Recently, my wife and I have been discussing, with greater urgency, the need to buy a home. Since getting married nine years ago, we’ve been either renting or searching for apartments to rent. And as a teacher for the past eight years, my profession has called me to rent in almost every district of my seemingly little country of Belize. But the desire to invest in a home didn’t materialize until four years ago -with the birth of my son, Arthur. Now more than ever, I’m determined to raise my son in a stable and structured environment, where it’s not such a big deal to color on the walls.
Research into Local and Foreign Markets
Now, instead of feeling sorry for myself and our current situation, I decided to look into affordably priced housing markets in Belize and the US via newspaper and internet listings. In Belize, we’ve decided the capital city of Belmopan would be great place to live and establish ourselves, with its culturally diverse population and easy-going suburban feel. When I consider the markets to the north, the Midwest particularly interests me, being born and raised in Chicago; deep-rooted love for the region remains as strong as ever, though I’ve been away for 16 years. With nearby Cleveland boasting the lowest priced housing market with an average house costing about $60,000, the area is all the more attractive (Fuscaldo, 2013).
Lowering the Asking Price, Not an Option
Although, I gained greater appreciation for real estate agent expertise -early on in my research (I’m not a paperwork kinda guy), I’ve made up my mind not to be solely dependent on my agent’s perspective which may not always be as objective as expected. To ensure I’d have some input when the time comes, I read whatever credibly sourced material I could find to increase my knowledge with regard to terminology and seller strategy -which apparently aims to sell me a house at or above market value. I wondered, was greed the reason. Then I came across a recent Zillow report which made matters clear. It explained the loan-to-value conundrum 43.6% of homeowners with mortgages across the US have found themselves effectively trapped in. By having less than 20% equity , homeowners are unable to sell their homes with the expectation that proceeds from the sale will pay for the expenses associated with the sale (agent fees, closing costs) and the down payment on a new home (Gudell, 2013). Conversely, potential buyers find themselves facing, in some instances 1) insurmountably high market values and 2) fierce bidding wars in a less competitive housing market resulting from 1) homeowners paralyzed by negative equity rates and 2) homeowners holding out on selling until price gains on their properties have increase by another 5% – 10% (Gopal, 2013).
Buyers get a Bad Rep in a Less Competitive Market
I believe in a fair exchange and I believe most buyers would agree. However, buyers (even potential first time homeowners) have been grossly misrepresented as either hagglers looking for a deal at the sellers’ expense or just straight up professional flip artists. If the asking price is right, a mutually beneficial event is bound to occur. Speaking, for myself and my family, the idea of settling into a home that just fits; to walk into a house and feel at home is our number one goal this year. And I’ll do whatever it takes to achieve this goal, even offer advice to homeowners planning on selling.
Every Homeowner was Once a Buyer
Before entering your home into the housing market, take some time to consider the psyche of the average buyer -strapped for cash. Remember, you were once a buyer. So ask yourself: How can I convince a buyer, in these tough economic times, to purchase at or above market value with a clear conscience? The answer: Add value as inexpensively as you can, through both tangible and intangible means. To assist you in achieving such a goal, I’ve curated the top 5 time-tested tips I’ve come across during my research that will increase both property and buyer appreciation before your first open house. What makes my advice so valuable? Instead of more real estate agent tips, you’ll get the tips that resonate most with a real not hypothetical buyer. If possible carry out the following first three tips before entering the market.
Tip #1 Paint to Impress
According to Matthew Fry -owner of the City Painters (2013) use colors that appeal to a wide audience even if it means re-painting bright colors and take down outdated or busy wallpaper. Pay close attention to high traffic rooms: the kitchen, living room and bedrooms. Also, remember to paint the exterior. A good first impression, via your listing and in person, is priceless. No mattered how low the budget a buyer may have to work with, he or she is looking for all the curb appeal they get.
Tip #2 Pre-Market Inspections
Though more buyers are requesting pre-offer-inspections, which they pay for, you shouldn’t depend on their contractor’s findings to inform you about the condition of your home. Arm yourself with knowledge, ideally before you enter the market with facts that you can address at your convenience. By regularly maintaining your home and making necessary repairs, you’ll have little to no defect to disclose when you’re ready to sell. Savvy buyers will feel safer making their investment with one less unknown factor to worry about.
Tip #3 Staging for Buyers
According to Meridith Baer -founder of Meridith Baer & Associates (2013) staging a home is about scale and seamlessness. Decorate each room with the right size furniture to help as many potential buyers as possible picture themselves living in the space. Remember, whatever you do to enhance the look of your rooms shouldn’t be done to appeal to your particular sense of style. Staging for viewings is not interior design. By keeping room to furniture proportions in mind as well as decorations and paint colors that appeal to the widest possible audience, you’ll be less likely to lose a contract due to triggering claustrophobic feelings or being guilty of too much charm.
Tip #4 Make Concessions
Differentiate your house from the rest that are selling on the block, not by dipping below market value but by offering deals that speak directly to buyer concerns. One type of deal you can offer is to pay the buyer’s closing cost in part or in entirety. Buyers viewing similar sized houses -even priced lower than yours- will take special notice of your interest in them. Another idea, which can ease buyer jitters, is to offer a one-year warranty on selected items, especially home appliances which include the all important brands you bought to update the kitchen. Please don’t forget to update the kitchen.
Tip #5 Full Disclosure
There’s nothing more attractive than honesty in such a cut-throat industry. Being trustworthy may set you apart from the other sellers that buyers interact with during their hunt. One major way of gaining buyer trust and respect is to disclose issues that no type of inspection can reveal. For example, though you’ve done all you can to make your home a safe and healthy place for a new family to live, there are some issues you just can’t fix -such as a basement that tends to flood during heavy rains. Mention what you need to mention and save yourself from possible litigation. You don’t want to spend the money you gained or saved paying lawyer fees. Not Cool.
Though, I’m not an economist (disclaimer), here’s my informed opinion. With more homeowners adding value to their homes, more homeowners will not only be willing, but able to sell. With mortgages and future down payments being covered by redeemed equity and less occurrence of delinquency in the servicing of debt, a fall in interest rates can be anticipated. Also, with more homes on the market to sell, the demand that fuels bidding wars can only decrease. Finally, we can look forward to a leveling off of market values. Imagine houses priced to meet seller needs and buyer budgets. In such a climate, potential first time homeowners will find the housing markets more palpable than it currently is -despite the fact that huge discrepancies in price between the Midwest and the Coast will likely always exist (Olick, 2013). Wherever in the world my wife and I decide to live, we’ll definitely be looking for a homeowner that meets our simple checklist of expectations.
Fry, Matthew. (2013, May 3). Paint Before You Sell! – A better paint job can increase the value of your home. The City Painters. Retrieved from http://www.thecitypainters.com/blogs/entry/paint-before-you-sell-to-increase-the-value-of-your-home-1
Fuscaldo, Donna. (2013, November 7). Highest and Lowest Priced Housing Markets in America. Aol Real Estate. Retrieved from http://realestate.aol.com/blog/2013/11/07/highest-lowest-priced-housing-markets/
Gopal, Prashant. (2013, February 5). Homes Sell in Two Weeks With Low Supply for Spring Buyers. Bloomberg. Retrieved from http://www.bloomberg.com/news/2013-02-05/homes-sell-in-two-weeks-with-low-supply-for-spring-buyers.html
Gudell, Svenja. (2013, May 22). Millions Remain Trapped by ‘Effective’ Negative Equity in Q1, Even if They’re Not Underwater. Zillow. Retrieved from http://www.zillow.com/blog/research/2013/05/22/millions-remain-trapped-by-effective-negative-equity-in-q1-even-if-theyre-not-underwater/
Olick, Diana. (2013, November 6). And America’s top housing market is…CNBC. Real Estate. Retrieved from http://www.cnbc.com/id/101172639
Schawbel, Dan. (2013, May 31). Meridith Baer: The Fine Art Of Staging Homes. Forbes. Retrieved from http://www.forbes.com/sites/danschawbel/2013/05/31/meridith-baer/
 A homeowner is said to have effective negative equity if he or she owns less than 20% of his or her property.