t know.”

To hasten the process, immediately make arrangements to have your “give away or sell” items carted off. This allows you to create more space to sort through possessions from the “I don’t know” box that will require more consideration.

“Decision making is what slows people down. But you’ll make decisions a lot faster if you have fewer items to look at,” Nash says.

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

Just last month, a meteorologist of 32 was excited by his promotion to a better-paying position with the National Weather Service. At long last, he figured he could afford to buy a modest single-family house in a middle-income suburb near his office.

But so far, his housing search has proved fruitless. Though his earnings have risen, so have home prices in his favorite suburb.

This true story doesn’t come as a surprise to Danielle Hale, managing director for research at the National Association of Realtors (realtor.org). As she notes about the affordability problem now facing countless buyers: “Price growth is outpacing income growth.”

But Hale expects wannabe buyers like the meteorologist to continue scouring the market despite the ongoing shortage of inventory.

“Buyers are very resilient,” she says.

What keeps so many would-be buyers in markets still largely dominated by sellers? Tom Early, a long-time real estate broker, says some are motivated by fear that mortgage rates, which continue to hover near historic lows, could rise due to economic changes.

Still, some prospective homeowners are willing to wait on the sidelines in hopes they could gain more leverage in the next few years. Their hopes are bolstered by predictions from such housing analysts as Svenja Gudell.

“As the number of homes for sale increases and home appreciation slows, we expect the market to meaningfully swing in favor of buyers within the next two to three years,” says Gudell, chief economist for Zillow, which tracks housing markets throughout the country.

But, as Early says, “Most people don’t want to put their lives on hold with the expectation that they might could get a better price if they wait.”

Here are a few pointers for those pondering a first-home purchase:

-- Search for eager sellers.

The loss of a job is one common reason homeowners must sell; divorce is another. Also, an increasing number of baby boomers -- now in their 50s to 70s -- would like to sell and downsize as they head into retirement.

As a potential first-time buyer, you might feel awkward seeking out owners who are under pressure to sell. But there’s nothing unethical about doing this, Early says.

“Owners whose houses have long been languishing on the market, usually due to overpricing, might be extremely ready to negotiate,” he says.

How can you identify those who are highly motivated to sell? Early suggests you ask your real estate agent to draw up a list of properties in your favored area that have been on the market for an extended period. Also, he recommends you go to the neighborhood where you’d like to buy and talk informally to residents.

“Tell the local residents how much you appreciate their neighborhood and they’ll be more likely to open up with you as to which houses could soon hit the Multiple Listing Service,” Early says.

-- Spend time researching any neighborhood you’re considering.

One way to help you search for motivated sellers is to crunch numbers. Ask your real estate agent to determine the average “days on market,” (from list to sale), for properties in the area you’ve chosen. Then look for homes in that price range that have been sitting unsold for a longer-than-average period.

Before crafting an offer on the home of your choice, Early suggests you also examine another set of numbers: the average list-to-sale price differential. If you note that most properties have recently fetched 90 percent of their list price, you might consider a first bid 10 percent lower than asking, assuming your research shows this is warranted, he says.

-- Avoid harsh critiques of a property you’re considering.

Suppose you’re seriously considering a house that would easily accommodate you. However, you’ve noticed a few minor shortcomings in the floor plan, such as an inconveniently located laundry room and the absence of a powder room for guests on the first floor.

In an attempt to strengthen your bargaining position, should you write a letter highlighting these drawbacks and also pointing out the owners’ poor taste in choosing to paint their kitchen dark blue? Absolutely not, Davis says.

“It’s almost universally true that homeowners have pride in their properties and are hurt by a strong critique,” Davis says.

Of course, you and your home inspector should be forthright in itemizing repairs that need to be taken to bring the property up to standard, such as roof repairs or the replacement of a nonfunctional water heater. But the inspector should do so in a courteous manner that doesn’t insult the owners.

“It’s always better to be assertive without being obnoxious,” Davis says.

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