Fixer-Upper Before you Sell

I always smile when I talk to sellers who are convinced that the second we put a sign on their property, offers will come in from all corners. Mostly they have been living with their home for some years, and now that they have taken the “plunge” to get the house on the market, they are prepared to deal with buyers, starting on day one.

But really, not so fast. First you have to get the house ready. And by getting it ready, I mean not just signing a listing agreement, but cleaning it and painting and making the home what Realtors like to call “plain vanilla”. I say “first things first, let’s sell this home first and then you’ll have the money in hand to spend on your next home.”

Sometimes sellers follow their Realtor’s suggestions and really make the house like a new home. Some believe every suggestion as a criticism of how they have let the house dip into disrepair, and just get uncooperative.  The highest 1% may even bring in “stagers” who will move furniture, paintings, carpets and mirrors, change traffic patterns and shampoo rugs to make an older home seem like new, and to give potential buyers a sense of home and how the house will work for them.

Stagers and Decorators sometimes will paint or update tile, trim shrubs and fix gardens and even buy new furniture to make the home better than new—they’ll make an older home appear to be a “model home”. They do not provide these services for free however, and so can depending on the home, they can be pricey.

Other times sellers say, “there’s no sense in fixing the house up, it’s been good enough for us and it’s move-in ready.” Buyers may not share that opinion, especially if they don't want a fixer-upper.

And so I say, usually they are wrong. You don’t need a big budget to fix up a house, what you need is a sense of what’s wrong and the time and willingness to make the necessary changes—and the commitment to repair whatever you break while you are fixing what needs to be corrected.

Used homes can be like used cars. They can be low mileage creampuffs or dented and worn out beaters that still have the smell of their prior owners. Sometimes the prior owner smoked cigars, sometimes the prior owner wore perfume—but when you are the seller you’ll soon understand why God invented Fabrize.

I always tell my listing clients that we Realtors will manage the marketing and the sale of a property, but the homeowner needs to manage the condition. And the better the condition, the better a house will show and sooner it will sell. Think for a moment how buyers see houses.

Usually they see internet photos, so the property needs to look good. Then when they come to actually see the home in real life, they might be seeing 3 or 4 homes in a day (sometimes more than that) so each house needs to be at it’s best for the visit.

And you (and your house) only have once chance to make a good first impression. So as the clients first see the house from the street or driveway, they are already making up their mind. If the yard is a mess, or they see old bicycles and trash, or even a rusty front door, you are starting with one strike against you—before they even come in.

When that door is opened, what they notice next needs to be very appealing, or you are soon to have strike two. Be sure there are no barking dogs (even in expensive kennels), no cat or dog smells, no loose or dirty carpets, and no dishes in the sink or family photos on the fridge. The idea is to de-personalize the home so the buyers can visualize the house as their own. If you can, get cardboard boxes and start packing all the loose stuff—you’re going to move anyway, might as well get started. Clean out bookcases, put away bric-a-brac, get rid of half the clothes that fill the closets (and don’t fit anyway).

Sweep the garage or carport, if the floors are raw concrete or painted, repaint them, there’s nothing easier than painting a floor with a roller. Clean the kitchen cabinet doors and the appliances. It’s amazing all the dirt we just don’t see. And here’s a hint, take photos of your home, all around. Then look closely at what your house looks like to the camera, you’ll see finger prints, chipped paint, peeling wallpaper and all the flaws that you just don’t notice because you live there.

I have made these suggestions to hundreds of sellers, some took my advice, and some didn’t. Most of the houses I’ve listed over the years sold, but I can promise you this, the cleanest ones sold quickly and for the most money.

Mostly it’s just paint, but if you are earnest about selling think new screen and doors, and door hardware. Make the first impression one of newness. Have the carpets shampooed and wax or polish the floors. (Who still waxes floors? But what a difference gleaming floors make).

So marketing really does work, and the more a seller and a Realtor can work as a team, the more likely a house will sell for the most money in the least amount of time.

Dane Hahn is a real estate professional serving Sarasota and Charlotte Counties from his office at Sarasota Realty Associates in Venice. You can reach him at 942-681-0312 or by email at dane.hahn@gmail.com

 

 

Get Out of the Market and into These Areas

As a long-time observer of real estate trends, I am satisfied with the sluggish growth I see in today’s market. Don’t get me wrong, I am working hard for my clients who want to sell their properties, and I am searching properties for clients who are planning to buy now or in the near future. But for the health of the market overall, I am seeing a healthier adolescent real estate market than we have had for some time.


I always smile at newspaper headlines that state that rental rates are getting too high, and these high rates will certainly drive potential tenants away. Naturally high rental rates are always onerous, but come on, if the rates were too high, the properties would not rent—and investors do not want empty buildings or apartments. So really what the newspapers are saying is, “the rental market is getting stronger than some can afford”. In truth, that will always be the case, no matter the price. I must say I could not afford to buy or even rent a place in New York City or Hong Kong—so I choose not to live there. It’s fair to say that rental rates and sales prices affect us all.


In many areas housing prices are rising and that has some investors thinking about if and where they should buy their next rental. But making an income on rental properties means the investment must offer not only good appreciation on the property but also a steady and lucrative rental income for the long haul. Without the rental return, the property can quickly become a major drain on the bank account.


Because the market was so slow for so long, many sellers became "accidental landlords" after realizing that they couldn’t sell their home for the price they wanted. Instead, they kept the home and became landlords. Some liked the rental business and decided to make this a second stream of income. The number of homes purchased with a mortgage loan has been dropping steadily since May. Instead, cash is king for many reasons. As mortgage rates began creeping up, investors and some homebuyers started opting to purchase with all cash. And that trend may continue as new stricter loan requirements are implemented and enforced.


The top rental return markets start off with Detroit ranked number one for rental returns thanks to its low-priced homes. A median home in Detroit is slightly under $45,000, giving investors a 30 percent annual gross yield, according to the report. Compare that to the national median home price of $189,000 and you can see why investors are heading to Detroit.


To determine the rental returns, statisticians used the 2014 fair market (monthly) rent for a three-bedroom home and multiplied that figure by 12 (months) and then divided that 12-month total by the median sales price of residential properties in the county. Positive cash-flow properties help investors build long-term wealth. And good cash-flowing rentals can be found in many U.S. markets, but rapidly appreciating home prices are making it more difficult.

Florida has three of the top 20 counties nationwide with the best rental returns:

 · Putnam County, Florida, - Palatka
 · Hernando County, Florida - Tampa, St Petersburg, Clearwater
 · Highlands County, Florida – Sebring

Investors would do well to review the sales and rental prices in these areas. Usually the least expensive properties in the most run down areas will over 10 to 20 years become the “newest, hottest” areas. Back in the 1980’s and 1990’s, run-down areas in Chicago or near New York City (think Hoboken, NJ) or around Boston and New Bedford, MA could be had for minimal amounts of money—but today these areas have become gentrified, and are now very appealing, and very expensive.

So I’ll say it again, so long as there are buyers or renters, no price is too high. But when the price becomes--in fact--too high, then there will be no buyers or renters. Dane Hahn is a real estate professional serving Sarasota and Charlotte Counties. He can be reached at 941-681-0312.

Richey Rich Orders a Home

Let me tell you about the very rich. They are different from you and me. They possess and enjoy early…unless you were born rich, it is very difficult to understand… -- F. Scott Fitzgerald

I must say I have ever only sold a couple of $1 million plus properties. But I thought it might be amusing to discuss what the very rich look for in a home.

First of all in general, price is no object. When you and I might say, “Don’t bother showing me property I can’t afford.” The average Millionaire/Billionaire is more likely to suggest they want a particular group of must have features.

In Florida, the number one request is a water feature. It doesn’t matter how wealthy you are, even poor people like water features (ponds, mini-lakes and waterfalls).  But the wealthy can specify the quality of the water-frontage.  Gulf frontage, Bay frontage, or wide water open views will all be appealing. Golf course frontage and views of wide-open land are a distant second, except for the hunters or golf nuts.

Privacy is a big request, but by privacy they don’t necessarily mean there must be a significant distance or buffer between homes. It does mean they do not want to see or hear the neighbors. Privacy can also mean security—and security is an area in which more is better. Cameras, gates, special locks and security management are all important to these buyers.  And privacy can extend into the home as well, where his and her rooms have become more of a requirement—separate closets, bathrooms and even bedrooms, plus his and her offices are not unusual requirements.

Size is also key—unless the home is a well-known (smallish) icon in the area, like, say a Frank Lloyd Wright home--size matters.  Big is good, bigger is probably better. Where the average house in the area may have 1800 feet under air, the mega rich are looking at 10-20,000 feet (that’s a half acre of house).  As a matter of fact I just heard of a mega rich couple that wanted to downsize from 10,000 feet to a home in the 5,000 square foot range.

New construction is fine, so long as it’s all finished and ready to move into.  A large home say 5,000+ square feet could take 2 years to build, and the mega rich are always in a hurry, so there’s no appeal in building from scratch, or rebuilding an existing home and the confusion of living in a construction site and freshly planted landscaping.

The rich often have requests for specialty items in their home. An elevator is a nice feature, and then there are rooms designed for special uses.  You might have a sewing room, but the rich will expect a wine cellar, an art gallery, a writing room, even a gift-wrapping room, a large garage with a half dozen stalls or more, and probably an exercise room. The biggest difference to me is the special purpose rooms that are requirements.

Things that they once looked for—like a home theatre or even a fancy kitchen—have lost their appeal. The home theatre has become less a must have with the advent of large flat screen televisions which can be wall mounted and concealed in the woodwork or a piece of furniture.  And fancy kitchens? If you were mega-rich, why would you need a fancy kitchen as long as your catering kitchen was convenient and efficient?

I once asked a very wealthy client what it’s like to be so well off.

“Look,” he said. “I think all it does is make things easier. I don’t think it changes you that much. The happy guy who later makes tons of money is still happy. But if somebody’s a jerk before he makes it, he’s a jerk when he’s got a billion dollars.”

Dane Hahn is a real estate professional affiliated with Sarasota Realty Associates. He can be reached at 941-681-0312 or by email at dane.hahn@gmail.com. See him on the web at www.danesellsflorida.com

 

 

When do I get my Deed?

Q, We purchased a home in Englewood last April. We paid

the home off a few months ago. Will Sarasota County send

us the deed to our home or do we need to request it?

A. When you bought your house there was a brand new 

original deed created just for you, which after closing was

forwarded by the closing company to the county. In essence

 the county only borrows that deed so they can photograph

it and record it in the county records, then they return the

original to you within (approximately) six weeks or so of

the original purchase. Usually people put the deed away

and most folks forget where. Sometimes it’s someplace safe,

sometimes not, but fortunately the county keeps a copy.

Unlike cars, where the bank holds the title, with a house you 

get to hold the deed. With a car, the lender holds the title until

it is fully paid off, and then after the very last payment, they

will send you the title (this keeps you from selling the car

while you still owe money on it).

Deeds to homes are always the property of and held by 

the homeowner. If you can't find your deed, you can look it

up on line or request a true copy from the county. You

mentioned that once you paid off the mortgage nobody sent

 you your deed.  And nobody will, but since you have paid

off the mortgage, look for or ask the mortgage company for

a formal "release" of the mortgage. It’s a document they must

send to you.

You may find--even years from now--that a credit agency will 

have bad data and think you still owe money on this very mortgage,

and you may need to send a copy of the aforementioned  release

to them to prove the mortgage has been long paid off--so don't

lose it.  On a happier note, getting a release qualifies you to host

a "mortgage burning party" in which you and your closest friends

can celebrate your newly found financial independence.

When you read a copy of your deed, you'll see it has surprisingly 

simple contents. In a nutshell you will see the date, your name as

the buyer and who sold the property to you, and the legal description

of the parcel (which may be as simple as a town, lot and block, or

 can be more complicated).  It will be signed by the seller and

stamped by the county regarding transfer taxes paid and where it

is filed (Book and Page). Since there is only ever one original copy

if it's lost you can ask the county for a copy. Usually for a fee the

county will provide you a copy and certify it as a true and legal

copy. You can also download a copy for free, but while the

downloaded copy looks the same, it does not qualify as a legal copy.

 

One last suggestion for you and all homeowners, if there has been 

a change in your life that might affect your deed, say a divorce or

a death of one of the owners, or even an event like a new spouse;

take time to make the appropriate changes to your deed. You will

want a lawyer to handle this effort and it will result in a new

original deed, so go back and read from the top of this document.

But when you need the newly corrected document, there is never

enough time to get it done, so review your deed as often as you

review your will or trust.

Dane Hahn is a real estate professional serving clients from 

Sarasota Realty Associates in Venice, Florida. He can be reached at dane.hahn@gmail.com or by phone at 941-681-0312. See him

on the web at www.danesellsflorida.com

Need Help, Ask the Secretary

There are two kinds of training that Realtors go through.  One type is classroom work that makes you more familiar with certain issues that Realtors run into—like how septic systems work or just who is it that eats lead paint or maybe simple changes in the law.  The other type is general training to make you better at selling and encourage you to get out and meet the public. At every meeting there is a pundit or training guru talking about working smarter—not harder. And usually they have some high-priced CD’s that they will sell at a discount, “today only.”

Usually these guys start out their “teaching” by telling their group they have been a huge success and yet they started with nothing. They overcame being born without thumbs or growing up in an abusive home or having 10  kids by age 19 or some such problem—and usually a problem that you don’t have—and they became successful just by working smarter not harder.

Realtors usually work harder—not smarter—so this is notion that buying a CD  will solve our time and family issues resonates with us. Out of the 168 hours in a week, we’re guilty of working half of them at least. So when their flyers ask questions like: Don’t remember the last time you took a vacation? Do you regularly put in 80-hour weeks? Are you headed for burnout; an all too common side effect of the ultra busy work life we’ve programmed ourselves to believe is necessary to succeed.

One of these promotional flyers just came across my desk, and here are some of the questions it poses:  Do you really need that meeting or can you just walk over to someone and get to the bottom of an issue?  Do you check your e-mail all day long? Are you trying to do everything yourself? You.must.stop.now. Work at home (if you can) at least one day per week.

All of these ideas sound compelling. And probably they all have good solid basis in fact, but as I used to tell my sales team, “it’s difficult to remember the goal is to drain the swamp when you are up to your waist in alligators…” Which is just another way of saying that life gets in the way of even the best laid plans.

In most real estate offices, we have terrible managers.  We never hire managers, we hire salespeople. The good ones stay, the bad ones quit, and the best ones are made managers—a job they neither trained for nor probably wanted. And I can tell you that from personal experience, most managers don’t make as much money as good salespeople. It used to be that a manager’s perks were a private office, regular hours and health insurance. But given the recent downturn in real estate and the Affordable Care Act, the only perk is the private office, unless the broker is downsizing.

So when you go into a real estate office, look around.  You will see there are workers and there are managers who once were workers, but now drink coffee and walk around. If you want to get a good agent to represent you, forget talking to the manager, just ask the switchboard operator which agent is the most successful, you should get a straight answer, and then you can decide if you need the busiest agent or one who has time to work for you.

 

Dane Hahn is a real estate professional at Sarasota Realty Associates in Venice, FL.  Contact him at dane.hahn@gmail.com or by phone at 941-681-0312. See him on the web at www.danesellsflorida.com.

 

Measuring the Square Footage of a House

Clients often tell me they have seen discrepancies in the square footage in two ads for the same house. For example, the county land records will say a house has 3,000 square feet, but the sales brochure will say the same house has 3,500 square feet. The difference in measurements can seem confusing at least and maybe even seem misleading.

While I sincerely doubt anyone is purposely trying to mislead the public, it's true that not everyone in the real estate business calculates square footage the same way. Many builders include all finished "walkable" areas when totaling the square feet of a house. Prospective homebuyers want to know the total living area. It’s  important to Builders to show all the square footage they are offering—so the cost per square foot of the homes are competitive relative to other builder’s homes.

Realtors like to see the larger square footage measurements, as this makes the homes offer seem like more house for the dollar.

Buyers believe bigger really is better—until they become homeowners and get their tax bill.  Owners find their taxes are determined by square footage, and that’s when they want to sharpen the pencil to subtract the extra space out of the computation.

The square footage for condominium units is typically not questioned. These numbers are taken from the original approved condominium documents and are generally accurate. But for attached and detached single-family homes, there are different ways to calculate square footage.

Most county (tax) appraisers first measure the exterior of the home to determine the gross enclosed area. For example, a single story home that measures 25 feet by 100 feet contains 2500 square feet. Since they are measuring the exterior, that calculation includes everything under the roof that’s inside, hallways, stairwells, thickness of the walls, closets and garage—and they don’t have to get inside to come up with that gross number.

There will be times when an appraiser wants to see the inside of your house, and it’s worth letting him in—even though some folks refuse, citing a privacy issue.  If you refuse you open the door to him, you risk him being creative, which can be costly. He may imagine you have recently tiled the bathrooms, added hardwood to the family room, and installed a whiz-bang kitchen, meaning your appraisal could well be over the top in size and value. Then you will have to apply for a corrective adjustment or abatement and request he come back—which could take a year or more. Meantime your taxes will be inflated. On the other hand, if you have just done all that work—and especially without the benefit of a permit—maybe you don’t want him to come in a find out.

 

 

We have seen buyers who agreed to buy a home after seeing it two or three times, but then backed out of the deal when they learned the square footage was not what they expected. Go figure.

If you subtract out the lanai, garage, porches and ancillary areas from the gross living area under the roof, you will get “gross square feet under air”. This is the number that most Realtors will choose to use as the measurement that will be used in a listing.

You don’t have a basement, right? But a home on stilts that has a lower level used as a garage and laundry or storage room, might be considered a basement. On the other hand, what if you have a two-story house? Usually the 2^nd floor is smaller than the first due to roof lines, or possibly a vaulted ceiling in the living or family room, so accurate measuring is important and remeasuring your home and correcting county data could actually save you property tax money.

Calculating the square footage of a home is often more of opinion than exact science. If you're interested in buying a particular house and want to know the size expressed in square feet, my advice would be to make an appointment to visit the home and bring your tape measure, pen, paper and calculator. 

Dane Hahn is a real estate professional affiliated with Sarasota Realty Associates in Venice, FL.  You can reach him at dane.hahn@gmail.com or at 941-681-0312. See him on the net at www.danesellsflorida.com

 

 

Buy a House With No Down Payment

I’ve had clients tell me they were ready to buy a house—but then qualify that by saying, just as soon as they get a big load of cash from an insurance suit they have lodged. So I really can’t take them as seriously as I would like. Because who can say what the outcome of an insurance suit will be and when it might happen, if ever.

There are tons of folks who subscribe to the “American Dream of Home Ownership”. These are people with the desire, but often not the ability to make a purchase.

And then again, we can’t forget all the “programs” designed to help families buy a home of their own. For years I was a director at Habitat for Humanity—heck, we gave homes away to families that qualified. And with all due respect, sometimes we had to look pretty hard to find a qualifying family for a house we were ready to build. So if you think you might like a Habitat home, make your application and see what happens.

The people who are pretty sure they wouldn’t qualify to buy a home, usually don’t even consider it. They know they don’t have a down payment or their credit isn’t perfect. But the truth is that with a little time, work, and patience, homeownership can be a reality. You just need the right people in your corner.

So let’s talk about the down payment. You know that’s the big chunk of cash, as much as 20% of the cost of the home you want to buy.  And not having enough down payment often stands in the way of becoming a homeowner for many people. But there are available programs on the city, state, and federal level which can help make the home ownership happen.

In an effort to assist low- to moderate-income individuals achieve homeownership, the Florida First Time Home Buyers (FTHB) program offers borrowers an assortment of down payment assistance options. The assistance comes in the form of a grant, or a 0% interest or low, fixed-rate second mortgage. Only one Florida Housing down payment program can be used by the borrower and only in conjunction with the FTHB program first mortgage products.

For a Federal Housing Administration (FHA) loan, the most common loan type for first-time home buyers, requires a minimum down payment is 3.5 percent. However, a number of nonprofits can help middle-income buyers with down payments. There are loans available which require no down payment at all. VA loans for example are often overlooked when in fact they provide qualifying former military members a zero percent down loan.

Florida Housing’s Homeownership Pool (HOP) program provides down payment assistance on a first-come, first-served basis. Eligible homebuyers are those whose adjusted income does not exceed 80% AMI. Through this program, they can receive a 0% deferred second mortgage loan for the lesser of 25% of the purchase price of the home or $70,000, or the amount necessary to meet underwriting criteria (with the exception of eligible homebuyers with disabilities and eligible homebuyers at 50% AMI or below, who may receive the lesser of up to 35% of the purchase price or $80,000).

If you qualify for a conventional loan (the least-expensive type, which conforms to tougher rules written by giant mortgage companies Fannie Mae or Freddie Mac) you’ll need a down payment of at least 5 percent.

There are also federal programs like the Federal Home Loan Banks’ Affordable Housing Program (AHP). A knowledgeable lender will be able to tell you how much you need to come up with for your down payment and recommend any available grants or assistance programs to help offset the costs.

Once you’ve figured out how to get your down payment taken care of, it’s time to think about closing costs. Closing costs can be one of those unexpected expenses that sneak up and bite you if you are not prepared. They range between two and seven percent of your loan amount - but before you freak out and decide you’re definitely not homebuyer material, there are ways to get help here too.

There are Assistance programs that offer down payment funds often allow funds to be used to pay closing costs.  Depending on the strength of the real estate market in the area in which you are buying, the seller may kick in closing cost assistance.  A good lender may be able to figure out an equation within your particular loan parameters to offset closing costs through a credit.

If you have credit (score) issues, start by addressing these problems as much as a full year before applying for a mortgage. Don’t expect to qualify with anything lower than a median score of 620 on the three credit reports (Experian, Equifax, and TransUnion). The higher the median score, the more likely it is you will qualify without extra effort and the better your interest rate can be.

If your scores are low, go on the offensive. The world of credit repair is complicated and frustrating and often makes no sense whatsoever, but success stories are out there.  Find a mortgage agent you like, and trust—and follow their suggestions.

Dane Hahn is a real estate professional affiliated with Sarasota Realty Associates in Venice, FL. You can reach him at 941-681-0312 or by email at dane.hahn@gmail.com. See him on the web at www.danesellsflorida.com