Smart Moves

A couple in their early 30s have pondered homeownership since moving in together three years ago. In the past, they’d scour websites for listings and occasionally stop by open houses. But so far, rising prices and cutthroat competition have discouraged them from making any serious bids.

Now, new numbers on real estate sales are giving cheer to the couple in this true story, and they’re planning to head into the market in a serious way very soon. That’s because the pace of home price increases is slowing and the supply of available property is finally increasing, albeit ever so gradually.

Elizabeth Mendenhall, president of the National Association of Realtors (realtor.org), predicts more wannabe buyers will be entering or re-entering the housing market in the near future.

“The modest uptick in new listings last month is good news for would-be buyers. Listings are still scarce --especially for entry-level homes -- but patience may yield a positive result for those looking to buy in the months ahead,” Mendenhall says.

Ashley Richardson, a veteran real estate agent in suburban Baltimore, is also anticipating more robust sales as an increasing number of prospective buyers move off the sidelines in hopes of finally bagging a property they can afford.

“We’re not there yet, but we’re moving to a more normal playing field between sellers and buyers,” Richardson says.

Daren Blomquist, a senior vice president at Attom Data Solutions (attomdata.com), which tracks housing sales all over the country, cautions that neighborhood markets vary widely. That’s why it’s critical to hire an agent with in-depth experience in the area where you’re searching.

“All real estate is local, and a knowledgeable agent is the key to navigating the market and determining if a particular property is a good deal or not,” Blomquist says.

Here are a few pointers for buyers:

-- Realize that not all sellers are equally motivated.

Tom Early, a former president of the National Association of Exclusive Buyer Agents (naeba.org), says that although the overall economy is faring well, financial duress is still a common reason many homeowners decide to liquidate their property.

“Even today, I’d say the majority of sellers want or need the money they have tied up in home equity,” he says.

Mark Nash, a longtime real estate broker and author of “1001 Tips for Buying and Selling a Home,” advises buyers to determine as much as possible about the sellers’ situation before making an offer.

-- Ask for assistance from your agent on “due diligence.”

“Before making an offer on any property at any time, you’ll want to learn as much as possible about the sellers’ equity position,” Nash says.

He suggests that would-be purchasers ask their agent to research the public records to determine when the present owners bought their house, what they paid and how big a mortgage they took out.

If they bought long before the big housing crash -- around 2008 -- the odds are good they still have substantial equity, unless they gutted most of that with a big home equity loan or a cash-out refinance.

“Sellers with lots of equity have much more latitude for bargaining. They can cut you a reasonable deal and still move away with a check in their pocket,” Early says.

-- Ask your agent to quiz the seller’s listing agent.

Listing agents are sometimes surprisingly candid in responding to questions about their clients’ situation.

“If the owners are under extreme pressure to sell, the listing agent may even tell your agent their true bottom line price to let the house go,” Early says.

-- Don’t rule out “stale” listings.

Most sellers are advised by real estate professionals who help them hit the target when setting the initial list price for their property. But in all markets, there are a few owners who insist on premium pricing because of their emotional ties to their property.

“Some people are just simply bullheaded. They demand more than their homes are worth, even though they have to sell against their will. This is particularly likely among sellers who’ve invested large sums to customize their properties,” Early says.

Ironically, those who price too high at the beginning are ultimately the ones who must sacrifice the most to get their homes sold. That’s because properties that languish on the market soon lose their luster and raise suspicions among prospects.

But eventually some money-strapped sellers with financial problems must wake up and sell at a realistic price or see their properties taken away from them through foreclosure.

Have you fallen in love with a princely place that went on the market months ago at a bloated price? Are you confident the sellers must move soon and will eventually have to take a price cut to get their place sold?

If so, Early urges you to prepare yourself to submit an immediate bid on the property as soon as its owners face reality and take their reduction. Make sure you have a pre-approval letter from a reputable lender showing you have the income and good credit to go through with the deal.

“Sellers who’ve just sobered up and finally cut their price to a realistic level will sometimes succumb to a substantial reduction. It’s at that moment that you should pounce quickly with your fair offer,” Early says.

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

In many neighborhoods, baby boomers are hanging onto their properties into their elder years, adding to the frustrations of millennials struggling to step onto the first rung of the housing ladder. The obvious result: rising prices.

“Home price appreciation continues to outpace wage growth,” says Daren Blomquist, senior vice president at Attom Data Solutions (attomdata.com), which tracks real estate markets throughout the country.

But one subgroup of boomers is finally releasing their houses, clearing the way for the next generation to take occupancy of their dwellings. These are seniors selling to move closer to their grown offspring.

Take the real-life example of a pair in their early 70s. They’ve owned their modest ranch-style house in a leafy middle-class suburb since the 1970s. But now that their only child has given birth to a daughter, they’re finally planning to sell and buy a condo near the baby’s parents' house.

Thanks to home price gains, some older owners can now afford to cash out of one property and buy another closer to their kids, says Victoria Mendenhall, a real estate broker since 1998.

“Family, and particularly grandchildren, are now a bigger factor in determining where people choose to retire,” says Mendenhall, who specializes in working with older clients and is affiliated with the Seniors Real Estate Council (seniorsrealestate.com).

Here are a few pointers for grandparents planning a move:

-- Don’t assume you need fancy entertainment options for the kids.

In an attempt to attract more frequent visits from grandchildren, some seniors decide to live in a community that offers easy access to such commercial entertainment features as an amusement park or a miniature golf course.

But Judy Luna, a veteran real estate broker, says retirees shouldn’t plan their move on the basis of kid-oriented tourist attractions. That’s because most communities offer enough in the way of recreation to keep most kids happy.

“It’s ideal -- but not necessary -- to have a neighborhood swimming pool the kids can use when weather is right. But you don’t need a lot of other major entertainment attractions,” says Luna, who’s affiliated with the Residential Real Estate Council (crs.com).

-- Challenge the notion that you’ll need an oversized yard for the kids.

Luna attempts to dissuade older buyers from seeking a property with a large yard, unless they’re devoted gardeners and have the stamina to maintain the property or can easily hire contractors to do so.

“To meet your grandchildren’s needs, you’re actually better off living near a park with a playground than having a big yard. Also, a small yard will certainly mean less upkeep for you,” she says.

-- Pick a setting with calm streets where kids can play safely.

One factor some older buyers overlook when selecting a grandchild-friendly community is the level of traffic coming through the area.

“You won’t want to live in a heavily traveled neighborhood or on a main road,” Luna says. As she observes, a road with a lot of traffic brings noise and fumes into your habitat. It can also pose obvious risks to the safety of your grandchildren.

Ideally, you’ll choose a property that’s located on a quiet cul-de-sac or a dead-end street. But if that’s unavailable, Luna says you’ll at least want to position yourself on a calm street with relatively little through traffic.

Making sure children are protected from road hazards is especially important if the grandparents intend to provide day care for very young children. But it’s also vital for older kids, who enjoy riding bikes and playing ball on neighborhood streets.

-- Seek a home with an extra bedroom or suite.

Many older buyers plan to downsize to a smaller property after selling the large family home where they’ve lived for years.

But Tom Early, a real estate broker who twice served as president of the National Association of Exclusive Buyers Agents (naeba.org), recommends that those hoping for overnight visits from family buy a place with at least one guest bedroom.

“Granted, your family can always check into a hotel. But it’s a lot more fun if everyone stays under the same roof and you can easily share those great pancake breakfasts,” Early says.

-- Rule out any community that limits family visits.

Though the Great Recession is in the past, Early says many grown children, including those with young kids, are still moving in with parents when facing a financial crunch or to save money.

If you’re an older homebuyer facing this possibility, he recommends you closely examine the rules or regulations that could limit your ability to house family members.

“It’s really shocking to see how many new condo and townhouse developments have deeds that severely limit how long guests can stay over,” Early says.

Often, the written rules governing guest visits are not enforced. But it’s always possible that leaders of the residents’ association will demand you follow the rules to the letter. That could mean, for instance, that your newly divorced son couldn’t move into your place with his toddler -- not even temporarily -- until he can afford to buy his own home.

“It can be painful to be forced to turn away family who need to live with you for one reason or another. Life is much too short to accept such draconian restraints,” Early says.

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

After divorce ended her very brief but unhappy marriage, a filmmaker felt more celebratory than sad. Without a spouse to challenge her plans, she could finally fulfill her dream of owning a small cottage on a creek near Annapolis.

Given her substantial savings and solid salary from an academic medical center, the filmmaker was able to purchase a compact but stylish contemporary house with waterfront views and boat access. The closing went smoothly, and the woman’s move won the admiration of both family and friends.

This true story doesn’t surprise Andrew Cherlin, a sociology professor at Johns Hopkins University. A half-century ago, he says most Americans bought a home only after marrying, and those who didn’t wed first were considered “weird.”

“Fifty or 60 years ago, if you weren’t married, people thought you were mentally ill. People thought marriage was the only way to live a successful life,” says Cherlin, an expert on the demographics of marriage and divorce.

Of course, not every unattached person who aspires to homeownership can fund a purchase solo. Nowadays, two healthy paychecks are often necessary to cover the cost of buying in many prime neighborhoods. Compounding the affordability problem, a shortage of inventory -- especially in the starter home segment -- continues to push up prices.

Arlen Olberding, a certified financial planner who counts a number of young singles among his clients, says it's often wise for people with unsettled career plans to postpone homebuying. For example, many singles who expect to make a near-term job change or to soon head back to graduate school should delay.

“Solo buyers are more vulnerable to potential foreclosure if they encounter a layoff,” says Olberding, who’s affiliated with the National Association of Personal Financial Advisors (napfa.org).

Here are a few pointers for single buyers:

-- Choose a place within your financial “comfort zone.”

Merrill Ottwein, a veteran real estate broker, cautions all buyers -- but especially young singles -- against taking on a mortgage that feels uncomfortably large.

“Decide on your affordability target right from the start, before you go home shopping. After that, don’t let your real estate agent or lender inch you up above your comfort zone,” says Ottwein, a past president of the National Association of Exclusive Buyer Agents (naeba.org).

Although lending standards remain stringent, he says it’s still very possible to obtain approval for a mortgage that’s larger than you can reasonably handle. That’s because lenders only see the big picture, and don't factor in all the daily expenses of modern life.

“Being ‘house poor’ is an awful way to live, and can cause lots of fear and anxiety,” Ottwein says.

-- Look for a home a roommate could share.

If you shared dorm space back in college, you may be in no mood to share the home you buy with a roommate who pays you rent. Still, Ottwein encourages young singles to seek a property that would be attractive to a potential housemate -- should they one day need rental income to help offset their mortgage payments.

“Also, a house with two or, ideally, three bedrooms will be easier to sell when you decide to do so,” he says.

What type of home works best for accommodating a roommate? Ottwein suggests a place with a second bedroom suite that includes a private bath, so a roommate could live more independently. Also, an outside entrance to this second suite is ideal.

-- Choose an energy-efficient property.

After moving in, many first-time buyers are surprised by the size of their home upkeep expenses. They hadn’t expected to spend so much for everything from electricians’ bills to mulch for the garden. The size of their energy bills also comes as a shock.

Obviously, some costs associated with homeownership -- such as taxes and insurance -- are unavoidable. But home shoppers can more easily contain their energy expenses by choosing a property that’s well insulated and has substantial, double-pane windows.

“Unless you buy an energy-efficient home, you’ve got a big risk for rising power costs looming ahead,” Ottwein says.

He encourages first-time buyers to educate themselves on the topic of energy efficiency housing by going online. One website that provides information on the subject, energystar.gov, is sponsored by the U.S. Department of Energy, along with the U.S. Environmental Protection Agency.

Also, make sure you ask the home inspector you hire to evaluate the energy efficiency of any property you plan to buy in advance of a final commitment for its purchase.

-- Don’t let homebuying constrain your social life.

You don’t have to live in the immediate vicinity of your friends to stay in touch. But if possible, you’ll want to avoid buying a property many miles from your closest friends, even if that’s the most affordable option.

“Buying a nice house is a wonderful goal, but so is maintaining friendships that can last a lifetime and support your happiness and well-being,” Ottwein says.

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