Smart Moves

If there’s one commonality about consumers these days, it’s that everyone, except the wealthy, are feeling financially pinched. Inflation means many people are cash-short.

“Consumer confidence fell for a third consecutive month in July,” says Lynn Franco, the director of economic surveys and indicators at The Conference Board (conference-board.org), which tracks consumer sentiment.

High gas and food prices continue to weigh on consumers, along with rising medical and child-care costs. But for young renters, no inflation issue is more painful than the sizable increase in apartment rents.

Meanwhile, many homeowners who want or need to sell a rundown property are confronting prohibitively high expenses to prep their place for market.

“Home shows on cable have created a nation of perfectionists about their real estate. But few sellers have the cash reserves to glorify their place like the TV shows portray,” says Mark Nash, author of “1001 Tips for Buying and Selling a Home.”

Indeed, longtime owners now living paycheck-to-paycheck are often unable to cover the cost of fundamental presale fixes, such as the replacement of a failed air conditioning system or a broken dishwasher.

“In the ideal world, sellers would spend whatever it takes to put their home in perfect condition. But few people live in that world. Money is especially tight nowadays for seniors and those with disabilities who rely on Social Security,” Nash says.

In past years, first-time buyer households -- many of them combining dual careers with child rearing -- were unwilling to consider a “fixer-upper.” But that’s now changing in desirable areas where available homes still remain scarce. There, well-priced “fixers” are once again on the radar screen of more first-timers.

Pam Gebhardt, a longtime real estate broker for Re/Max, says one motivational force causing young families to consider a fairly priced “fixer” is that they’re desperate to escape their rental units.

“In a lot of areas, rents are skyrocketing,” Gebhardt says.

Even so, it’s rare for young adults to accept a property in poor condition.

“Because most first-time buyers aren’t handy and don’t have the means to pay contractors, realistically only a minority are willing to consider a fixer-upper. But that’s still more than would have considered a fixer in the past,” Gebhardt says.

Here are a few pointers for those needing to sell a home in “as is” condition:

-- Engage an experienced agent for candid counsel.

Owners planning to sell a home that’s rundown are wise to seek a listing agent willing to serve as a project manager, says Eric Tyson, a personal finance expert and co-author of “House Selling for Dummies.”

“The right agent will spare you costly errors,” Tyson says.

Ashley Richardson, an agent affiliated with the Residential Real Estate Council (crs.com), says a skilled agent should give you a list of doable tasks.

“For example, you wouldn’t want to put high-end cabinets into the kitchen of a house that’s in overall poor condition. But you might want to have your current cabinets repainted,” she says.

As the first step in the agent-selection process, Richardson recommends you interview three candidates, asking each to critique your home and itemize cost-effective steps that would make it more saleable.

“You want someone who will look you straight in the eye and tell you the truth, not someone who just tries to flatter you into giving them the listing,” she says.

-- Seek assistance for the purging process.

Many owners trying to sell a home in poor condition feel overwhelmed by the sheer magnitude of the work facing them. Decluttering is especially daunting for those with health problems.

“Sellers who can’t do this work themselves should ask family members and friends to help,” says Richardson, who sells property through Long & Foster.

But what if no volunteers step forward? In such cases, Richardson suggests that owners may wish to hire students or others looking for temporary, part-time work.

“Post an ad asking for help ‘pre-packing for a move.’ And be sure to check background references on any stranger coming into your house,” she says.

Richardson recommends you give the person you hire a series of manageable tasks.

“For example, tell them to pack up the contents of your china closet or an overloaded bookshelf,” Richardson says.

It may seem counterintuitive for the owners of a home priced for an “as is” sale to bother with the removal of clutter. But Richardson says it’s essential.

“No one will buy a house if they can’t even see how large its rooms are,” she says.

-- Help potential buyers picture your home’s possibilities.

Though most owners of property in poor condition lack funds for major improvements, Tyson says it’s important that they make their place at least minimally appealing.

“Nearly all buyers now preview properties online. If they don’t like what they see there, they’re unlikely to go visit the place,” he says.

Besides clearing out your clutter, you’ll want to remove any beat-up furniture or window coverings that make your place seem dark and drab. Your agent may have a stock of furnishings to lend you that would make your place look fresher.

In addition to cosmetic touches, Tyson says the owners of a rundown home should consider providing visitors with mock-ups and contractors’ estimates for needed improvements.

“Always remember that most people are devoid of imagination -- meaning they’ll need help to envision how great your house will look once all the necessary work is done,” Tyson says.

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

For those struggling to buy a first home for two years or longer, it’s small comfort to know the pace of price increases has slowed and bidding wars are less common than before. Many novice buyers have yet to score an affordable place due to price constraints.

Frustrated buyers need a sound breakthrough strategy, says Steve Israel, the broker-owner of an independent realty firm that caters to homebuyers. He suggests one strategy for income-tight consumers to consider: buy a rental unit.

“Absolutely, it’s possible to get a good deal on a house that’s now a rental or was previously rented. But you and your agent must be extremely careful to do serious research on the property,” Israel says.

Fortunately, many sellers are now more open to negotiation as the home sales market slows down.

Dawn Templeton, who heads an Idaho realty firm, says, “The market is cooling off a tad. There’s more balance between buyers and sellers, and sellers are making more concessions on repairs.”

Israel says some of the most-willing-to-negotiate sellers include the disillusioned owners of properties that were converted to rental units.

“Many of these folks never intended to become landlords and they dislike the headaches,” he says.

“The owners of rental property who live far away are often so eager to sell that they’ll give you a very good price,” says Sid Davis, a Utah broker and the author of “A Survival Guide for Buying a Home.”

“Think of the hassles of trying to manage tenants and keep up a house when you live hundreds of miles away. Then combine that with the reality that a lot of people just can’t stomach being a landlord,” Davis says.

Here are a few pointers for buyers pondering the purchase of a rental:

-- Investigate the property when the tenants are away.

With rare exceptions, those living in a rental home are usually unhappy to learn that their landlords plan to sell, forcing them to move.

Some tenants, in an effort to sabotage the sale, will make derogatory remarks about the owners and about the underlying condition of the property.

Davis urges buyers trying to evaluate a rental property to schedule their visits at times when the tenants are away.

“That way, you’ll avoid the annoyance of having the tenants follow you around in the house. You’ll also feel a lot more comfortable scrutinizing the property,” he says.

-- Make sure you get a serious home inspection.

A fair number of rental properties are overseen by professional managers. Still, they rarely receive the same level of attention as owner-occupied homes. That’s why it’s important to make any bid conditional on a satisfactory home inspection.

“Every house should get an in-depth home inspection. But this need is especially great for a property that’s served as a rental, either currently or in the past,” Israel says.

Davis says one way to find a qualified home inspector who serves your area is to go to the website of the American Society of Home Inspectors (homeinspector.org).

“Ideally, you’ll gather the names of at least 10 candidates and then narrow your list to three who you can interview by phone,” he says.

Davis recommends you avoid hiring any inspector who’s also in the home-improvement business.

“Watch out for any guy who tries to contract with you for home improvement or repair work,” Davis says.

If a comprehensive home inspection reveals only the most minor of problems, the rental unit you’re considering could qualify as a legitimate “diamond in the rough,” according to Davis.

-- Seek cost estimates for potential repairs.

As a real estate investor, Davis once owned seven rental properties, all of which he’s since sold. His experience as a landlord taught him that tenants often fail to tell their landlord about problems unless they become serious.

“Suppose the dishwasher has malfunctioned for a year, yet the landlord has never heard about the problem until a home inspector determines that the dishwasher leaks and must be replaced, along with the subflooring beneath,” he says.

Davis says the prospective buyer of a rental -- or any property for that matter -- should determine in advance how much needed repairs will cost. Before finalizing your bid, he recommends you get estimates for all the work on your inspector’s list. Then make sure these costs are factored into the price you negotiate.

-- Rule out houses with major issues.

In those neighborhoods where available homes are still in short supply and buyers continue to outnumber sellers, bargain properties are still tough to find. Even so, Davis says those who keep an open mind about purchasing a rental unit could still get a good house for an under-market price.

The key to finding a genuine bargain in a rental unit is to carefully consider each property on its own -- upsides and downsides.

“The reality is that some rental properties, especially those that have been occupied by tenants for five years or longer, are a terrible deal that would drain your savings and make your life miserable. But a house that’s been rented out only briefly could present a wonderful buying opportunity,” Davis says.

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

When the pandemic hit in 2020, an ER nurse and her engineer husband -- in their early 30s and recently married --vowed not to let COVID slow their life plan down. They wanted at least two kids, and they had identified a child-friendly neighborhood with exceptional schools as their ideal place to live.

“The neighborhood was extremely pricy. But we were determined to get our foot in the door. So, we bought a little bungalow we could afford in this area. Then in quick succession, we had our two little boys. All that’s great, but now we feel really crowded in our tiny house,” the nurse says.

Currently, just two years after buying their bungalow, the couple is intent on obtaining a much bigger place in the same neighborhood. So, now they plan to trade up and have put their house on the market.

“The great news is that we acquired our starter home at just the right moment, before the big pandemic price surge. Our house has now been appraised for more than $150,000 above what we paid for it since then,” the nurse says.

What’s next for this young family?

“With proceeds from our sale, along with help from our parents, we can afford to buy a much larger house that’s also brand new. Because we adore this area, this next place will be our forever house,” she says.

As this true story illustrates, getting the timing right on your real estate transactions can make a major difference in the fulfillment of your housing goals.

“The correct timing of a home sale involves the combination of good luck and excellent planning. That’s especially true now with the economy possibly heading into recession,” says Sid Davis, the author of “A Survival Guide to Selling a Home.”

Davis, a longtime Utah real estate broker, says all too many homeowners delay the time-consuming process of decluttering in advance of a sale.

“It seems overwhelming. But you don’t want razor-edge timing when you have so much at stake,” he says.

Here are a few pointers for sellers:

-- Line up a listing agent as early as possible.

“I get into a lot of panicky situations with 11th-hour home sellers. Sometimes I feel like a firefighter,” Davis says.

When he first entered the real estate field more than two decades ago, he recalls how clients would typically call for help at least three months before they needed to sell. Now, he says many wait until just a few weeks before they intend to move.

Once you know you’re definitely going to move, Davis says it’s prudent to begin interviewing prospective listing agents and then to promptly select the one you want to represent you.

An agent with ample notice of your selling plans can better determine the steps you should take to achieve the best possible outcome, whether this means replacing your kitchen appliances or painting your front door. The agent can also exercise more care in selecting the right listing date.

“Arranging for contractors on a nonemergency basis can save you cash, and careful pricing can mean more proceeds at the bottom line,” Davis says.

-- Request statistics on selling times.

Suppose you’ve accepted an out-of-state job offer, but you have several months to relocate. How can you estimate the time needed to go from list to sale?

Dorcas Helfant, a former president of the National Association of Realtors (nar.realtor), recommends you ask your agent for statistics on selling times for homes in your community.

“The only numbers that count are the ones for your immediate neighborhood. Beyond that, the statistics aren’t relevant,” Helfant says.

Take these numbers, known as “days on market,” and chart them over a three- to six-month period. If selling times are lengthening, this could indicate a cooling of demand and should signal caution to prospective sellers.

“Assuming the market is chillier than before, you’ll want to allow yourself at least one extra month beyond the average selling time to ensure a smooth transition,” Helfant says.

George Ratiu, manager of economic research for Realtor.com, the home listing firm, stresses the uncertainties now rampant in real estate markets -- but says sellers still have reason for optimism.

“Homeowners trying to decide if now is the time to list are still in a good position in many markets, as a decade of rising home prices gives them a substantial equity cushion, and homes continue to move quickly,” Ratiu says.

-- Pack up your belongings promptly.

Though he has no scientific basis for the statement, Davis contends that 99% of home sellers procrastinate on the property prep process.

“Even when they have extra time, it’s human nature to wait until the final inning to mobilize. Most of us rely on deadlines to get going,” he says.

Besides painting and repairs, nearly all homes need a thorough purging to show well. Your first step, Davis says, should be to remove any excess furnishings that crowd your interior space. Then box up smaller items and place them in your garage or a rented storage unit.

“By beginning as early as possible ... you enhance your chances of fully completing this task before your place goes up for sale. Trust me, you won’t miss all that stuff, even if it’s stored away for months,” Davis says.

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