Moving up to a larger home

If you are ready to move up to a larger home, here are some things you might want to think about.

The ideal scenario is you sell your current home and move right into your new one. I have helped countless sellers do just this, but it does not always happen that way. Real estate closings are not perfect.

They involve people, and sometimes things happen. I have seen both buyers and sellers wait until the last minute to mention an important detail to their agent or lender. When you are on a time crunch, a small issue can become a larger one. Remember in the real estate world, things are often a process.

Although it is rare, be prepared just in case you have to find a temporary for a few days. If you need to close before your new home before you are able to close a bridge loan maybe an option. This allows you hold two mortgages for a short period of time. I generally am not a fan because of the additional cost, but if you are in jeopardy of losing dream home it might be worth it.

Most of the time instances such as these can be prevented, but every once in a while things happen that are out of our control. I tell clients to hope for the best but prepared for the worst. I am not trying to scare you but prepare you just in case. The idea is that you will be less stressed because you have already considered what to do in a worst case scenario.

There are also a few things preventative measure you can as well. You should get prequalified perhaps even before you put your home for sale. You want to know what you can afford, and you want to make sure there are no surprises on your credit report. If you check your credit early, you may have time to take care of any issues that are present.

This is something you want to know and not assume. Even if you have done nothing to adversely impact your scores, you still need to check them. Errors, identity theft, and memory lapses are things that happen to real people. One uncorrected item on your credit report could potentially cost you thousands over the life of a mortgage.

Once you put in an offer, you should stay in touch with your lender. If they ask you for something, provide them with exactly what they ask for and/or contact them for clarification. Please do not put it off because you do not understand why they need it. You can be upset or complain, but lenders typically require all the documentation they ask for.

If you are purchasing a more expensive home, you also want to maximize the proceeds from your current home. This includes any necessary improvements or upgrades. You should consider paint, outdated hardware, mulch, and shrubs. You also should organize your home as clutter is a deterrent to most buyers, especially those who might pay top dollar.

Managing an IRA owned property

Probably the easiest thing to do is to have your IRA admin hire a management company for you. Now obviously it can be the one you select on the terms you have agreed to but not signed beforehand. The management company will collect any rents, pay expenses, and of course deduct their fee. The rest will go into your IRA.

The other thing you can do is have any rents sent directly to your admin, and they can pay all of your expenses including utilities. Of course they will be a fee for this, but it shouldn’t be too bad considering most of them will be probably be put on a direct withdraw or bill pay system. This is a fee you should discuss when you shopping for an admin before you purchase the property.

You can then either have the checks mailed to you admin, or if you want be collect them you can. But you still have to have them made out to your IRA.

Buy a home with your IRA

If you are tired of all the madness in the stock market or just think you can do better with real estate, you may want to consider buying an investment property with your self directed IRA.

First you need to open an IRA with a qualified third party administrator that will do this. Then you will need you have your funds rolled over from wherever you have them now. Next you can start shopping for the property that you want.

Once you have found the perfect property, complete a purchase contract showing that your IRA will have title. You can provide your agent with an escrow deposit, but be sure to they know the check will be replace by one from your IRA company.

Then the admin will provide you will a  buy instruction letter for real estate which you will need to complete. This will provide more of the details of the transaction. Last and best of all the admin will actually complete the closing for you with the title company of your choice. Now obviously you will want to review and approve, but they will then take care of everything including the transfer of funds.

Which lot should I choose

I always recommend a home site with a view or one that backs up to preserve type area. It can be a view of anything a mountain, the ocean, a lake, river, or pond. Unless it is a dump, almost anything is better than a view of your neighbor. On a payment, the extra money you spent will probably be minimal, and you’ll make it back and then some when you decide to sell.

Aside from that you have a few options.

  1. Cul-de-sac – Most people love these lots. They are at the end of the street so less traffic. Also most of these lots are pie shaped. But if you are in a community with children, be prepared for some noise.
  2. Corner lot –  Some people are really into corner lots. Probably because you usually get more land, a side entry, and are able to show off your curb appeal. But obviously be prepared for more traffic.
  3. Interior lot- This is simply a lot between a corner and corner or a cul-de-sac. They can be good or bad, big or small it just depends. A lot of the better views are on interior lots. This is because most developers are smart and want maximize profits by having more than just a few premium lots at the end of the street.
  4. In the curb – This is a home in or no the outside the bend of a curb, These can be alright depending on the street, speed, and traffic flow. You don’t want to always be nervous pulling out of your driveway.  I do like inverted pie shaped lots though.
  5.  Funky lot- They might seem like a deal because they are irregular, with view of the side of another house, or just something unappealing to most. I’d be very wary of these. I’ve had to sell a few and usually isn’t fun.

How much acreage do I need

If you’re looking for land a common question is how much do I need. It is an important question since if you have too little you’ll always be wanting more, and if you have too much you’ll pay more and probably have more maintenance than you want. It all really depends on what your plans are for the land.

What are you wanting to do with it? How does adding another acre or two or ten help you achieve your goals? There is really no cookie cutter answer, but I would encourage you really think it through. Go check out a few properties by walking or driving them to really get a sense of what size you need.

Perhaps just as important of a question is the shape of a property. Many developers or sub-dividers have parceled off long skinny lots because it offers easy access to a main road. However if what you are long for is space from your neighbors, these offer only a little more than a acre lot. So a more square or a flag lot may be what you need.

You also will need to consider what is around you. Also the distance and cost to run utilities to your property can be a huge expense that you don’t want to get shocked with after the fact. Also will you have access to sewer or will the land percolate. If it doesn’t and you can’t do an alternate system forget about a septic. Also it is a good idea if you have to put in a well to see what the depth are for nearby properties.

1 level or 2 level floor plan

This is a question many home buyers contend with. Perhaps except for the senior citizens, most buyers weigh the pros and cons on a single versus a split level plan. This is generally a question of cost since most split level plans offer more square footage for the money.

This is great if have a big family and need the space, but it also important to consider where the savings is coming from. The most obvious saving is in the foundation and the roof which can be quite substantial. You only need half as much roofing material and maybe 35-40% less material for the foundation.

However if you are considering a home with a crawl space and not a slab, you will have a comparable amount of floor joist. Another place where you potentially save is often a split level plan is a more simplistic plan. Think of a big box sort of plan.

You also should consider some of the added square feet are going to need to be used for the stairs and upper and lower landings. Also sometimes split level plans are the only option because of the prescribed building envelope in the plat. What this means is a one level plan might not be able to meet the square footage requirements for a given community because the footprint allowed.

This leads me to a pro for the split level plan which is a larger yard. Also, two story plans offer more separation if that is something you are looking for say from your kids. Another option you could consider is a single level with a bonus room which is generally over the garage. This cuts down on the noise heard in the home from the second level. But one think you might want to think about is the usable size of that room.

Now that you are an empty nester

You kids have grown up and moved out. Now it is just the two of you in this big ole house. It is the home where all of your kids were raised and there are so many memories, but you both know it is just too much house for you these days.

You now looking at retirement and trying to get a hold of your expenses, but at the same time not trying to sell yourself short. You want to be comfortable but not have so little that you are constantly missing the space of your old home. So how do you do it smart?

The main thing is to sit down and think about what you need and want. I mean it. Think about ever scenario. Do you really want to keep do holidays at your home or is it maybe time to pass on the torch. Yes, it is going to be different, and it will probably take some time to get use to.

The key is to take some time to plan. Then maybe take a little more. Also you should consult with a local agent so you are not over or underestimating what get or find.

Roof styles and cost

To tell you the truth, I am not a real roof guy. It is just not something I particularly care about. I mean I see some, and I’m like that looks pretty cool. But the truth is I could take it or leave it once I know how much extra that cost.

It is something I never really put that thought into until I took a job selling homes for a prominent builder. But it is a big deal even if it is not something you are into. If you don’t check out the roof style and assign a value to it, it could cost you thousands when it comes time to sell.

For instance, a open gable is a common and less expensive style than a hip roof.

You see how it would be more labor intensive and require more exactness to build.  Now lets consider a hip and valley roof.

You easily see a big difference. But you also need to consider the lost square footage. If you bumped all those walls back out you would have a much larger square foot home. That said it would also be a lot less appealing to prospective buyers.

Think about it. If you could get a hip and valley home versus a open gable home for about the same amount which would you choose? But now lets talk cost. If you compared a simple open gable versus a hipped roof on an average home, you might be talking an extra $3000-$5000. But through in an intersecting, a cross hipped roof, or a hip and valley you could easily be talking $20000+ in additional value.

I guess my point is to try to see past all this price per square foot mess and really start comparing your homes.


In love with the home’s decor

Perhaps one of the most know and yet still the most devastating traps is falling in love with a potential home’s decor. It’s a trick home builders have been using for years. They dress up a cheaper home with trending paint schemes and home accompaniments of the days.

And guess what? Even though they know paint is cheap and the all the furnishing don’t go with the home,  some poor sap falls for it.  I guess they can’t see past all of that, or maybe they just don’t understand construction cost well enough to know they are being had.

Now granted there are many upgrades in homes that are costly and do add value. Some obvious ones would be cabinets, counter tops, trim, appliances, and flooring. Through in some of these, and it makes it even more complicated. Some buyers can quickly tally up these cost versus adding them later, but how much value does it really add?

Would you pay more for the upgrades you choose or the ones someone else did? Now factor that in with getting to pay for it in a low monthly mortgage. What do you think other buyers in your price point would choose, and how do you plan on finding out?

Now put all that aside, and let’s consider most important and value determining factor of the home – the design. How much cost and value is in a one level home versus two or three? What about a crawl space versus a slab or a walkout basement? What about the different type of roof gables? Have you priced vaulted or tray ceilings? What about a pool? And what about…?

Does any of this even matter to you or should it? I am guessing some but probably not all of it, right? The problem is whenever you decide to sell this home what made it attractive for you and made it seem like a value might not be what does it for another buyer. They might be considering other features and adding and just as importantly subtracting value for other items.

I am not saying don’t fall in love with your next home because I hope you do. But just don’t overpay for it because you don’t know whether the next guy will when it comes time for you to sell.


FSBO Warning

A client once told me they seriously considered selling their home on their own after a friend was bragging to them how they sold their home in a day by themselves. They told me that they had never really thought about it because they we scared of making a mistake or getting sued, and they figured it would be a major pain and time consuming. But they figured it would be worth checking into because who isn’t into saving money, right?

So naturally, I asked what made them choose to list their home. Long story short they said it didn’t make sense for them, and without telling you too much these  sellers were the very analytical type – think engineer. They said at face value they might save money if a potential buyer actually offered them what a buyer would on a listed home. But because most buyers shop with the help of a realtor, they would be limiting their exposure and/or end up paying 1/2 commission to their agent anyway, or the ones that don’t might expect them to give that saving to them.

But either way once they figured in marketing dollars and the time involved to research, show, and coordinate everything against the cost of their time, it didn’t make sense.  The funny thing is they asked me to look up what their friend sold their house for. I reluctantly did. Truth be told, my curiosity killed me. I had to.

Assuming they gave zero seller concessions, they maybe and I mean maybe saved a percent from what I could have sold it for. That’s a whole lot of risk and time for maybe a percent. I don’t know maybe you could do better, and if you’re up for it give it a shot. I just thought it was a story worth sharing.