Real estate has distinct momentum heading into 2013, with demand finally starting to catch up with supply and significantly fewer distressed properties weighing down the system. As 2012 wound down, the national vacancy rate for owned homes had dropped to 1.9% from a downturn high of 2.9%. That's still above the 1.5% norm but nevertheless encouraging. The ever-optimistic National Association of Realtors predicts a 5% rise in median existing home prices through 2013, though most forecasters see a more modest 3% upswing in real estate prices.
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Either way, the real estate market is thawing, unless you're living in such hard-hit areas as California's Inland Empire or dodgier parts of the Rust Belt. With the new year upon us, here are 10 real estate tips to see you through a more promising 2013.
Tip 1: Get off the sidelines
For good-credit buyers waiting for the bottom of the market, it has passed, but the good news is that home prices and interest rates are still quite low. For sellers waiting for market improvements, they're here. Stretch, take a deep breath and jump back in the game if your budget allows. The rules have changed a bit, however, and lenders want buyers to put a little more skin in the game. So expect to make higher down payments than in those pre-bust years. Another caution: Sellers will likely find that buyers have a harder time qualifying for mortgages.
Tip 2: Screen your buyers
Save your time, and weed out the tire-kickers. Make sure potential buyers are preapproved, which means they've already had their credit and employment checked thoroughly to determine how much they can borrow. Have your agent call their loan officers. Serious borrowers will find this acceptable because it shows they are ready to act.
Tip 3: Create a good impression
Most folks start their home searches online these days, so the number of murky, drab photos posted on website listings is baffling. Consider hiring professional photographers or videographers to create an optimal presentation, particularly for high-dollar spreads. Winter exteriors might show sun shining off the snow, spring shots could sport blossoms, summer shots ought to spotlight that shimmering pool or well-coifed lawn, and fall photos might show vibrant leaves. Think vividly, but not deceptively. Shots should accurately reflect the depth of rooms. Interiors should show bright, uncluttered spaces and highlight the best outdoor views. Remove a few furnishings for your photo session and brighten up (or even repaint) dark rooms.
Tip 4: Renovate wisely
A thorough remodeling can help seal a deal, but it rarely pays for itself. In fact, the average remodeling payback in the past 10 years has dropped from 82% in 2003 to about 57%, according to Remodeling magazine. Bringing up the rear are added back-up power generators (47.5% return) and sunroom additions (45.9%). Topping the list are steel entry-door replacements (73% return) followed by garage door replacements (71.9%). Unless the place is a wreck, focus on the small stuff: Sellers routinely underestimate the positive impact of simple home improvements such as repainting and minor fix-ups, say 3 out of 4 Realtors.
Tip 5: Build your team wisely
Vet the help. This goes for such crucial players as your agent (interview at least three), your inspector, appraiser, title company and if applicable, your attorney, surveyor or even energy auditor (a good idea if you're buying a large home). Look them up at the Better Business Bureau, Angie's List and any of a number of websites where service reviews can be found.
Tip 6: Don't let the heart lead the head
No clinging to false hopes, please. Win the game of "the price is right" by pricing your house correctly from day one. Find a proven, seasoned agent and follow his or her lead on listing-price suggestions. Pricing should be based on comparable sales, specific neighborhood time-on-the-market trends, an up-to-date appraisal and the home's inherent pros and cons. No amount of marketing hocus-pocus or staging can overcome a bloated price tag. Cut your price if no serious offers emerge in the first 30 to 45 days. It's not 2006 again.
Tip 7: Open your marketing options
Give your agent (or yourself) the green light to creatively market your home in varied venues, be they virtual or terra firma. Sellers are tapping into Twitter, Facebook, Pinterest, LinkedIn and any number of sites to tickle buying bones. Agents and owners are customizing websites and blogs as well. But be tactful and imaginative. For example, a blog called "What you'd like about living in my town," might cover culture, education and other quality-of-life niceties -- followed by a playful pitch for your home, of course. Social media, unlike listings on the Multiple Listing Service or newspaper ads, allow for quick feedback and Q-and-A. You might also suggest your agent market your home to foreigners via overseas property sites or local partners abroad and to corporate relocatees.
Tip 8: Run the numbers
Are you really poised to buy? The housing market is improving, but that doesn't mean exuberant buyers should write a check and empty their savings accounts. Back up a bit and first get a free copy of your credit report, then fix any blips to save on higher mortgage interest rates. Break down your essential monthly bills and reconcile them against your family income, then use an online mortgage calculator to see how much wiggle room you'll have once you buy. Remember to factor in closing costs, inspection fees, loan fees, legal fees and emergencies.
Tip 9: Work your ground game
You're not just buying brick and mortar, you're buying a neighborhood. Consider this short checklist before making your buying decision.
- Do a criminal search, including the ZIP code's crime statistics and the National Sex Offender Public Website at NSOPW.gov.
- Chat up residents about pros and cons of the neighborhoods.
- Visit at different hours; be wary of poorly kept homes and yards, unsavory visitors, traffic and pet noise, industrial or landfill odors, blaring train horns, too-bright lighting, and vacant-but-developable commercial lots.
- Practice your work commute and find mass transit options.
- Research school performance and student-teacher ratios.
Tip 10: Leave nothing to chance
Switch on that stove, run the faucets (including the baths), check the water pressure, activate the sprinklers, turn on all the lights, flush the toilets, turn on the air conditioning and heat, test the remotes and venture into the closets and look for signs of brown splotches or fresh paint for evidence of roof leaks. Granted, you might not feel comfortable doing all these at the open house, but you certainly can at the final walk-through. Sometimes agents and inspectors miss things.
Copyright 2013, Bankrate Inc.