The Ultimate Open House Prep Checklist: Bathroom Edition

It may not be the grandest room in the house, but the bathroom is one of the most important when it comes to selling your home. Buyers want as many bathrooms as they can afford, and they want them pristine. So, if you’re getting set to host an open house, it’s time to spiff yours up! Here’s exactly what you need to do to get it ready:

Clean everything. You know this already: There’s nothing worse than walking into an open house and finding mildew, scum, hair (or worse) in and around the tub, toilet, and sink. Give your bathroom the kind of deep cleaning you’d usually reserve for when the in-laws visit. Ask yourself, “What would Martha Stewart think?” No rings around the tub, no soap scum on the shower door, no beard clippings in the sink. Use a mix of vinegar and water in a spray bottle to make mirrors sparkle—it’s an old-school recipe that gets fabulous results (just remember to wipe away streaks with either newspaper or a microfiber towel).

Hide your toiletries. That means toothbrushes, contact lens kits, loose makeup containers, hairspray bottles—anything that could clutter up your countertop goes into the medicine cabinet, under the sink, or wherever it won’t be seen.

Then put out nicer ones. Now is the time to break out those triple-milled imported soaps, or a nice handsoap and lotion duo. Think hotel bathroom.

Remove prescription drugs. We can’t stress this one enough. If you have a medicine cabinet full of allergy meds, sleeping pills, or anything else your doctor may have prescribed, either lock it in a safe or take it with you when you leave during the open house.

Stock toilet paper. A well-organized bathroom has plenty of toilet paper at the ready. The person who needs it will appreciate it. Though we’re not suggesting that open house visitors use your loo.

Keep that toilet seat down. While we’re on the subject of toilets, the seat should always be down and the lid closed. Always.

Test the water pressure. During my years as a Chicago real estate broker, I saw buyers turn on the shower and the faucet and flush the toilet. They’re checking your water pressure. If it runs at a trickle, get your plumber to take a look.

Fix those drips. If your sink has a slow drip, fix it. A drip isn’t just annoying; to buyers, it’s a sign you might be letting other, bigger things go.

Make it bright. A dimly lit bathroom can make even the cleanest space appear grimy. Try installing a few natural light bulbs to give the appearance of sunshine.

Clear out the library. You may be proud of your bathroom’s collection of old Architectural Digests, New Yorkers, and Teen Vogues. But it’s time to move them to the recycling.

Show off that shower. If your shower is a showstopper, show it off! Pull back the curtain to reveal those coordinating glass tile borders or decorative mosaics you invested all that time and money in.

Fix that fan. A loud exhaust fan is a no-no. If the bathroom exhaust system is audibly exhausting, it might be cheaper to replace it than to have it repaired. Most new fans have a sound rating measured by sones. Be sure to buy one rated at 1.0 sones or less, as advised by the Home Ventilating Institute.

Say it with flowers. Heavy air fresheners can be off-putting, but a vase with fresh flowers goes a long way. Orchids, hydrangeas, and eucalyptus all add a pleasant scent to a small space—and give potential buyers a reason to smile.

Stage the tub. Whirlpool bathtubs may no longer be the sought-after luxury item they once were, but the idea of a drawn bath remains appealing. Stage your tub by placing flameless candles around it and setting a favorite book and a stack of towels nearby, all to conjure up images of “me time.” (There’s no need to fill the tub with water, though!)

Upgrade your towels. The easiest way to gussy up a bathroom is to change the towels. Invest in fluffy new ones that pop with color (especially if the walls are a neutral shade), and fold them in three parts so no edges show.

Nix the rugs. Rugs are necessary, but they’re not always the most attractive aspect of a bathroom. Leave the floor bare—it makes the space look cleaner and roomier, and gives buyers the chance to see a (we hope) nice floor. Which you swept clean, right? Right!

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Source: REALTOR.COM (April 15, 2015)

How Your Credit Card Can Keep You From Buying a Home

New changes coming to Fannie Mae’s automated underwriting system next month could have prospective home buyers rethinking how they pay their credit card bills. Here’s why.

Lenders generally use Fannie Mae’s automated underwriting system for every single mortgage loan sold in the secondary mortgage market. This system has always reviewed the mortgage applicant’s credit history, credit score, debt-to-income ratio, reserves (a fancy term for savings), and occupancy in order to determine whether they should be approved for the loan.

But, starting June 25, Fannie Mae will use trended credit data to evaluate how applicants paid off their loans over the past two years. And the new data will show not just the loan balance and whether you’ve made all your payments on time (as traditionally is the case on credit reports), but also the actual payment amount that you made on the account.

This change is designed to reward “transactors,” borrowers who pay off their credit card balances in full each month. “Revolvers,” conversely, carry a balance, pay the minimum each month, or regularly do balance transfers in an effort pay less interest on their debt. They’re generally considered riskier applicants as the more revolving, unpaid monthly obligations you carry, the greater the odds you’ll have trouble paying your bills down the line.

For instance, let’s say your credit card bill generally ends up around $300 each month. For the transactors, this bill would not be considered a problem as the new data demonstrate they paid their credit card off each month. The revolvers, however, would be unable to show the obligation is paid and, therefore, it would be seen by the lender as a strain on borrowing power to income.

What does this mean for me?

If you are a transactor, you’re in good shape for buying or refinancing a home so long as you continue to pay off your credit card while supporting a high credit score as a result. (You can see where your credit currently stands by viewing your two free scores, updated each month, on Credit.com.)

If you are a revolver, you’re going to have some choices to make. These choices may include the following.

• Can you buy less house?
• Can you cash-out refinance and pay off the obligations through closing?
• Can you write a check to pay off the consumer obligations, even if the interest rate on them is 0%? (Revolving 0% credit obligations could still limit your ability to qualify for a mortgage.)
• Can you consolidate your credit card debt so you can save on the mortgage and take the monthly savings and prepay the consumer obligations? (Note: You would have to do the math ahead of time to determine if swapping your revolving credit card payments for an installment loan payment would help your debt-to-income ratio and your wallet.)

 

If you have monthly ongoing credit accounts, you could still be able to get a mortgage, but it’s going to add another layer of credit scrutiny that will play a role in your ability to buy a home or refinance one you already own. Simply put, more emphasis will be placed on the full credit, debt, income, and assets. These changes are designed to promote fairness in the area of credit while helping to promote Grade A securities being delivered to Fannie Mae.

If you need guidance as to which debts would have the most impact on your ability to qualify, talk to an experienced mortgage lender who can clearly articulate how your liabilities may affect your ability to borrow.

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This article was written by Scott Sheldon and originally published on Credit.com.

4 Ways to Remove Smelly Odors

Whether it’s a pet odor or yesterday’s pungent dinner, you can take steps to remove bad odors from a home prior to a showing.

“If you enter a home and immediately encounter a smell, that is generally all people focus on, and all they will remember,” says Debra Johnson, a home cleaning specialist with Merry Maids.

Realtor.com® recently offered the following tips for banishing common odors from a home.

1. Pet urine: Use a spray with enzymes that breaks down odor molecules. Soak the area with the spray and let it seep into the carpet.

2. Dinner: Open the windows and turn the range hood fan on to high when cooking high odor items, like fish. If smells still linger, fill a shallow bowl with white vinegar or coffee grounds and place it on the counter. It’ll absorb the smells overnight.

3. Paint: Slice an onion in half. Place each half on a dish on opposite sides of the room. It will neutralize paint smells. (The smell of the onion should only linger for an hour.)

4. Kitchen sink: Check your drain and garbage disposal to make sure something isn’t stuck. Then, place two or three slices of lemon or orange into the disposal. Turn on the water. Flip the switch.

Read more tricks at realtor.com®.

Source: “Tricks to Banish Bad Smells From Your Home—Forever,” realtor.com® (April 28, 2016)

5 Compromises Worth Making When Buying a Home

Home buyers often start their search with a long list of must-haves … only to find they need to whittle it way down once they see what’s within reach. Unless you’re a bazillionaire, it’s impossible to check all those boxes on the wish list. So, how do buyers decide what pieces of their dream (home) they’re willing to hack off?

Imagine a triangle with price, location, and size/style/upgrades at each point. In most cases, you will have to be ready to give up on one of those three, says Dana Gonzalez, a Realtor® in Denville, NJ. “Expect to compromise. If you get 80% of what you want, you’re lucky.”

We asked experts to name some common concessions and offer words of wisdom—or warning—on how those trade-offs can play out.

Compromise No. 1: Location

It’s one of the first thing agents say their clients are willing to budge on.

“While they might want to find a home that is within walking distance to the downtown area with shops, restaurants, and public transportation, buyers do not want to compromise on their living space,” says Suzy Minken, a Realtor in Short Hills, NJ. “After all, they live in the home. Sometimes these homes are too small to fit their lifestyle needs, or the larger in-town homes are simply above their price range. So the dream of a walk-to-town location very often will get removed from a buyer’s must-have list.”

Compromise No. 2: Square footage

But not everyone is adamant about doing everything they can to keep from downsizing. After all, if you’re willing to skip that guest room, playroom, or dining room, you may be able to stay within your budget and live in a nicer neighborhood, points out Daniel Blatman, a Realtor in Manhattan, NY.

“Sometimes the reward is not paying long term for family and friends to be able to stay in your home,” he says. So, if you’re hoping to discourage the in-laws from spending three weeks with you each summer, this compromise could work out for the best!

But, real estate agents warn, if your space needs might grow in the near future—say, if your family is expanding—you might want to think twice before moving into a tight squeeze.

Compromise No. 3: Yard size

Plenty of buyers fantasize about landscaping a sweeping garden, or at least having an outdoor pool or hot tub—until they see what they have to shell out (or give up) to get it.

“When it comes to describing their dream home, buyers frequently say they want a large backyard,” Minken explains. “After seeing lots of places, however, buyers realize that the size of the backyard is not as important as the spaciousness of the interior of the home.

“When I ask my home buyers to qualify what they mean by a ‘large’ backyard, the answer is almost universally the same: ‘large enough to fit a swingset.’” And that’s not exactly football field-size. “So that means they have more homes to choose from, especially when inventory is low.” 

That said, house hunters are more stubborn when it comes to the terrain itself.

“They prefer a flat backyard to enjoy with their family and friends,” Minken says.

Compromise No. 4: Awesome garage

“For the first-time home buyers who are moving from an urban area to the suburbs, it often comes as a surprise that not all homes have a two-car garage,” Minken says. “Older homes, built in the early 1920s and 1930s frequently do not. While there are homes that do not have a garage at all—and these homes are a much harder sell—buyers will compromise and buy a home that has a one-car garage if the home meets the other items on their must-have list.”

Buyers are often flexible on the type of garage as well. Some garages are detached, which means that buyers can’t enter directly into the home from the garage—helpful during inclement weather. And some single-car garages are attached to the house, but—surprise—there is no entry from the garage into the house.

Compromise No. 5: Specific architecture

So, you’ve always pictured yourself in a Craftsman bungalow, until you saw the asking price. If you suddenly find yourself smitten with a Cape Cod, it’s OK; you’re not alone.

“Whether it be the architectural style of the house or type of kitchen counters, those things are one of the first things mentioned when clients tell me what they want,” notesAmber Dolle, a Realtor in Sherman Oaks, CA. “But when compromises have to be made and they’ve had time to look at homes for a bit and consider their budget, the home’s aesthetics usually are the thing they choose to overlook.”

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Source: REALTOR.COM (March 3, 2016)

4 Signs You’re Being Too Picky to Buy a Home

If you’re shopping for a home, it’s nice to think you won’t settle for anything less than perfection. But come on, that’s kind of like holding out for the “perfect” partner—romantic, but unrealistic. Get a grip, folks!

“No matter what stage of life you’re in, you’ll never find a house that meets all your needs forever,” says Carrie Benuska, a Realtor® at John Aaroe Group in Pasadena, CA. “And if you’re too detail-focused, you could pass up one that suits you now or only needs modification.”

No, we’re not telling you to just settle. But we want to make sure you aren’t one of those overly hard-to-please, pie-in-the-sky idealists who’ll end up with no home at all.

Check out these signs your pickiness level is off the charts and could stand for some tapering back.

Sign No. 1: You know exactly what you want—to a fault

It makes sense to house hunt with a few basic criteria in mind (open kitchen, quiet street). But if your wish list is airtight and hermetically sealed (i.e., you pass up a home because your furniture doesn’t fit in the bedroom), a great place could slip right past your radar.

“People often think they know what kind of house they want before they start looking, but they usually don’t,” says Wendy Flynn, owner of Wendy Flynn Realty in College Station, TX. “Checklists should evolve as people visit more homes with priorities rising and falling.”

So, the less ironclad your wish list, the better. Flexibility is your friend.

Sign No. 2: You’re searching for your ‘forever home’—even if it’s your first

They’re called “starter homes” for a reason: Odds are you won’t stay there forever. Starter homes may be too small, or too far from your office, or even a tiny bit too unattractive, but if it’s within your price range and satisfies some basics on your checklist, maybe you shouldn’t pass over it so fast.

Yet that’s exactly what many home buyers are doing these days: According to Bank of America’s Homebuyer Insights Report, 75% of first-time home buyers say they plan to forgo buying a starter home and instead are saving for homes that they’ll love for a lifetime, with 35% wanting to retire in the first home they purchase. That’s all nice, but you could end up waiting a whole long time before you can afford that. Why not build equity in a first home for five years before upgrading instead?

So whether you’re scouting school zone districts or making space for grandchildren before you’re pregnant (yes, this happens, says Flynn), don’t let fantasies of forever impair your judgment for the home you pick here and now.

Sign No. 3: You think home improvement reality shows are actually realistic

On TV shows such as “House Crashers” and “Property Brothers,” fixer-uppers are transformed into eye-popping showpieces in a matter of days. In reality, such renovations are extremely costly, complex, often nightmarish, and always time-consuming. Details are glossed over onscreen, raising people’s real-life expectations.

“I can tell right away if a client is super picky if he wants to make massive renovations to a home that aren’t reasonable for the property or the neighborhood,” says Flynn. “Other times, I’ll jokingly say, ‘Now, look, this isn’t HGTV.’”

Sign No. 4: Your real estate agent’s getting exasperated

Good Realtors genuinely want you to buy a home you adore, so defer to their industry expertise whenever possible.

“I like to give my buyers the time they need to make their own discoveries and decisions,” says Flynn. “But I also respect their deal breakers: If a home isn’t a fit, let’s leave right away and not try to convince each other it will work.” And yet: Indecision can cause an agent to run circles around a client who won’t consider perspective beyond their own.

“Years ago, I had a client who always found a problem with every home I showed him, even ones he loved,” says Benuska. “Eventually, I had to sever our working relationship—to this day, he still hasn’t bought a home.” The good news: “Oftentimes, the root of pickiness is fear,” says Benuska. So if you’ve found a fantastic home and are nitpicking over the kitchen tile, ask yourself if you’re truly ready to buy.

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Source: REALTOR.COM (April 25, 2016)

Why Your Home May Not Be Worth as Much as You Think

Homeowners and appraisers rarely agree on a property’s value, and for the vast majority of the past decade, homeowners have been overvaluing their homes. In May, there was a 1.15% gap between what consumers thought their houses were worth and the worth determined by appraisers—it’s the first time in 22 months that homeowners overvalued their properties by greater than 1%, according to Quicken Loans.

Quicken Loans, a large, Detroit-based nonbank mortgage lender, publishes its Home Price Perception Index on a monthly basis, and May is the fourth consecutive month of a growing gap between homeowner and appraiser opinion. At the same time, the Home Value Index increased 0.24% nationally from April to May and 4.64% from last May, so values are going up, just not as much as homeowners may have believed, perhaps.

Looking at housing markets from a national perspective is a very rough look at market performance, because things vary so widely by location.

“The HPPI, more than anything, is a reminder that there is no such thing as a national housing market,” said Quicken Loans Chief Economist Bob Walters, in a news release about the May figures. “Every city, and every neighborhood, moves in different directions based on local factors. Consumers need to remember to watch their local area closely to understand the direction their market is heading.”

For example, in most major metropolitan areas, appraisers estimate properties’ worths at more than the homeowners’ opinion, in contrast to the national trend. Out of 27 large metro areas analyzed by Quicken, homeowners overvalued their homes in only 10 cities, and only four of those had a difference in opinion above the national average. On a regional level, it seems Midwesterners overvalued their homes the most in May: They thought their houses were worth an average of 1.67% more than appraisers did, compared to a 0.24% difference in the Northeast and 0.03% difference in the South. In the West, homeowners underestimated the homes’ values by an average of 0.16%.

Banks use appraisals to determine whether to back your home loan, whether it’s a purchase mortgage or you’re refinancing, which is why it plays such an important role in the mortgage process. Additionally, appraisals factor into your property taxes, another major homeowner expense you should anticipate changing from time to time. It’s crucial you can afford your housing expenses, to avoid serious credit and legal issues. When having your home appraised, there are some simple things you can do to make it go smoothly, like tidying up before the appraiser arrives, inside and out, in addition to having an accurate list of improvements you’ve made to the home or any features you want to make sure the appraiser is aware of.

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Source: REALTOR.COM (June 15, 2015)

10 Interior Design Trends That Turn Off Home Buyers

You want your home to look its best, and maybe you’ve been inspired by the interior design trends you’ve seen in magazines, on TV or on design websites.

But following some of the hottest home remodeling and interior design trends can backfire when it comes time to sell your home.

Buyers want to picture themselves in a home, and highly individualistic touches can get in the way of that.

When you’re ready to sell your home, it’s best to put things in pristine, move-in condition and remove all of the individual touches that made your house a home.

After all, your goal is to get potential buyers to picture themselves in the home—and they won’t be able to do that if your decorating style still dominates.

Check out the caveats that go along with these home interior design trends.

1. Boldly Painted Walls

Decorators often tout black or another bold paint color as the perfect backdrop to metallic accessories or appliances in modern home design.

The reality is that people prefer the exterior and interior walls of a home to be neutral. Even though repainting is cheap and relatively easy to do, it’s still a pain and buyers might not want to bother.

When decorating, your best bet is to stick to an appeasing hue for the walls and use accessories to provide pops of color.

2. Wallpaper

Bold, graphic patterns increasingly are being incorporated into interior design, often in the form of wallpaper.

But wallpaper—even if it’s only on one wall—is an extremely personal choice and time-consuming to remove if it doesn’t appeal to the buyer

Consider replacing wallpaper with a neutral paint for broader appeal.

3. Lavish Light Fixtures

While potential buyers want rooms that seem airy and bright, beware of installing a showpiece light fixture that is too modern or ornate.

Fixtures should enhance your home—not steal the spotlight.

4. Gleaming Gold

Designers may be mixing silver and gold to give homes star quality, but it might be wise to change out fixtures if they have the wrong metallic sheen.

Gold can give a home an outdated, ’80s feel. Switching out the faucet and door handles with a more appealing finish—such as brushed nickel—is relatively inexpensive and can help make your home appear sleek rather than out of style.

5. Converted Garages

People want a covered parking space so that they have a safe place for their car—especially in areas where street parking is at a premium. Additionally, people often use their garage as storage space.

If you convert your garage into a space tailored your specific needs, such as a music practice room, it may not suit your potential buyers.

6. Converted Bedrooms

Like with the garage, people want rooms built for their original purpose.

If you’ve converted an unused bedroom to an office, walk-in closet, or a game room, make sure you can easily convert it back to a bedroom when you’re ready to sell.

7. Carpets

While designers love to play with the texture of shag carpeting as it feels soft underfoot, the majority of home buyers prefer hardwood floors.

People assume carpets trap dirt, germs and odors, and they don’t want to go through the hassle of steam cleaning their home before they can move in. Potential buyers also don’t want to spend time removing carpet to expose hardwood floors.

If someone really loves carpet, it’s much easier for them to add it themselves—after the purchase.

8. Too-Lush Landscaping

The “outdoor living room” is all the rage, and you may be tempted to build out your backyard into a lavish wilderness of flowers.

But potential buyers may be hesitant to buy a home with an overly landscaped property requiring a lot of maintenance.

Focus on creating or maintaining a nice and neat outdoor space that people can enjoy without too much fuss.

9. Pools and Hot Tubs

A pool may seem like a luxurious feature, but it can be a big turnoff for buyers.

Pools are perceived to be expensive to maintain and potential safety hazards, especially for families with children. Above-ground pools are eyesores and can leave a dead spot in the backyard.

These sentiments extend to hot tubs, too. Many people see hot tubs as breeding grounds for bacteria, and they are not a feature easily removed from the deck or back yard.

10. Fancy (or Not) Pet Products

Sales of pet products are expected to increase nearly $3 billion from last year, and there’s an increasing market for luxury pet items.

But even animal lovers don’t want to see another family’s pet paraphernalia in a potential home. Even if your home is immaculate, the presence of pet-related items will give the impression that it’s dirty.

Be sure to remove all traces of your pet—including toys, food dishes and photos—before listing your home for sale.

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Source: REALTOR.COM (October 15, 2014)

The Ultimate Open House Prep Checklist: Kitchen Edition

When you’re selling your home, the kitchen is the single most important room—so when you hold an open house, you want it to shine. Literally. You’re going to have to deep-clean, declutter, and touch up whatever you can. Luckily, we’ve put together this pathologically complete checklist to help make sure you forget nothing.

Don’t make it hard on yourself: The night before, don’t fry fish, don’t whip up a new batch of kimchi, and don’t cook bacon the morning of the open house. Go out for dinner! Order takeout! Please?

Clean out the fridge! We all know that buyers will look in your refrigerator. They’re just nosy that way. Give them something to look at—a spotless interior. Then wipe down the outside, too.

Clean those floors! Nothing says turnoff like a trail of crumbs on the kitchen floor. If you have hardwood or tile flooring, vacuum and damp mop, making sure to get in all the dark corners. If you haven’t yet replaced your linoleum, sweep, mop, and wax it.

Make it shine. If you have stainless-steel appliances, take care of them properly. Wipe them down with the proper cleaning supplies. Honestly, one spray and a little elbow grease, and they’ll look brand-new.

Clean those stovetop drip pans—or better yet, replace them! A rusty, crusty drip pan can make your stove look older than it is. If you don’t have time to scrub them clean, spend a few bucks to replace them.

Degrease that hood. Those vents are grease magnets. Clean the filter before the open house. You may need to dig out the user manual to learn how to remove it, soak it, and make it make shine.

Clean the light-switch plates. Those switch plates can get splattered with grease or, worse, show years of fingerprints and dirt. If they can’t be freshened up, replace them—all of them.

Debug your light fixtures. See those dark spots in your overhead light fixture? Those are dead bugs! Clear the carcasses and wipe the glass clean.

Granite should sparkle. Most people wipe their countertops clean with the same dish sponge they use to wash their dishes. Let’s take it a step further. Use granite polish to wipe on a shine that will make buyers think you spent thousands of dollars on new granite just for them.

Countertops should be spotless. Nothing impresses buyers more than endless stretches of pristine countertop. So it’s time to stow the toaster, the Vitamix, the burr grinder, the rice cooker—all those appliances that take up valuable real estate.

Clean the microwave. You’ve already polished the stainless steel, now clean the inside. Few buyers will open the microwave and check inside, but for those who do, let’s not greet them with years of caked-on food splatters.

Clean the cabinets, inside and out. No one really cares if your canned peas are next to your canned tomatoes, but buyers do care about space. Now’s the time to purge: Do you really need that tin of Spanish octopus? A buyer should be able to open the cabinet door and see the back of the cabinet wall. And while you’re at it, get a pail of water and Murphy Oil Soap and wash your cabinets.

Update your knobs. Cabinet knobs installed in the 1980s can make a kitchen look dated. But upgrading them is easy: Just buy new ones, then install them. Presto! Your kitchen is awesome(ish).

Don’t bake cookies! Baking cookies seems like a nice gesture for buyers, but the trend has run its course. Just have a clean kitchen—everyone appreciates that.

No need to set the table. The kitchen is all about space. If you’re lucky enough to have an eat-in kitchen, let it speak for itself. A clutter-free kitchen with clean, expansive surfaces will do way more than a set of fancy dinner plates.

Flowers are always nice. The one exception to the clutter-free countertop rule is a vase of fresh flowers. Who doesn’t love a pleasant smell ?

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Source: REALTOR.COM (April 24, 2015)

Ouch! Three Times You Can Kiss Your Earnest Money Goodbye

The earnest money deposit—the cash you offer to essentially call dibs on a house—is one of the most important and misunderstood parts of the home-buying process.

Depending on where you live, you can expect to put down anywhere from 1% to even 10% of the home’s purchase price as earnest money. (In some highly competitive markets, buyers are making even larger deposits in an effort to stand out.) An earnest money deposit tells a seller you are serious about closing. Without earnest money, you could theoretically make offers on multiple homes, essentially taking them off the market until you decide which one you like best.

Don’t worry—the seller isn’t going to run off to Aruba with your cash. It remains in an escrow account or with the title company until the sale closes. And, if everything goes off without a hitch, that earnest money is put toward your down payment and closing costs. So there’s nothing to lose, right?

Probably not, except these three scenarios where your earnest money could end up financing the seller’s trip to Aruba.

1. You waived your contingencies

In highly competitive markets, it’s becoming more common for buyers to waive contract contingencies regarding financing or an inspection. You might be tempted to do the same—it will make you a more attractive buyer. But it also comes with serious risks. You guessed it: You might lose your earnest money deposit.

The financing contingency guarantees that you’ll get your money back if for some reason your mortgage doesn’t go through and you’re unable to purchase the house. The inspection contingency allows you to renegotiate the price or demand repairs if serious defects are found during the inspection.

If your contract doesn’t have such buyer protections and you run into trouble with the inspection, you won’t be able to get your money back if you abandon the deal. Most experts recommend that you not waive the inspection contingency, unless you’re planning on tearing the property down.

As for the mortgage-financing contingency, waiving it may be the only way to compete with all-cash buyers. But you’ve got to be absolutely sure that you’ll be able to get approval from your bank.

“I strongly encourage my clients to obtain a conditional approval before signing a noncontingent contract,” says Ivona Perecman, a New York City real estate broker and lawyer. “Otherwise, it may turn out that the bank that pre-approved you will not give you financing or offer a lot less worse terms and, consequently, you may lose the deposit.”

2. You ignored the timeline outlined in the contract

Your contract usually sets out a specific time frame in which you’ll need to secure financing, get the home inspected, and be available for the closing. Generally speaking, as long as you’ve made a good-faith effort to adhere to the timeline, sellers will grant a reasonable extension if a lender drags his feet or there are other extenuating circumstances that delay things.

However, in some cases sellers may include a “time is of the essence” clause in the contract. Watch out for this phrase in your paperwork—it means the closing date for the sale is binding. If you can’t make it to close for any reason, you’ve breached the contract and could lose your deposit.

3. You get cold feet

If you have a change of heart about the home you’re buying—but there’s no problem with the property or the financing—you likely will not get your money back.

“If a buyer changes her mind and was able to request the down payment be returned without consequence then the whole idea of a contract would no longer be worth much,” says Marc Kaufman, a real estate attorney with Wexler Lehrer & Kaufman in New York City. “One party cannot simply walk away and default on a whim.”

The earnest money deposit serves a protection for the sellers when they take their home off the market. If late in the game you decide that you no longer want to make the purchase, they get to keep it as compensation for the time and money they have to spend on listing their home again and looking for another buyer.

When it comes to real estate, a case of buyer’s remorse could be even more painful than a lost deposit. To avoid both, really make sure the home you’re bidding on is “the one.”

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Source: REALTOR.COM (September 16, 2015)

My Home Isn’t Selling—When Should I Give Up?

It’s the end of the traditional summer buying and selling season, and Debbie Davis is facing a major dilemma.

The Allentown, PA, resident put her four-bedroom, three-bathroom house up for sale in March. She figured it would fly off the market—after all, the house is spacious, well-maintained, has a fully remodeled basement, and is in a fantastic neighborhood. What’s not to love?

“I did all the things that my Realtor® recommended: painted and decluttered,” Davis says. “A house down the street was on the market for about $30,000 more than what I was asking, and so I was optimistic.” Very optimistic.

But then reality reared its ugly head. Davis’ house lingered on the market, attracting no offers. Finally she decided to take the hit—and dropped the price from $239,000 to $229,000. The result: one lowball bid.

Now Davis, a professional musician who moved several states away while her home still sits on the market, is forced to pay a mortgage on her new house (which would have been otherwise paid for with cash from the sale proceeds). And so, the dilemma: Davis’ Realtor contract is up at the end of the month. Should she keep trying to sell the house, or take it off the market and rent it out?

Davis isn’t alone in her quandary. It’s a seller’s market across the nation right now, but that doesn’t mean every home is being scooped up in a nanosecond.

When your home for sale is languishing on the market, how do you know when to give up? Here are a few things you should consider before you call it quits.

Take a good, hard look at the numbers

The first thing to do is evaluate the way the house is priced, says Shannon Sharpe, a Realtor in New Orleans.

“I mean really evaluate,” Sharpe says. “Look at the active competition. What else would a buyer in that price range be getting for the same amount of money? Can your house be marketed better?”

When a home is stalling on the market, it’s often a price issue. Scrutinize the market before making a decision. If you’re comfortable lowering the price, try selling it for three more months.

Analyze how your home was marketed

“Before you take the next step, really check what happened over the last six months,” says Gary Malin, president of Citi Habitats in New York City. “Arm yourself with as much information as humanly possible.”

He suggests asking a few questions:

• Were you provided with traffic reports and detailed information about the number of people who saw the house?
• What client feedback did you get?
• What advertising did you do in print as well as online?
• Do you have details on what people who viewed your property ended up buying?

 

Both Sharpe and Malin agree that if you aren’t happy with the marketing approach, it may be time to seek another real estate professional. Approaches differ, and you might need to find someone who is better suited to your needs.

“Given that you haven’t gotten the result you want, it might just not have been the right fit,” Malin says.

Don’t limit your options

So you discovered your home was priced appropriately and you have no quibbles with your Realtor’s approach. It’s time to take a deep breath and accept the possibility that your market is in a slowdown.

Ask agents about the typical time on the market. And, Malin notes, the choice doesn’t have to be between renting and selling the house. You can hedge your bets and try both options until you find a buyer.

“You could put the house up for rent and for sale at the same time so that potential clientele have a trial rental period,” Malin says. “Maybe it’s just a slow time in your market, and the rental market is really strong. Maybe a year from now the market will be better.”

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Source: REALTOR.COM (September 24, 2015)