Smart Moves

After plugging in their home address to online real estate websites such as Zillow or Redfin, many homeowners feel elated and house-rich. After all, the value of their property as estimated by these companies has likely skyrocketed in recent months.

But for those hoping to sell and move, the euphoria wears off quickly after they’ve scouted alternative places to own, given the scarcity of available options.

"Inventories are extremely tight now, making it tough to find a suitable property. Then, due to the buying frenzy, many purchasers face a bunch of other bidders. This forces them to make snap decisions without much forethought," says Keith Gumbinger, a vice president at HSH Associates, which tracks mortgage markets throughout the country.

In areas with overheated markets, Gumbinger says some owners are rethinking plans to sell. Instead, they’re opting to refinance their property and take cash out to renovate their home more to their liking.

"These folks debated long and hard whether to move or improve, and they’re choosing to improve. They don’t relish having their house torn apart for a major renovation. But that makes more sense to them than an expensive move," he says.

Marc Zitelman, a veteran mortgage broker, says many equity-rich owners who are opting to improve rather than move fall into the boomer population cohort, born between 1946 and 1964.

For instance, Zitelman tells the true story of a couple in their 60s -- a special education teacher married to a sales executive -- who abandoned plans to move in favor of a large-scale remodeling project for their four-bedroom colonial.

"Their two kids are grown and through college, so they don’t really need the extra space. Yet they’ve decided on a complete remodeling of their kitchen and bathrooms, plus a rebuilding of their deck," he says.

Two sets of numbers are prompting some older owners to renovate rather than sell and buy a different property.

"At this point in time, prices have gone up more than mortgage rates have gone down," says Zitelman, who’s worked in the home finance field for more than 20 years.

Many owners with good credit scores and solid jobs can qualify for a home equity line of credit, also known as a HELOC. This is a revolving loan that lets borrowers tap their equity at a rate lower than through a credit card. Still, Gumbinger says prospective remodelers can access even lower-cost funds through a cash-out mortgage refinance.

"As always, it’s smart to shop around before you apply for any kind of home financing. If you’re refinancing, one good place to start is with the lender who currently holds your mortgage," he says.

Here are a few pointers for those intent on a cash-out refi:

-- Investigate your credit situation before starting the refinance process.

A major factor limiting mortgage market access involves what Gumbinger calls a "a severe deterioration of credit." This could result from late payments on your mortgage or a delinquent student loan.

The most common indicators of creditworthiness used by mortgage lenders involve credit scores. Lenders assume that the higher your score, the less risk you represent to those who lend you money.

Credit scores typically range between 300 and 850, and if you rank low that could severely hinder your chance of refinancing to a lower rate.

Still, Gumbinger says many owners with a few credit blemishes are actually surprised to find that their scores are higher than expected.

Under federal law, consumers have free access to credit reports on a yearly basis through annualcreditreport.com. Alternatively, you can purchase credit reports and score information through the three major credit bureaus: TransUnion, Experian and Equifax, or by going to the website of Fair Isaac Corp. (myfico.com).

"If you know your numbers, you’re less likely to get bamboozled into paying too much to refinance," he says.

-- Look for lenders who process loans in a timely way.

"Within reason, I would leave no stone unturned in looking for the right place to refinance," Gumbinger says.

Some owners are comfortable using a lender from a faraway state that they’ve found online. But Gumbinger says those who are anxious about the process are often more at ease with a nearby lender.

"It’s important to realize that rates are quite uniform throughout the country. So you’re not necessarily going to get a better deal from a lender in a distant location. In addition, you’ll probably have a happier customer service situation locally," Gumbinger says.

One obvious way to search for a customer-friendly lender is to ask friends, neighbors or colleagues about companies they’ve used. Or you can seek out referrals from the real estate agent who sold you your current home. Agents usually keep a short list of lenders whom they’ve found reliable.

-- Take advantage of online mortgage calculators.

Gumbinger is a big fan of the online information available to mortgage hunters.

Nowadays, there’s no need to rely on the lender to give you the data you need to compare mortgage options. You can use online calculators to adjust for different factors, including the amount borrowed and the full term (duration) of the loan.

One of many websites offering free online calculators is that of Gumbinger’s firm, HSH Associates (hsh.com). Another popular site for refinance information is bankrate.com.

"Calculators are great for comparing various refinance scenarios," he says.

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

As a wannabe home seller in the still-hot housing market, perhaps you imagine that many listing agents are earning huge windfalls. After all, commissions are ascending along with housing values. And in popular neighborhoods, homes are selling at lightning speed.

But many agents are less than euphoric about current market conditions. That’s because there’s a severe shortage of inventory available to list. Meanwhile, more people have entered the real estate field -- including those who lost jobs in the retail, restaurant and hospitality sectors. This has also intensified competition among agents.

Since the pandemic started, membership in the National Association of Realtors (nar.realtor) has increased substantially. It’s now the largest trade association in the nation, with more than 1.4 million members.

“(A)gents are presently facing a tremendous battle to obtain listings -- especially for newcomers to the field who receive fewer word-of-mouth referrals,” says Sid Davis, a veteran real estate broker and author of “A Survival Guide to Selling a Home.”

No matter the number of available agents, homeowners intent on selling should exercise great care in selecting a listing agent, says Eric Tyson, a personal finance expert.

“It’s all too common for sellers to take a trivial approach to hiring a listing agent. ... But selling success depends on due diligence,” says Tyson, the co-author of “Selling Your House for Dummies.”

Granted, some owners do well on their sale without a highly qualified agent -- particularly if they’re lucky enough to live in an area where the market remains robust. But real estate specialists caution against overconfidence, especially at a time when there are crosscurrents in the economy, as there are now.

Whether your home sale is voluntary or involuntary, Tyson says it’s critical you make agent selection a priority.

“Treat hiring an agent as seriously as you would any professional,” Tyson says.

Ron Phipps, a real estate broker and past president of the National Association of Realtors, says more sellers are gradually getting the message about the importance of careful agent selection.

“It used to be that a lot of people would just call in a family member or friend who happened to have a real estate license. The good news is that sellers are now searching more widely,” he says.

Here are a few pointers for sellers:

-- Interview at least two to four candidates.

Without interviewing other contenders, you may be tempted to hire the first agent who comes recommended. But Phipps says it’s still wise to also interview other candidates.

“When you talk to several people, you’ll get different perspectives on your sale,” Phipps says. “Several opinions on pricing can be especially helpful.”

Even now, he says you should be wary of any agent who suggests you list your place for more than 10% above what others say is its fair market value.

“Find out how they arrived at that higher price,” says Phipps, noting that occasionally some agents may suggest an above-market list price as a way to flatter you into hiring them. This practice is known as “buying the listing.”

“It’s a shortsighted listing strategy,” says Phipps, who’s worked for his family-owned real estate firm for more than four decades.

-- Screen for local knowledge of your market.

Your uncle or that highly recommended friend-of-a-friend might be an excellent real estate agent. But should you consider hiring this person if their office is located a significant distance away from your place?

Absolutely not, says Tyson, who contends that a faraway agent is likely to be much less effective in marketing your property than one who knows your local turf well.

“Anyone who works more than a 15-minute drive from your place is probably a very poor bet. Geography matters a lot,” he says.

It’s especially wise to have an agent close by if you’re trying to sell a property in a city setting -- such as a condo in a high-rise building. In such a case, the ideal agent is typically someone with proven experience selling units in your same building.

“Agents with an intimate knowledge of the floor plans and sales history of your complex can hit the pricing target right the first time. That spares you the agony of multiple pricing adjustments later,” Tyson says.

Realtors call the area where they most often sell homes their “farm.” As Tyson says, agents who say they farm your area should be able to demonstrate this with a list of transactions they’ve done there recently.

-- Ask about a candidate’s awards and honors.

How can you identify agents who have achieved an unusual level of expertise? Phipps says one way to distinguish among agents is to ask if they’ve been elected to positions of leadership within their professional groups.

“This shows they have a reputation for collaborating with other real estate people,” Phipps says. That’s important, he says, because real estate is a cooperative profession, and a successful sale typically involves more than one agent.

-- Choose an agent with a proven deal-closing record.

In a transitional period like the current one, many sellers are understandably nervous that complications along the way to closing might jettison their deal. That’s because qualifying for a mortgage is trickier than it was prior to the last real estate downturn of 2008.

“Selling has become much more complicated. So it’s smart to find an agent with experience handling many different kinds of transactions. Look for their record of closing deals, not just taking listings,” Phipps says.

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

Americans have taken many lessons from the pandemic. One is the supreme importance of close ties to family and friends. Another is the centrality of home and having comfort, space and privacy for every member of the household.

“For more than a year, we lived with extreme limitations. Now that COVID-19 is nearly over, people are impatient with further delays or postponements. There’s an urgency to now, and that applies to the place where folks desire to live,” says Michael Crowley, a longtime real estate broker.

It isn’t only boomers who wish to hasten moving plans that were long postponed due to the pandemic. It’s also young singles and couples who aspire to larger quarters.

“Young homeowners know this is a tremendously good time to sell because home values have risen to a very high level. One reason they want to sell their starter home immediately is they fear this strong seller’s market can’t last indefinitely,” says Crowley, a past president of the National Association of Exclusive Buyer Agents (naeba.org).

John Lovallo, a housing analyst for Bank of America Securities, says the aging of the millennial population --born between 1981 and 1996 -- is a major factor now underscoring real estate markets.

“A very strong wave of demographic support is now coming through the pipeline,” says Lovallo, who contends that many millennials are now involved in an “urban exodus,” which has them selling their city properties in favor of larger homes in the suburbs.

As listing agents constantly reiterate, the first step to prepping a house for sale is to free the property of excess accumulations so potential buyers can see the true dimensions of its rooms and imagine themselves living there.

Dana K. White, the author of “Decluttering at the Speed of Life,” has moved six times in her adult life and hopes to soon move again from her 2,000-square-foot rancher in a Dallas suburb. She says that during her last move, she learned the hard way how to expedite the clearing process.

“My house was a disaster, which made me desperate,” says White, who outlines the purging process she perfected through her books, blog and podcast.

One of White’s core recommendations to sellers is that the removal of superfluous items from a property should take priority over reorganizing belongings.

“Your house will feel a lot less overwhelming if your first step is to free yourself of all the trash, recyclables and items to donate to charity,” she says.

White doesn’t oppose the idea of selling one’s excess possessions -- for example, on eBay. But she’s learned from personal experience, as well as from her followers, that attempting to sell unwanted items can needlessly delay decluttering.

Here are a few pointers for home sellers in a hurry:

-- Look into the high cost of hiring a moving company.

“Average millennials have a bright future with many moves ahead. Hauling all that baggage with them or paying to store it slows them down, and isn’t either wise or cost-effective,” says Tanya Whitford, a former actress and certified professional organizer whose clients include many in the entertainment field.

Some millennials are tempted to store their belongings at the home of their parents. But Whitford says this too could be a flawed strategy.

“Maybe your parents will refuse to house all your stuff, or they’ll need to downsize their housing in the near future,” Whitford says.

“Usually the only things you should keep are cherished memorabilia and things you’ll need in the immediate future,” she says.

-- Donate as many superfluous items as possible.

Beverly Coggins, the author of books on both time management and decluttering, suggests that those who must pare their possessions dispense with any clothing they haven’t used in a year or longer. The same applies to many other household items.

She says many people feel especially anxious about letting go of things given to them as gifts from relatives or close friends. But she says such guilt feelings are needless.

“It doesn’t mean you love the person any less because you can’t keep everything they give you,” she says.

Coggins also suggests you take photos of treasured items that are too large to move. These could be hung up in your new domain.

-- Request pickup services to hasten the giveaway process.

Many home sellers find it easier to let go of extra belongings if they know they’ll go to good use. That’s why Coggins and other professional organizers often advocate contacting charitable organizations interested in collecting serviceable items.

Very often, charity groups will pick up items from your home, a convenient way to free yourself of clutter quickly. Also, with a pickup appointment, you’ll have a definite deadline for your work, which can serve as a motivating factor.

-- Keep your focus on your future.

Nowadays, the reality is that many are decluttering to hasten a trade-up move before home prices make that option unobtainable. Yet many who declutter in advance of a move find it has many favorable aspects, including the lessening of personal stress.

Coggins also notes that another benefit of purging is that it reduces home upkeep demands, affording you more time to focus on the people most important to you.

“After clearing through all their extra things, many folks realize what’s most important to them is not all those inanimate objects but their close relationships,” she says.

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