Smart Moves

A couple in their late 60s -- an American Express manager married to a landscape architect -- were highly motivated to retire and move to a beachfront condo in South Carolina. Standing in their way: the sale of their 1970s-era brick colonial.

To expedite the move, the couple swung into action with their own plan for pre-sale upgrades. Unfortunately, some of their well-intentioned “improvements” hindered rather than helped their sale, according to Ashley Richardson, who later became their listing agent.

“Before you go gung-ho on upgrades, call in local pros for expert opinions on what will truly enhance your sale without overspending,” says Richardson, who sells homes through the Long & Foster realty firm.

As it happened, she says the retiring couple wasted more than $20,000 on ill-advised upgrades. These included poorly planned kitchen changes, such as the installation of replacement countertops in black linoleum. The couple also brought in new carpeting to cover handsome hardwood floors.

“Buyers love hardwood, but they hate linoleum. As to the kitchen, their overwhelming preference is always for light quartz or granite,” she says.

After the retirees engaged her services as a listing agent, Richardson assisted them with a revised list of upgrades -- including flooring fixes and better kitchen countertops. It cost another $10,000, but the house sold just days after the extra work was done.

In many neighborhoods, demand for fairly priced residential properties continues to outstrip supply --keeping sellers in a strong position. That’s all the more reason why it can be unwise for owners to overspend on upgrades in hopes of increasing their profits.

Fred Meyer, a veteran real estate broker, says it’s rare for sellers to benefit from major pre-sale remodeling work.

Meyer, who also trained as a real estate appraiser, says one primary tenet of the appraisal field is that “cost does not equal value.” To illustrate, owners who spend $40,000 to install an in-ground swimming pool might at best reclaim only a fraction of that expenditure when their place is sold.

On the other hand, small landscaping upgrades that add color to the entrance of a home can repay sellers mightily.

“If you put in blooming flowers, you can expect to recover their cost at least 10 times over,” Meyer says. The same holds true for sellers who spend modestly to repaint their interior rooms in a pale neutral color, such as light gray.

Here are a few pointers for sellers:

-- Find an agent with substantial knowledge of your community.

What’s surprising to many sellers is that buyers differ widely in terms of which upgrades they prize most. For example, around Harvard University, where Meyer lists property, he says sellers are sometimes justified to install built-in bookshelves.

“Some professors joining the faculty actually put more of a premium on bookshelves than a snazzy kitchen,” he says.

Mark Nash, a real estate analyst and author of “1001 Tips for Buying and Selling a Home,” says owners who are unsure which improvements are worth doing are often reluctant to ask for advice before remodeling. But Nash says reputable agents won’t pressure you to list a property until you’re ready. Meanwhile, their advice could save you thousands of dollars in contractor charges.

“Real estate people can often put you in touch with local contractors who do good work for a low price. Through their clients, they pick up the names of contractors who are solid yet inexpensive,” Nash says.

Ask any agent who visits your home to go room to room, creating a checklist of updates that should enhance the value of your property rather than hurting it.

-- Don’t overshoot your neighbors on upgrades.

Nash says nowadays, buyers will refuse to compensate you for any renovation work that raises your property above neighborhood standards.

What kinds of upgrades constitute “overimprovement”? One example would be the addition of a three-car garage in a neighborhood where most houses have no garage at all.

-- Retreat from renovation work that’s overly pricey.

Have you already launched into a remodeling project, but fear you’re spending more than you could recoup? If so, Nash encourages you to contact your contractors and negotiate a change in plans.

Often, real estate agents can suggest less expensive products than those recommended by contractors. For example, they might recommend you replace worn carpet with a Home Depot brand rather than one from a designer showroom.

Besides substituting supplies, your contractors may be willing to renegotiate the overall scope of your project.

“Even after paying penalties for canceled work, you’ll probably come out ahead if you contain your enthusiasm for fancy upgrades,” Nash says.

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

The barriers facing prospective first-time homebuyers are hardly insubstantial. Many have mounds of student debt and diminutive savings accounts. Others have flawed credit or work histories. What’s more, nearly all wannabes confront home prices that are escalating faster than their income gains.

These multiple factors are combining to discourage more would-be buyers. Indeed, the extent of their despair is now documented in a new survey from Lending Tree, the online loan company based in North Carolina.

The survey, which polled 2,050 U.S. renters in August, found that 48% worry they’ll never be able to afford a home during their lifetimes. Among the most pessimistic were renters from Generation X, born from 1965 to 1980, and millennials, born from 1981 to 1996.

“People in the midst of their careers, especially Gen Xers in their peak earning years, are thinking, “If I haven’t bought a house at this point, it’s probably not going to happen,” says Jacob Channel, a senior economic analyst at Lending Tree.

Channel says renters’ worries are understandable --particularly during the COVID-19 era.

“What they’ve been seeing for a while now, especially during the pandemic, is home prices rising really, really fast and wages not necessarily keeping up,” he says.

Richard Rosa, a Massachusetts real estate broker who works solely with buyers, says many prospective homeowners have been on an “emotional roller coaster” that’s been particularly intense since April 2020, when the pandemic accelerated the buying surge.

Noting the steep ascent in home prices and hearing chatter about bidding wars, a segment of the wannabe homebuyer population is simply refusing to participate in the competition. These include those in the Lending Tree survey who’ve concluded that ownership is out of their reach.

“They consider it just too emotionally draining to proceed right now,” says Rosa, president-elect of the National Association of Exclusive Buyer Agents (naeba.org).

While some renters have reconciled themselves to the idea that they’ll never be homeowners, others have simply exited the buying market temporarily -- giving themselves a breather.

Rosa tells the true story of first-time buyers in their mid-30s. A therapist married to a software engineer, they began their home chase this past January. Their motivation? The birth of their baby daughter and the dream of a suburban Boston house in a neighborhood with solid schools.

“They weren’t asking a lot -- just a basic place with about 2,000 square feet of living space, three bedrooms and an eat-in kitchen,” he says.

Until late summer, Rosa says these clients went “full throttle” in their attempt to compete with rival bidders. To make their offers more appealing to sellers, they waived contingencies. They also routinely offered $30,000 to $70,000 over the asking price. Still, they were outdone by other buyers who bid even more. That’s when they opted for a temporary break from their home-buying quest.

This fall, many would-be buyers who took a temporary break -- including the Boston couple -- are headed back on the trail, hoping a slight increase in available inventory will improve their odds.

“I encourage our clients to get out there and keep trying for a house. Remember, you have to play to win,” Rosa says.

Here are a few pointers for buyers:

-- Focus on your primary motivations for buying a home.

Anxiety is an influential factor that can stop people from actualizing their buying plans, even when logic tells them it’s the right time to go forward, says Sid Davis, a real estate broker and author of “A Survival Guide for Buying a Home.”

Of course, there could be legitimate reasons to wait. Perhaps you have a basis for worry that your employer could soon lay off workers due to the pandemic. Or maybe you fear your spouse could soon be subject to a job loss.

“None of us has a crystal ball. But those who have secure jobs and truly want to own a home in order to build equity and enhance their family life might be kicking themselves later if they wait too long,” Davis says.

-- Look for early guidance and support from a trustworthy mortgage lender.

In this ongoing era of conservative lending, most mortgage lenders still go to great lengths to ensure that the loans they originate are solid. This means borrowers must be well prepared to respond to the lender’s requests for documents.

“The right lender will help make sure you assemble every single document needed to get your loan approved,” Davis says.

As proof of income, many lenders insist on much more than the customary pay stubs and W-2s. For example, they’ll likely ask you for tax returns. In addition, they’ll probably want assurances that the funds you’ve amassed for your down payment have been in your savings or checking account for some time and weren’t borrowed from an uncle just a week ago.

The time you spend documenting your eligibility for a home loan is time well spent if the lender gives you a “pre-approval” letter. Especially in this market, where sellers are nervous that deals will fall through on financing, this letter is a vitally important bargaining tool.

-- Gather intelligence before making a home selection.

Rosa recommends you walk the neighborhood around any house that interests you. Talk to local residents about real estate trends in the community and whether it’s a good time to buy there now.

Buyers who’ve lost homes to other bidders should be especially cautious about home selection to avoid a major mistake.

“Even in a seller’s market, smart buyers hold out for a house they could keep for as long as eight to 10 years or more,” Rosa says.

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

For home sellers, it's still time for celebration. In most popular neighborhoods, available properties remain in short supply. Tight inventories keep selling times short.

“About a third of all houses are selling in a week,” says Glenn Kelman, the CEO of Redfin, a national real estate company.

He forecasts that “prices will remain strong but aren’t going to be shooting through the roof as they did last spring or last fall.”

This trend should convince more people to finally let go and put their homes up for sale.

Until now, Kelman says, “it was hard to persuade sellers to put their homes on the market because they thought, 'If we wait one more month, we’ll get more money.'”

With a leveling of the playing field, sharp sellers are becoming more attentive to how they present their properties to the public. This involves a fuller awareness of the preferences and tastes of typical homebuyers.

“It’s amazing how superficial elements of home presentation can have a striking impact,” says Jeff Levine, a real estate analyst and architect in Washington, D.C.

Here are a few pointers for sellers:

-- Think paint colors when prepping your place for sale.

Zillow, a giant Seattle-based real estate firm, commissioned a study of 1,300 recent or prospective U.S. buyers to determine their favorite interior paint colors and how this influenced the prices sellers fetched for a home.

“Interior painting is one of the most common and impactful projects sellers take on,” says Amanda Pendleton, Zillow’s home trends expert.

For sellers, the survey defines several specific color choices that are viewed favorably by most buyers and that increase selling prices. One clear winner was a pale sky-blue bathroom, which increased the perceived value of a typical American home by a remarkable $4,698.

Buyers were also favorable to master bedrooms painted in “dramatic, moody tones” such as forest green or deep charcoal gray, according to the survey. But they liked light neutrals in common areas, such as living and family rooms.

Surprisingly, the trend toward bright blue accent walls and mint kitchens received negative reviews from potential buyers.

-- Consider hiring a home stager to make your place show-worthy.

Staging is the art of transforming a property so potential buyers can visualize themselves living there. Properly done, staging accentuates a home’s attractive features and minimizes its negatives.

Many agents are convinced that hiring a talented stager can increase the odds of selling a property promptly. Working under a full-service contract, most stagers will provide an array of services. They’ll remove excess furniture and personal items and rearrange the remaining pieces. Often, they also supplement the owners’ furnishings with alluring accessories of their own.

Unfortunately, the cost of hiring a professional stager for a full menu of services can exceed $500 or more, says Michelle Minch, the owner of a staging company called Moving Mountains Design (movingmountainsdesign.com).

But Minch says cash-constrained sellers don’t necessarily need the full range of services available through a stager. For a much lower price they can obtain an abbreviated consultation and receive pointers they can execute themselves.

“Tell the stager you just want the 10 top tips for making your house look better. For just an hour or so of consultation time, a good stager can tell you about furniture arrangement and also recommend mild, pleasing paint colors for your walls. You’ll get a road map for making your house move-in ready,” she says.

How can you find a competent stager to work on an “a la carte” basis? Minch suggests you visit the website of the Real Estate Staging Association (realestatestagingassociation.com).

Look for stagers in your area and make sure to check their websites for examples of their work before you give them a call.

-- Request that your listing agent promote your sale with other local pros.

Until recently, fairly priced properties in coveted neighborhoods practically sold themselves, and listing agents had relatively fewer marketing responsibilities. But in the current market, buyers are very gradually gaining power.

One key marketing skill your listing agent can use is to “talk up” your place to other real estate agents who have home-buying clients of their own.

“Strong agents will respond to your request to step up informal marketing of your place by spreading the word. They’ll make personal phone calls to other agents. They’ll also take flyers about your house to their professional meetings and hand them out. This way you should get more people over to visit your house,” says Lisa Atkinson, an agent affiliated with the Residential Real Estate Council (crs.com).

Your listing agent may have done this sort of one-on-one marketing for your property when it was first listed. But if your house has been sitting unsold for longer than you’d like, it might be time to ask your agent to do another round of this informal promotion.

“By alerting other agents to your property, your listing agent will enhance your chances of finding a buyer,” Atkinson says.

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