Deciding If “Fixer-upper” Is The Right Deal For You

You know them when you see them—especially when going through the home-for-sale listings, where their photos probably lack quite the allure of the others. You can also spot them by some cautiously-phrased tip-off language. They are “handyman specials” that are offered “as-is” or that “need attention” or “TLC”. A perplexingly low asking price is a dead giveaway, too. Most often, if, considering the features listed, the number is too good to be true, you’re looking at a fixer-upper.

If you are house hunting, are they worth looking into? Or if you own one, should you do the fixing-up? How do you make a rational decision?

First, about whether to get to work before you offer your own fixer-upper to the world:

It’s true that a fixer-upper can be a serious magnet for prospective buyers, particularly when those buyers aren’t averse to putting in some old-fashioned elbow grease. If you are able to accept the kind of low sales price that will make yours a standout from competitors, it’s bound to attract a lot of interest from budget-minded householders—as well as professional house-flippers and contractors who work on their own account.

The rule of thumb for owners readying a property for sale is to investigate whether smaller replacement projects—the kind that add curb appeal and/or kitchen glamor—are likely to boost the home’s value above the cost of the undertaking. Most reports on the subject find that large-scale projects seldom return even 80% of their cost, although when chosen strategically, per the NAR^® “…they can improve the market position of the property in relation to the competition.” (Translation: move it out of the ‘fixer-upper’ category).

From a non-professional buyer’s point of view, though, the question is whether the fixer-upper route is a better choice than the costlier home buying options. If you have little interest in extensive DIY projects or decorating overhauls, you already know the answer: skip the fixer-uppers. You have to be enthusiastic to make one of those worth the undertaking. You needn’t bother with any of the super bargains with listings that admit “needs some TLC.”

If you are on the fence, the answer may well lie in a careful appraisal of what will be needed to bring the candidate up to neighborhood standards. If you are an experienced DIYer, there are software packages available that can help you estimate expenses. If not, our contractors will be able to provide an itemized ballpark estimate for such a project. If the combined cost of purchase and upgrades still create an attractive package—and you are prepared for some dislocation as major work is being done—a fixer-upper is worth serious consideration.

This fall, the local market has offerings with real value in every category. Always remember that every home that is listed on the market has a story or history that can’t be  gleaned from perusing the home’s marketing description… Call me at (513) 659-2284 to get the complete low-down on any and all homes that pique your interest!       

Stock Market in Turbulent Contrast to Serene Real Estate

Last week was a head-swiveling version of a follow-the-dots puzzle for those who keep tabs on national news related to local real estate. Children like following the numbered dots to reveal a picture. You can’t be sure what it will turn out to look like until the end. The week was a lot like that:

 Monday led off with the release of housing-builder sentiment: its best reading in 10 years! It was given credit for reversing an early-day 100+ point stock market drop. When the Dow closed up 68 points for the day, real estate performance got the kudos.

Monday’s dot connected to the next one, which appeared as USA Today’s early Tuesday dispatch pointing out that the previous day’s market rescue was hardly a flash in the pan. The Money section’s lead story, “Housing Provides Much-Needed Lift to Wall Street” drew a broader picture. In a ho-hum year for the broader stock market, housing-related stocks were uniformly “among the best-performing shares.” The S&P 500 may have been up less than 2% for the year, but homebuilders’ shares were up 13%; home-improvement retailers, 11.1%; home furnishings stocks, a blistering 26.1%! The reason was “the power of the resurgent real estate market to generate positive action in the stock market.”

Then, on Wednesday, CoreLogic provided the next dot with its release of the August MarketPulse roundup, pointing to a 6.5% increase in its national home price index. This was the logical next dot—one that was hardly unexpected. The predicted continuation of price increases was again explained by lean inventories, continuing low mortgage rates, and consumer confidence rated “the most optimistic in eight years.”

Thursday’s dots had been anticipated, too: the morning announcement of July existing-home sales marked the 41^st consecutive month of year-over-year price gains. Volume was up, too, as sales topped an annual level of 5.5 million for the first time since early 2007. The Street took that as “just the latest confirmation that the housing nightmare is mostly over.”

By Friday, the last dots appeared in calm contrast to the frenetic news from Wall Street, which completed its worst week in five years. Even the real estate industry stocks which had rescued the day on Monday couldn’t buck the outrushing tide of equity losses. But the last dot for local real estate watchers was found in the analysts’ post mortems after the market’s close, as speculation increased that the carnage on Wall Street might well be sufficient to nudge Federal Reserve decision makers away from raising interest rates in September. Real estate trackers were able to put their pencils down and relax for the weekend.

So, what was the picture the follow-the-dots puzzle revealed? The real estate industry dots seemed to trace a simple circle…with a curved line near the bottom that looked a lot like a smile.

Whether or not local real estate offerings continue to benefit from historically low mortgage interest rates (they dropped again last week!), there are definitely great opportunities for buyers and sellers. Give me a call whenever you feel the time is right to take advantage of today’s market!  

Important Tips To Know About Cincinnati MLS Listings

Wouldn’t it be great if high schools started a Driver’s Education kind of class for real estate? At some point—I think it was in the 1930s—Americans realized that it would be a good idea for the public schools to offer Driver’s Ed, just as a matter of public safety. If you’ve ever tried to deal with a clutch and stick shift built before the mid-50s, you’ll understand the need. Too bad the damage that can result from lack of real estate knowledge isn’t as obvious as a dented garage door.

The first Realty Ed class session could deal with the history of MLS listings. Even given the void in the school system, a teenager wouldn’t need much real estate exposure to have at least heard of “the listings.” “The Multiples” is more obscure, as is “MLS” (when you Google that, you get a lot of major league soccer sites).

They are all jargon that refer to the information published by “the” Multiple Listing Service. “The” is in quotes because there isn’t just one Multiple Listing Service in the United States; there are many different ones, run by different companies. Our Cincinnati MLS Listings are produced by our MLS Listing publisher, who cooperates with others across the country to come up with the not-quite-exactly-uniform format you see when you go searching online for greater Cincinnati homes for sale.

If the high school kids’ first homework assignment is to go online to check out the local MLS listings (like the ones I provide), what they find looks quite straightforward and self-explanatory. They see pictures and descriptions of each property for sale, an asking price, and details that a future owner would want to know. Square footage, lot size, the year built, number and types of rooms are all there, making it easy to compare properties. There may be more details in some of the listings than in others, but the real estate agent who prepares the MLS listing makes sure the most important elements are covered.

What will not be obvious to the students (but what will make excellent Friday quiz material) is how the Cincinnati MLS listings embody other elements that are commercial and legal. Behind each of the listings (under the hood, in Driver’s Ed terms) is the fact that an MLS listing ordinarily represents a contractual offer by the listing brokerage to compensate other real estate professionals who represent potential buyers…which means it also is ordinarily evidences that the owner of the listed property has made a separate “listing agreement” with the listing broker.

Later on in the semester, there will need to be a discussion of FSBOs and the whole “For Sale by Owner” situation. It’s likely that one of the more troublesome ‘A’ students will then certainly raise her hand to ask something like, “Well then what happens when there is a Cincinnati MLS listing for a FSBO property? Doesn’t that mean there isn’t a listing broker to make the offer to compensate other real estate professionals who represent potential buyers?”

That will be the moment when it is again demonstrated why teachers need three months off every year.

Our Cincinnati MLS listings are a superb way to organize today’s active real estate offerings—but they are only one of many elements. Call me for expert assistance in getting all those elements fall into place!  

Homeowners Cheer U.S. Return to Housing Value Highs

For homeowners, the news was a long time coming. The bounce back from last decade’s dizzying plummet in the nation’s residential housing values has been underway for quite a while now—but those values hadn’t quite returned to their former heights.

Until last month!

The Wall Street Journal was early to break the long-awaited headline, “Existing-Home Prices Hit Record: $236,400.” Using just-released June sales numbers, the Journal reported that the nation’s average housing prices now topped the previous high water mark set in 2006. It meant that a lot of paper losses have been obliterated—and the return of full nights’ sleep for many U.S. homeowners who have long been underwater.

Another aspect of June’s housing report card could also ease nerves on a wider scale. USA Today led with it: “Existing homes were sold at the fastest pace in eight years…” It quoted the NAR’s Lawrence Yun as pronouncing this year’s spring buying season “the strongest since the economic turndown.”

That’s where the current housing market profile seems to differ in kind from the previous peak of $230,400, registered in July 2006. That mark was reached after sales volume had started to fall. Prices then followed, starting with a slow decline that continued until the spring of 2008, when the slump became a nosedive—unleashing the subprime mortgage crisis. The “bubble” of unsupported high prices had burst.

There was more glad tidings in last week’s news, as well. U.S. home builder confidence levels hit its highest mark in “nearly a decade” (WSJ). A rise in demand for apartment housing caused a jump of 9.8% in housing starts.

But the biggest news was the existing-home price rise, reported as having “rocketed” 35% since 2011, “benefiting current homeowners by giving them an opportunity to trade up to better homes or sell and cash out.” That’s the kind of spur that can stimulate the entire housing market.

With one economist (Andrew Hunter of Capital Economics) quoted as saying “the housing recovery has shifted into a higher gear,” it wasn’t surprising that other analysts were in agreement. “Don’t Laugh” read one headline from international observer Quartz.com; “the U.S. housing market is the best story in the global economy right now.” Reuters agreed about the implications. Their headline: “Strong U.S. housing data boosts dollar.”

Greater Cincinnati residents don’t have to be global investors to take advantage of this summer’s home values. A simple call to my office is all it takes to get things started!

Mortgage Rates Projected to Rise Sooner Rather than Later  

Now that we are deep into July, with summer in full swing, there might be vague thoughts running through your mind about some potential real estate moves—but certainly not until the fall. Right now all most of us are thinking about is whether another chilled glass of summer-something-or-other is in order. Mortgage rates and what the folks in Washington might be doing to affect them are not exactly what occupies an idyllic July afternoon.
         But if you’ve been paying attention to any newscasts long enough to reach the dull-as-dishwater economic stories they throw in toward the end of the broadcasts, you may also have an inkling that conditions are about to change. And the evidence does suggest that mortgage rates face a likely increase come fall. If your vague suspicion does come to pass, and if you’re among those considering buying or selling a home this year, now should be the time to stop “thinking” and start “doing”.
          Exhibit A for that proposition comes from one Michael C. Fratantoni, who happens to be the Chief Economist of the Mortgage Bankers Association (MBA). When he recently spoke at the National Association of REALTORS^® office in Washington, he made no bones about it: mortgage rates will continue upwards, with a first significant Fed hike likely in September. September! The 30-year fixed mortgage, which we all know has lingered at historic lows—below 4%—for several years, is likely to hit 4.4% by the end of 2015 , then move beyond 5% next year.
         It’s enough to stifle any thoughts about that frosty beverage.
         The good news for homeowners planning to list is that Fratantoni doesn’t believe any of these factors will keep the nations’ buyers away. After a pretty lackluster 2014 performance, the MBA forecasts a 14% year-over-year increase in purchase-money mortgage originations in 2015—and nearly 9% in 2016.   Nationwide, incomes are also expected to rise, and with new household formations on the rise, the national real estate market looks to remain in fairly good balance.
         While it seems there’s no instantaneous need to drop all your summertime activities to rush your home onto the market, with mortgage rates expected to rise sooner rather than later, it’s certainly worth making it a priority to give me a call this week.  After that, there will definitely be ample time to finish enjoying that delightful chilled summer beverage.

4 Foolproof Steps to Increasing the Value of Your Home

 As soon as you decide that you will be putting your home up for sale—whether soon or at some point in the foreseeable future—it’s also time to get strategic about growing your property's value—starting with a generous dollop of objectivity.

The difficulty stems from a truth about how everybody perceives much of their property’s value. We escape from hurly-burly of daily living by retreating to the comfortable confines of our home—our place. A good part of its value to us and to our family is its sheer familiarity—the “hominess” that makes it our personal haven. But some of the very things that make it so comfortable to us will be off-putting to outsiders—and they are the prospective buyers.

Our great leather easy chair (the dark brown one that’s gotten a few shades lighter where we sit, and a little off-color where the spills happened) may look a bit peaked to the untrained eye, but it’s been that way for years: who cares? The back door needs to be bolted to stay shut…we do that without even thinking about it—hardly an issue! The sofa may sag, but it sags exactly right (for us)! The bathroom window that’s sort of stuck (okay, maybe it’s painted shut)…etc. etc. etc.

Professionals are of one voice about the real value you add to a property when you go to the trouble of systematically depersonalizing it. It helps to approach doing that seriously and deliberately—to tackle it in an organized manner. There are any number of ways to go about that, but here is one way that will pay off:

Step 1

      Make a list... Review your home from top to bottom. Identify every nit-picky detail in your home that requires repair or renovation. Prioritize your list of repairs or renovations from the easiest (defined as least expensive/time consuming) to the most difficult (defined as most expensive/time consuming). Memorialize the list of repairs/renovations in writing and assign realistic completion dates for each item on the list. For "big ticket" repairs or renovations, get an opinion from a full-time real estate professional on whether the repair/renovation will, in fact, improve the market value of your home before you incur any expense.

Step 2

After a decent interval, sit down with the list and re-classify each item into an Easy Self-Fix List and a Professional-Attention-Needed List.

Step 3
      Get bids from the appropriate professional tradespeople, calculate which fit your budget, then schedule the work.

Step 4
      Get started on your own endeavors to address the Easy Self-Fix List. You’ll be able to organize your own efforts to finish up about two weeks after the last of the tradespeople are scheduled to finish their projects (a two week grace period is realistic: you are aiming to finish everything about the same time).

Following these four steps will put you well on your way to increasing the value of your home. And at any point in the process—from before Step 1 to the satisfying moment that closes Step 4—give me a call to discuss how to convert all that increased value into a profitable home sale!

 “Credit Score Whack-a-Mole” for Mortgage Applicants

You may have wondered why there are credit repair companies out there, since the credit reporting agencies have to allow any consumer to dispute incorrect line items on their own. The big Credit Reporting Agencies (“CRAs”) even have online systems for challenging erroneous information. The Agency must act speedily to investigate and correct any false information. Soooo, why pay someone else to just fill out their form?

The answer seems to be the same one that makes practitioners in the legal profession permanently in demand: it’s in the fine print. And in this case, it could be that some of that fine print is written in invisible ink.

As you can well imagine, speed is vital when a would-be mortgage applicant finds a credit score that’s lower than expected. The mortgage companies will decide whether you qualify (and how much interest to charge) based largely on that credit score. The actual details about how speedily the CRA must act are all contained in the fine print located in the FDIC’s Consumer Protection regulations, “Procedure in case of disputed accuracy” (6500, § 611). Once you notify the CRA, they have to investigate the validity of your claim and (without charging you a dime) determine within 30 days whether the item is accurate. More fine print describe further protections you have—

PARAGRAPH 2:  The CRA has but 5 days to notify the company or person who provided the information about your challenge.

PARAGRAPH 6: The CRA has to provide you the results of their investigation in writing, and, if you’ve asked for it, describe the steps they took to arrive at their decision.

PARAGRAPH 7: If you didn’t know that you had the right to receive the above description, they must furnish it within 15 days after you later request it.

Those sound like pretty solid protections—vitally important, since the CRA can’t just sweep your dispute under the rug, stall, or ignore you altogether. After all, they have to detail in writing how strenuously they worked to protect you! Right?

Except for one problem, which is in PARAGRAPH 8. If the CRA simply drops the disputed item from your current report within the first 3 days, that’s officially considered an expedited dispute resolution. Since the item has been dropped, that might seem to be a solid win. But PARAGRAPH 8 says that if the CRA does that, it no longer has to do anything demanded in Paragraphs 2,6, and 7! It’s as if those protections were written in invisible ink…so that next month, if the company or person just reports the same thing, voila! your credit report might once again go back to Square One. The CRA is supposed to notify you 5 days in advance; but let’s face it, the phrase ‘Catch-22’ comes to mind…or ‘Credit Score Whack-a-Mole’…

What can you do, short of hiring repair agency experts to fix your credit score? Most commentators are in agreement: just stay away from the online dispute forms. Send a registered letter with your dispute, because it usually takes the CRA longer than three days to act on it, so they can’t skip the protections.

And while you’re waiting, why not give me a call? We can start scouting for your new  home!