Home Selling • Tips and Advice • June 14, 2023

The Features that Can Help Your Home Sell for More Money (and Faster)

by Shay Brunson

The Features that Can Help Your Home

Sell for More Money (and Faster!)

Lauren Phillips

Modern interior

While plenty of people are wondering whether they should buy a home at all in 2023 in the face of challenging economic circumstances and an increasingly challenging housing market, the cycle of buying and selling homes ticks on. And there’s actually some good news for those hoping to sell a home this year: New research from home search site Zillow indicates that current home-buyers braving this uncertain market are still willing to pay for the specific features that speak to them, and certain amenities may even help a home get a higher offer.

After years (maybe even decades) of experts telling sellers and homeowners to make their homes appealing to the most people possible, guiding them away from distinctive or excessively personal choices that might turn off potential buyers come time to sell the house, we may be shifting in a new direction, as homes with specific features sell for more than comparable home without those features.

According to Zillow’s research, listings that mention high-end cooking amenities such as steam ovens, pizza ovens, and professional-grade appliances can sell for as much as 5.3% more than similar homes that don’t have these features (or at least don’t mention them in their property listings). Other trendy statement features such as terrazzo and a she shed can lead to a 2.5% spike in sale price, which can mean a lot of money depending on where you live—more than $13,000, if your home is close to the current average national home sale price of $535,800.1
U.S. Census Bureau and U.S. Department of Housing and Urban Development. “Average Sales Price of Houses Sold for the United States [ASPUS].” Retrieved from FRED, Federal Reserve Bank of St. Louis.

“Not every buyer will appreciate a chef’s kitchen or a putting green in their backyard, but those who do are willing to pay more for these personalized amenities,” said Amanda Pendleton, Zillow’s home trends expert, in a statement accompanying the report. “Post-pandemic home buyers who had plenty of time for self-reflection now have a greater sense of what they want and need in a home.”

These features may help your home sell for more money, but they may also mean it takes longer to sell the home—homes with she sheds may sell for 2.5% more, on average, but they also tend to spend extra time on the market (an extra two days, typically, Zillow’s research found). If a quick sale is your focus and a little more money is less of a priority, take note: Zillow’s data also shows that homes that sell faster than expected have more practical features, such as doorbell cameras, heat pumps, and fenced backyards.

Just as the right features can boost your home’s selling price, others can hurt it. According to Zillow’s data, certain finishes or features might indicate that a home is dated and in need of work—signaling to buyers that it may not be worth top-dollar. Homes with tile countertops can sell for 1.1% less than expected, and homes with laminate floors or countertops can sell for 0.6% less. These percentages may be small, but if you’re hoping to get the highest-possible offer for your home, every percentage point counts.

According to Zillow’s data, the top features that help homes sell for more than expected are:

Steam oven | 5.3%
Pizza oven | 3.7%
Professional appliances | 3.6%
Terrazzo | 2.6%
She shed | 2.5%
Soapstone | 2.5%
Quartz | 2.4%
Modern farmhouse | 2.4%
Hurricane shutters / storm shutters | 2.3%
Mid-century | 2.3%

The top features that can help a home sell faster than expected are:

Doorbell camera | 5.1 days faster
Soapstone | 3.8 days faster
Open shelving | 3.5 days faster
Heat pump | 3 days faster
Fenced (back)yard | 2.9 days faster
Mid-century | 2.8 days faster
Hardwood | 2.4 days faster
Walkability / walkable | 2.4 days faster
Shiplap | 2.3 days faster
Gas furnace | 2.3 days faster

How to Use This Information

Whether you’re prepping your home to sell (now, in the near future, or years from now) or simply planning some home improvement projects to increase your own enjoyment of the property, be sure to approach your home (and property listing) holistically, instead of only chasing the data. The specific features or reasons a home sold for more money or in less time might not appear in the data Zillow uses, which is why it’s important to thoroughly assess the features of your space in its own right before you make any major decisions.

Also, there will be regional differences that impact how much any of these features could impact your home’s sellability: What might be a key feature in one state may be a avoid-at-all-costs feature in another. (Think the outdoor pool: In California or Arizona, it might be a huge selling point, while in the Northeast it might be a maintenance concern for potential buyers.)

Generally speaking, this data—and the features it points to as improving home sale price—should be seen as “signals of perceived quality,” the Zillow report says. If you already have some of these features (or want them for yourself), you should install them and be sure to mention them in your property listing when you want to sell. Just don’t go out of your way to make improvements or install features that you won’t enjoy, just in the interest of potentially selling your house for a higher price. In other words, if you’ve got it, flaunt it—but if you don’t, there are plenty of other ways to help your home shine.

Home Buying • Home Selling • Tips and Advice • May 17, 2023

Bidding War Strategies for Homebuyers (and Sellers)

by Shay Brunson

Bidding War Strategies for Homebuyers (and Sellers)

Sarah Li Cain

bidding wars

Not so long ago, when the housing market was so frenzied that homes would sell almost as soon as they were listed, bidding wars were a common occurrence. Things have calmed down significantly now, but housing inventory is still very low. So bidding wars do still happen.

What is a bidding war, and how does it work?

In real estate, a bidding war can happen when multiple buyers are vying for the same property. These buyers compete to become the new owner of the property by incrementally increasing their offers — often pushing the price higher than the asking price.

It’s not always simply the highest bid that wins in a bidding war, however. Many buyers also use non-financial strategies to convince the seller to accept their offer, such as waiving inspections or certain contingencies.

Bidding wars most often happen in a seller’s market, when there is more demand from buyers than there is supply of homes for sale. They can also happen when homebuyers are under some sort of constraint, like a certain deadline they need to meet. In some cases, too, a listing might be purposely underpriced in order to incite a bidding war.

How to win a bidding war: 7 strategies to try

If you’re a homebuyer looking in a sought-after location or for an entry-level property, you may well face some competition. Don’t be discouraged — there are ways to help ensure you come out on top in a multiple-bid situation. Your real estate agent can help guide you through the process, as well. Here are 7 tactics to try if you want your offer to stand out from the rest.

1. Have your pre-approval ready

Getting preapproved for a mortgage shows a seller that you are able to afford their home, and have the financing to do it. Take note, however, that there’s a difference between being preapproved and prequalified. Generally, a preapproval carries more weight than a prequalification. The latter is simply an indication that you could be approved for a loan, while the former means the lender has already reviewed your finances and is very likely to approve you for a certain amount. Neither constitute a guarantee, though, which is why there is usually a financing contingency in real estate contracts.

2. Increase your offer

Simply put, being willing to pay more money than other buyers is one of the best ways to get your offer accepted. You may not have to increase it by a lot — it’ll depend on the area and other factors — so look to your real estate agent for guidance. Keep in mind that you may need to come up with the extra cash yourself. Lenders mostly finance loans in the amount the home appraises for, not more. You might also have more of an advantage if you can up your earnest money deposit. When making an offer, be sure it has a short expiration date, ideally 24 hours or less. This way, the seller has to decide quickly whether to accept or move on.

3. Up your down payment

Offering a higher down payment means less financing will be needed from a lender. This can be particularly beneficial if the bidding war pushes the price of the property higher than what it’s likely to be appraised for. For this strategy to be effective, it’s important to prove you have enough additional cash to put down with evidence, such as account balances.

4. Pay in cash

While this option obviously isn’t feasible for everyone, a cash offer is very appealing to a seller. There’s no need for a lender to be involved, helping to eliminate the risk with financing and speeding up the closing process. Be sure to have the property appraised and inspected before finalizing the purchase, though. There are even some companies out there that will help you make a cash offer (for a fee, of course).

5. Waive contingencies

Contingencies in a real estate transaction, or certain conditions that need to be met in order for the deal to go through, are common. Usually, the buyer has the right to back out of the purchase if these aren’t met. Waiving some or all of these contingencies could show the seller you really want to move forward with the purchase. However, this can also cause issues in the future, so be sure to consider carefully — especially if you’re thinking about waiving the inspection contingency.

6. Add an escalation clause

An escalation clause is an addition to your purchase offer that formally states you’re willing to increase your bid by a certain amount if another buyer matches yours. In other words, you’re promising that you’ll raise your offer incrementally up to a maximum amount, if necessary. This tactic can prove to the seller how serious you are about the home right away — but tread carefully. You might find you’re simply playing a game for the benefit of the seller, especially if the home has been intentionally underpriced.

7. Write a personal letter

Humanizing your efforts with a letter could convince the seller to accept your offer over another, even if it’s not the highest bid. Sometimes referred to as a buyer “love letter,” these can explain why you feel strongly about buying the home, including sentimental reasons: If the seller feels an emotional connection to their property, knowing that someone will take care of it like they did could mean you’ll luck out. Be very cautious here, though. There could be Fair Housing implications if you reveal personal information in the letter that influences the seller to either accept or reject your offer. In fact, the National Association of Realtors frowns upon such letters and actually prohibits Realtors from delivering them to sellers.

How to handle multiple offers as a seller

If you’re on the seller side of a bidding war, congratulations — you’re in the driver’s seat. Picking the best offer can help the closing process go more smoothly and ensure you receive the highest possible price for your home. Here’s what to consider when reviewing multiple offers:

Prioritize cash offers. A buyer that offers to pay in cash means you, as the seller, won’t have to worry about any potential hiccups with a lender.
Look at the buyer’s overall financial strength. Don’t look solely at the offer price. If the buyer isn’t likely to get a mortgage approved for that amount or put up more of their own cash, you may have to start the process all over again with someone else.
Review “extras.” Look for factors like contingencies and escalation clauses to see if any of these extras help sweeten the deal for you.
Know your home’s value. Consider whether your home might appraise for less than the selling price, which would require the buyer to spend more of their own money. You’ll want proof that the buyer has the additional funds available, and the track record of the buyer’s lender. You may even want to get your own appraisal before you list your home on the market, so you can benchmark that against other valuations.
Compare closing dates. If you want to move out as soon as possible, for example, a buyer who is willing to close on a faster timeline may be a major deciding factor for you.

Bottom line

Bidding wars can happen in hot real estate markets, where multiple buyers are competing for the same property. They are a boon for sellers, as they typically mean the home will fetch top dollar. But they can be frustrating and stressful for buyers, who are under pressure to make their offer as appealing as possible, as quickly as possible. An experienced local real estate agent can help guide your decisions to give you the best chance of winning — without breaking the bank. I’m here to help guide you through the process. Give me a call at 678-744-8070 and let’s discuss your options. 🙋‍♀️

Home Buying • Tips and Advice • April 27, 2023

Buying a House in 2023: What to Expect

by Shay Brunson

Buying a House in 2023: What to Expect

Barbara Marquand

Despite elevated mortgage rates and a continuing shortage of homes for sale, the 2023 market has some bright spots for buyers.

The frenzied competition of the past few years has settled down, home prices are stabilizing, and properties are staying on the market a little longer.

If you’re thinking about shopping for a home, here’s what to expect and how to approach the market.

Home prices flattening

After big gains in the past three years, home prices are expected to stay flat.

The National Association of Realtors, or NAR, predicts median existing home prices will rise just 0.3% in 2023 — a stark contrast from the 9.6% year-over-year increase in 2022 and eye-popping 18.2% jump in 2021. Existing homes are those that were owned and occupied before going on the market. The NAR projects prices for new homes to creep up 1.3% in 2023 after double-digit gains in the past two years.

Buyers already have more choices in some markets, but the supply of homes is still tight. In October, there was a 3.3-month supply of homes for sale, meaning it would take a little over three months for all available homes to sell at the current pace. In October 2021, there was a 2.4-month supply — but a balanced market has about a five- to six-month supply.

Buyers have more negotiating room

Sellers can’t call all the shots the way they did a year ago.

Some markets still favor the seller, but even there, buyers are standing firmer. For example, fewer buyers are giving up on home inspections, as many desperate shoppers did last year to win bidding wars. Some buyers are even getting sellers to pay some of their closing costs.

Mortgage rates stabilizing

Mortgage rates more than doubled in 2022, with the 30-year fixed-rate mortgage rising from about 3% at the beginning of the year to more than 6% in December.

The 30-year fixed is expected to average from 5.2% to 6.8% in 2023, according to recent forecasts by Fannie Mae, Freddie Mac, the Mortgage Bankers Association and the NAR.

The Federal Reserve, which increased the federal funds rate by 4.25 percentage points in 2022 to quell inflation, isn’t done raising rates. But it has stepped off the gas a little. The most recent increase in December was 0.50%, down from previous 0.75% hikes. Many lenders had built that bump into their rates, so economists don’t predict a big jump as a result of the Fed’s latest action.

Tips for buying a house in 2023

Here’s how to prepare and compete in the market.

Get your finances in order

Take a comprehensive look at your finances six to nine months before you start home shopping, recommends Eileen Derks, senior vice president and head of mortgage at Laurel Road in New York.

How much can you set aside for a down payment? What’s your budget? How much house can you afford to buy? The key is to own your home and not feel like the home owns you, Derks says.

Review your credit reports and correct any errors, and check your credit score. Pay bills on time, and pay down debt to elevate your score and reduce your debt-to-income ratio. Lenders offer the best mortgage rates and terms to borrowers with high credit scores and low debt-to-income ratios.

Schedule a free consultation with a loan officer, suggests Dan Hanson, executive director in market retail at loanDepot, headquartered in Irvine, California. A mortgage professional can let you know how your finances stack up and what you can do to improve your financial profile.

Understand mortgage options

“A lot of people still think they need to put 20% down,” Hanson says. “That’s not true.”

FHA mortgages backed by the Federal Housing Administration require only 3.5% down, for instance, and VA mortgages for veterans and active-duty military members require no down payment. Some conventional loans require as little as 3% down. And most states have down payment and closing cost assistance programs for first-time home buyers with moderate incomes.

There are fixed-rate and adjustable-rate mortgages, renovation loans for fixer-uppers and many other options.

Shop mortgage lenders

Some lenders offer a broad range of mortgages, while others specialize. Look for lenders that offer the types of mortgages you’re looking for, and apply with more than one to compare.

Don’t check just the interest rate. Look at the APR, or annual percentage rate, which includes the total cost of the loan, Derks says.

Compare loan estimates from different lenders line by line, Derks adds. The loan estimate, a standard document lenders must provide after you apply, details rates and fees, estimated closing costs and your projected monthly mortgage payment.

Hire a good real estate agent

“Having a quality, talented Realtor on your side as a home buyer is going to really help you get across the finish line,” Johnson says.

A real estate agent will help you find suitable properties, craft offers and negotiate with sellers.

“There is more to it than just the money,” Johnson says. “There are a lot of other terms and conditions.”

For example, being flexible with the closing date or letting the seller stay in the property for a few days after closing can help get an offer accepted in some cases.

Thinking of buying a house? With the market changing, it can be difficult to know what to expect. I’m here to help, with the latest information and guidance on the home buying process, so you can make the best decision for you and your family. Give me a call at 678-744-8070 and let’s discuss your options. 🙋‍♀️

Home Selling • Tips and Advice • March 22, 2023

Should I Sell My House Now or Wait?

by Shay Brunson

Should I Sell My House Now or Wait?

Mia Taylor

living room

If you’re considering selling your home, it’s critical to understand the current real estate market dynamics. The volatility that dominated the market in recent years amid pandemic-related pressures is starting to ease, but that doesn’t mean there aren’t still challenges.

For one thing, mortgage interest rates are ticking upward again after a brief decline and are once again hovering near the 7 percent mark (as of late February). That reality is making mortgage payments increasingly expensive and driving more than a few potential buyers to the sidelines — certainly not ideal if you’re on the selling side of the equation. At the same time, asking prices in February saw their most modest increase since the pandemic began at just 1.2 percent year-over-year.

But the popular adage that all real estate is local continues to hold true, meaning there are plenty of places around the country where buyer demand and prices both remain strong. So is 2023 a good time to sell your home? Here are some key insights to help you sort through that question.

Is now the right time to sell my house?

If popular opinion is any guide, 2023 may still be a good time to sell your home despite the evolving market dynamics. According to Fannie Mae’s January 2023 Home Purchase Sentiment Index, the share of respondents who feel it is a good time to sell increased from 51 percent to 59 percent.

“Right now is definitely a good time to sell,” says a Realtor. “Depending on where you live, housing demand most likely jumped in the last 30 days. In my market, demand has recently gone up 28 percent. And housing inventory is still historically low — about half as many homes are on the market now as compared to pre-COVID times.”

Of course, deciding whether it’s the right time to sell your home is a very personal decision. There are numerous important questions to consider, both financial and personal, before putting your home on the market.

Your local market dynamics play a large part in whether it’s a good or bad time to sell. In some areas, selling now is the right thing to do because prices are still climbing — or, at least, are not yet falling.

When is a good time to sell a house?

Historically, spring and summer are usually the best times of year to sell a house. But beyond seasonality, there are many factors that might make selling your home a wise decision. Often the reasons are based on financial calculations, cost of living expenses and other considerations, but there may also be other factors that make selling your home the right choice. These include:

If rates are low – Low interest rates entice more prospective buyers to enter the market, which is advantageous for sellers. An increased number of buyers shopping for homes often leads to bidding wars and drives up home prices, meaning you can likely sell your home for a solid profit.

If supply is short – A shortage of housing inventory also drives up demand and prices for available homes. What’s more, when housing supply is low, homes on the market tend to sell much faster.

If you’re ready to downsize – Downsizing may be a more budget-friendly choice than maintaining a larger, costlier home. For older homeowners, downsizing may even be a necessity.

If you need to relocate – If you’re relocating to a new state for a job or want to enjoy your retirement in a new area, and you need the profits from the sale to put toward your next place, selling may be unavoidable.

Tips to sell your home

If you’ve considered the pros and cons and decided to put your home on the market, here are some steps you can take to get the best deal possible.

Find a good agent: The advice and guidance provided by a professional real estate agent can be invaluable, particularly amid a hot or unpredictable housing market.

Make repairs if needed: To help land the best offer for your home, make necessary repairs.

Declutter the interior: You should also make an effort to tidy and declutter your home, allowing prospective buyers to see the living spaces clearly.

Add curb appeal outside: Your home’s exterior is another part of making a good first impression, and it’s worth freshening up the curb appeal before buyers see it. That can include improving or upgrading landscaping and walkways, or even be something as simple as a fresh coat of paint on the front door.

Invest in home staging: Staging a home for sale, particularly if it’s vacant, can help prospective buyers visualize how rooms can be used and present a more inviting and polished image.

Bottom line

Deciding to sell your home, whether now or later, is a major decision that requires careful consideration. Your future plans and goals should be a significant part of the equation, as well as your financial needs and the realities of the current market. If you decide to proceed with listing your home, working with an experienced Realtor is a smart move. A real estate agent who knows your community well can help you price a home effectively, which will increase the chances of a quick and smooth sale. Give me a call at 678-744-8070 and let’s discuss your options. 🙋‍♀️

Home Selling • Tips and Advice • February 23, 2023

6 Landscaping Improvement Projects That Offer the Best and Worst Returns on Investment

by Shay Brunson

6 Landscaping Improvement Projects That Offer

the Best and Worst Returns on Investment

Kathleen Willcox

What your house looks like outside is just as important as what it looks like inside—especially if you plan on selling it one day.

Boosting your curb appeal will not only elevate your enjoyment of—and confidence in—your home, it will also mark an important investment in its long-term value. Curb appeal alone can add 7% or more to the value of your home. Also, the National Association of Realtors® found that 100% of landscaping and tree service costs are recovered when a home sells.

But which landscaping tasks will bring you the best return on investment, or ROI?

Read on for insights from real estate and design pros on the outdoor renovation projects that deliver the best and worst returns.

1. Adding a deck or patio: Good ROI

Spending time outside with friends and family is much more convenient if you have a deck or patio. “Patios or decks can provide a gathering place for outdoor entertaining and increase the value of your home,” says Martin Boonzaayer, CEO of the Trusted Home Buyer in Phoenix.

Homeowners who decide to make the investment can expect to recoup about 65% of their investment, Boonzaayer says.

How much should you budget? According to Remodeling Magazine’s Cost Vs. Value Report, homeowners can expect to spend about $16,000 on a 16-by-20-foot wood deck with pressure-treated planks. A composite deck is more expensive, but the ROI is comparable.

2. Installing a sprinkler system: Good ROI

A dry, brown lawn is quite an eyesore. Installing a sprinkler system is a great investment that prevents unsightly patches and delivers a killer ROI.

“A sprinkler system can help keep your lawn and plants healthy and looking great,” says Boonzaayer. “It can be especially helpful if you live in a region with drought conditions. A sprinkler system can recoup up to 100% of its value upon resale.”

The cost of a sprinkler system installation, depending on the size of your lawn and ZIP code, can be about $500 on the low end and $3,500 on the high end.

3. Paver walkway: Good ROI

A pretty path from your driveway to your front door can do wonders for your home’s overall aesthetic.

“One project that delivers exceptional ROI, and improves your own quality of life, is putting in a paver walkway,” says Joe Raboine, a former contractor and director of residential hardscapes at Belgard in Atlanta. “Replacing the front walkway is also one of the simplest ways to refresh the exterior of your home.”

You can get creative with a variety of paver styles, from simple cobblestones to more modern, large-format pavers.

Raboine says he has seen such walkways deliver more than 80% ROI.

Costs for a paver walkway range from $1,500 to $4,500-plus.

4. Planting trees: Good ROI

Spending time outside in nature—especially around trees—has been shown to reduce stress and boost happiness. Adding some foliage to your yard can also be a boon to your home’s value.

“Planting trees can help provide you and your home with shade, increase your curb appeal, and help the environment,” says Boonzaayer.

Well-placed trees can boost your home’s value by up to 15%, paying for itself and then some, he adds.

Planting a tree costs anywhere from $100 to $2,000 (including labor) depending on the size of the tree and your location.

5. Planting the wrong kind of plants: Bad ROI

“Thoughtful landscaping in general increases curb appeal,” says Tammy Sons, a horticulturist based in Tennessee.

But in certain cases, plants and trees can undercut the value of your home if you’re planting the wrong kind of greenery in the wrong places.

“Planting large trees near paved drives and sidewalks or patios where the tree’s roots could crack the concrete” is a no-no, Sons says.

Sons also encourages homeowners to focus on native plants.

“Planting non-native, invasive plants can lead to disaster,” Sons says. “Kudzu, for example, can grow up to 18 inches in one day. Plants like this will take over other plants and suck up all of the soil’s nutrients.”

6. Adding a garden: Bad ROI

Having a garden brimming with fresh vegetables, herbs, and flowers will sound like heaven if you have a green thumb. But for potential homebuyers who have a propensity to kill any plant they touch, a garden might be seen as a headache that’ll inevitably turn into an eyesore when weeds take over.

“Gardens can be a rewarding hobby, but the ROI isn’t there,” Boonzaayer says.

You can’t make all of your home renovation choices with the future buyer in mind. But if you’re choosing between planting a garden or putting in a patio, at least now you’ll know what to expect when it comes time to put your home on the market.

Home Buying • Home Selling • Tips and Advice • January 26, 2023

How To Sell Your House And Buy A New One At The Same Time

by Shay Brunson

How To Sell Your House And Buy A New One

At The Same Time

Beth Braverman

Things can get complicated when you’re trying to sell your house and buy your next place at the same time. The process of buying and selling simultaneously can be stressful, particularly if you need the money from the sale of your current home to put toward your new one.

In a perfect world, your next house would be ready and waiting as soon as you turn over the keys to your previous one. But of course, the world is not perfect, and the timing between selling one home and buying the next does not always line up the way you want it to. Take heart, though, because a little planning and working with a savvy real estate agent can help make both transactions run more smoothly.

Here are five key topics to consider, with handy tips to manage the process — and keep your sanity intact.

1. Partners: Assemble a team of pros

Given all the steps and paperwork involved in selling and buying a home at the same time, you’ll want seasoned professionals guiding you through the process. Hiring a skilled real estate agent can give you a realistic estimate of home prices in your area and how to price your current home. Using that figure, you can calculate how much equity you have and what your net proceeds will look like, so you can apply that money toward the down payment and closing costs of your new home.

2. Money: Consider your financial position

Ideally, you’d be able to have concurrent closings, selling your home in the morning and closing on your next place that afternoon — or at least within a few days. But what if things don’t go according to plan? You could suddenly find yourself without the necessary funds to close on your new home, or wind up paying two mortgages for an extended period of time. Worst-case scenario, you may be unable to get final approval for a mortgage and potentially lose your next home.

If you don’t have the means to handle two mortgages simultaneously, you might want to include a contingency in your real estate contract that gives you an escape route should the sale of your current home fall through. You may also consider adding a financing contingency, in case your new loan approval hinges on selling your current home. Such contingencies are fairly common, and a good agent will be able to help you negotiate and get them written into the purchase and sales agreement you sign with the seller.

3. Market: Does it favor buyers or sellers?

When trying to buy and sell a home simultaneously, a lot depends on the conditions of your local housing market.

In a seller’s market

In a seller’s market, sellers have the upper hand. This has been the case for most of the past two years, in which the housing scene all around the country was characterized by limited inventory and bidding wars. In the second half of 2022, however, residential real estate markets have begun showing signs of cooling down, with more housing inventory available and sharply increasing mortgage rates putting a damper on sales activity.

Even in a market that favors sellers, you’ll need to make your home market-ready if you want it to bring in top dollar. But this type of market also means you can be more selective about which offers to consider and limit your options to those with fewer contingencies. If the property is priced right and staged well, it will likely sell quickly. So make sure you’re ready to move fast on buying your next place.

In a buyer’s market

On the other hand, when inventory is high and demand is low, that’s a buyer’s market. When buyers are in the driver’s seat, it could take much longer to sell your home. In a buyer’s market, you may want to hold off on making an offer on your next place until you’ve gone into contract with a solid buyer for your current home. You may also want to include a contingency that voids the deal if the sale of your current home doesn’t go through, for peace of mind.

4. Timing: Negotiate the timeline, not just the money

Of course you want to get the best possible price on the sale of your home, and not to overpay for the next one. But consider the timing of the closing process as well when negotiating both deals. The closing date can be one of the most important details when negotiating a sale. The goal is to get both the buyer of your current home and the seller of your next home to agree to adjacent closings or any necessary contingencies. You can even arrange for back-to-back escrow, in which the proceeds from the sale go directly to the purchase of the new property.

5. Safety net: Have a backup plan

No matter how carefully you plan your transactions, surprises can occur. Things might not happen on schedule — or might fall through completely. If you have contingencies in your contract, you should be able to reschedule the closings accordingly or walk away with minimal financial pain.

But it’s smart to have a backup plan just in case. Here are some options:

If you sell your current home but haven’t found your next place yet, you’ll need to find a short-term rental. Be sure to factor in the added expense of renting a storage unit if all your belongings won’t fit into the temp home.
Consider asking your buyers to do a rent-back agreement, which would allow you to remain in your current home after closing for a short time and pay rent to the new owners until you can move.
If you close on your new place without selling the old one first, you’ll have two mortgages to pay. To cover the costs until you’re able to sell, consider a home equity line of credit or a bridge loan over the short-term. (If you do use a bridge loan, keep in mind that you’ll be responsible for making payments on it regardless of whether or when your house sells.)
If you’ve closed on the new dream house, move in and try renting out your old home and using the income to help offset the expense of the new place until you can sell it.

Should I sell my house now or wait?

Deciding whether it’s the right time to sell your home can be perplexing. That’s especially true if you’re locked into a mortgage rate that’s significantly lower than what’s available now.

There are a number of important factors to consider when it comes to the timing of your house sale. These include:

Interest rates. Low interest rates entice more prospective buyers to enter the market, which is advantageous for sellers.
The current housing inventory. A shortage of homes on the market also drives up demand and prices for available homes.
Whether you would like to downsize. Downsizing may be a more budget-friendly choice than maintaining a larger, costlier home.
If you need to relocate. If you want or need to move to a new state, selling might be unavoidable.

You should consider these factors carefully, and you definitely shouldn’t rush into a sale just because the market conditions are right. If you don’t have a solid game plan for where you’ll go after your home is sold, or if you fear you could be hit hard by a possible recession, then it may be smarter to hold off for now.

Finding a trusted agent to help

Using the same real estate agent and real estate attorney for both the sale and the new purchase can make the entire process go more smoothly. (An attorney is not required in every state, but even so, it’s smart to have one on your side. Whenever there’s complicated contract language and large sums of money at stake, professional legal advice is invaluable.)

Final word on simultaneously buying and selling a home

Trying to sell your house and find a new place at the same time can be quite a challenge. Working with an experienced real estate agent can help ease the transition and ensure consistent communication with everyone involved. Finally, make sure you keep close tabs on your finances and credit, both before and during the process, and get as much done ahead of time before you start looking and listing. It’s a delicate dance, but the steps can be mastered, letting you successfully conclude both deals simultaneously.

I’m here to guide you through the process, every step of the way. Give me a call at 678-744-8070 and let’s discuss your options. 🙋‍♀️ – Shay

Home Buying • Tips and Advice • December 17, 2022

How Long Does It Take To Buy A House?

by Shay Brunson

How Long Does It Take To Buy A House?

David McMillin

Buying a home doesn’t deliver the instant gratification you’re accustomed to in today’s e-commerce world. While you might be able to hit the “Buy Now” button and pick same-day delivery with loads of other purchases, buying real estate requires a number of steps.

Timeline to buy a house, step-by-step

Step 1: Get preapproved

If you’re going to borrow money to buy a house, the first step is to get preapproved for a mortgage. A mortgage lender will typically ask for information about your assets, income and credit history to make their assessment of how much they’re likely to loan you. In some cases, lenders with online-focused operations can issue an automated preapproval letter on the same day. The letter will serve as evidence to sellers that you’re a qualified buyer. Preapprovals aren’t good forever, though — they typically last between 60 and 90 days.

If preapproved, you’ll receive a loan estimate within three business days after applying for a mortgage that outlines your loan amount, interest rate and other loan details. It’s important to compare options, too. The Consumer Financial Protection Bureau recommends getting loan estimates from at least three different lenders.

Before you begin the preapproval process, consider what you’ll look like in the eyes of a lender. Do you have any errors on your credit report? Are you carrying a hefty balance on a credit card? Think about the preapproval process as a chance to show off your best self. Lenders need to feel confident that you will be a responsible borrower.

Here’s a general timeline of what you’ll need to prepare before submitting paperwork for a mortgage preapproval:

At least 6-12 months before: Start saving up for a down payment (if you haven’t already) so you can show a lender you have the means to purchase a home. Also, try to get a broad picture of your financial situation by checking your credit report and score. Lenders will look at your credit history (and, by extension, your credit score) to see how creditworthy you are. Understanding what’s in your report now will give you a chance to raise your credit score if needed. Then, when it comes time to get preapproved, you have a better chance of landing a better rate.
3-5 months before: During this time, avoid taking out any new loans or making other major changes, like switching jobs. Doing so could affect your eligibility for a loan. Lenders look at your debt-to-income ratio, or DTI, for example, to see whether you can afford to manage your monthly payments. Keeping the status quo in your finances, income and job situation can help you avoid delays in your loan approval.
1-2 months before: This is a good time to start organizing the paperwork you’ll need to submit for a preapproval. Documents typically include recent paystubs, two years of federal tax returns and two months’ worth of bank statements.

Step 2: Find a home

Now that you’re preapproved for a mortgage, you know how much house you can afford. That means it’s time to start looking for one. At this stage in the process, you can work with a real estate agent, check out open houses and start house-hunting in earnest.

It’s important to note that this step can take more time than you might expect, because housing inventory is still tight. According to the National Association of Realtors (NAR), the country had a 3.3-month supply of homes in July 2022 — that’s up from January’s record low of 1.8 months, but still well short of the 5 or 6 months required for a balanced market.

Step 3: Make an offer

Once you’ve found the house you want to buy, your real estate agent will help you submit an offer. Your agent can help you decide on an offer that’s competitive, aligned with home prices in your area and reflects your best interest. The offer might also include contingencies, which help protect you if you end up needing to back out of the offer.

If you’re able to make an all-cash offer, you can reduce your time to close. Without a need to secure financing, you won’t have to deal with a financial institution. However, even all-cash transactions require some waiting as the seller works out all the details and paperwork, so keep that in mind.

It’s also important to recognize that making an offer is a step you could wind up repeating, depending on how hot your local market is. NAR data from early 2022 indicated that only 25 percent of buyers were successful with their first offer. But times changed as mortgage rates rose significantly over the course of the year, so the market is not quite as competitive now.

Step 4: Go to contract and put down earnest money

If your offer is accepted, you’ll go to contract and have to make an earnest money deposit, which is an amount of money you put down in good faith to assure the seller you’re serious about the purchase. Think of this as another signal that you’re committed to doing all the work ahead toward actually closing on the house.

Step 5: Schedule a home inspection

The next step should be a home inspection. Depending on your state’s laws, a home inspection typically needs to be completed within a set number of days after you sign a purchase agreement. If the inspector uncovers any major concerns, you might want to negotiate repairs or seller concessions, which could take more time.

Step 6: Wait out the closing process

At this point in the process, you can expect to do some waiting as your lender moves the loan into underwriting. In this time, you may need to submit additional documentation for your lender to clear your loan to close, and the lender will order an appraisal to assess the home’s value.

The type of loan you take out could alter the timeline slightly, because of the types of assessments and paperwork needed. For example, an FHA purchase loan currently takes one day less than a conventional loan, according to ICE Mortgage Technology (49 vs. 50). And VA purchase loans have historically taken a bit longer to close, due to additional documentation requirements like a VA Certificate of Eligibility.

If there have been major changes to your financial situation since you were preapproved, your loan might be delayed as well. Lenders can get a bit spooked if you change jobs, open a new line of credit or make any other big money-related decisions between the time you apply and the time they’ll actually give you the funds.

Once your mortgage is approved, your lender will give you a copy of your closing disclosure at least three business days before the closing date. The disclosure lists all the loan details, fees and terms, as well as what you’ll need to pay in closing costs to finalize the purchase.

Step 7: Sign the closing documents and get the keys

Finally, after all that work, closing day has arrived. You will need to sign a small mountain of paperwork. You’ll also need to pay closing costs, if you didn’t opt to roll those expenses into the loan. And you will likely need to pay with a cashier’s check, as personal checks are typically not allowed. How long does this final step take? It varies, but you should plan on spending at least two hours dealing with all the documents.

How to avoid delays when you buy a house

According to NAR, 15 percent of home sales encountered some delays that held up the closing in June, July and August 2022. There are a wide range of potential issues that can create stumbling blocks, including:

The buyer has trouble securing financing.
The appraisal report comes back with a value that doesn’t match the loan terms.
The home inspection report identifies the need for serious repairs.
There are issues with the title/deed.
There are issues with hazard and flood insurance.
The buyer loses his or her job.

One of the most common reasons for a delay recently has been an appraisal gap. According to data from CoreLogic, 20 percent of home sales had appraisals that came back lower than the agreed-upon offer price in May of 2021. However, those appraisal gaps became less common by the end of the year. Now, in 2022, the housing market does appear to be cooling off, which means that appraisal issues may become less common.

The best way to avoid delays is treat communications from your lender as a top priority. If your lender requests additional documentation of your income or employment, for example, respond as quickly as possible.

One last simple rule to help make the process pain-free: The earlier you get a head start on ironing out your finances and securing a preapproval, the more likely you’ll have a relatively smooth and quick transaction.

Home Buying • Tips and Advice • November 18, 2022

How To Make The Buy vs. Rent Housing Decision As Mortgage Rates Surge

by Shay Brunson

How To Make The Buy vs. Rent Housing Decision As Mortgage Rates Surge

Cheryl Winokur Munk

With mortgage rates rising, more people may be asking themselves the age old question: rent or buy?

These decisions are particularly pertinent amid bubble-like housing prices, making monthly mortgage payments more difficult to manage, and also sky-high rents that have proven to be one of the economy’s stickier forms of inflation.

The latest Federal Reserve interest rate increase, while not directly tied to mortgage rates, is having some effect on lending and home prices. And the Fed isn’t done raising rates yet this year.

The average 30-year fixed-mortgage rate was 6.10% as of Sept. 13, according to Bankrate.com, and it has been rising steadily, up to 6.43% on Tuesday, according to the mortgage rate comparison service, after the Fed’s most recent decision last week to raise its benchmark interest rates by another three-quarters of a percentage point — the third-time in a row it has raised rates by that amount.

More homebuyers are pulling out of deals given the environment. Here’s how to weigh the biggest housing decision you may ever make in your life.

Take a big-picture approach

Cory J. Phillips, a financial advisor at Pittsburgh-based Fort Pitt Capital Group, said he’s heard from clients that they are concerned about buying now because of rising rates. But rates are only one consideration when it comes to buying a house.

Although they are higher than the recent past, rates are still among average levels over the last 30 years, he said. “The last couple years we, as consumers, got used to such a low rate. Now it’s our expectation,” he said.

Trying to time the rate market isn’t wise, Phillips said. If the buying elements are right for you, it could still make sense to buy, even as rates are rising.

But before plunking down money on a down payment, consider what the next few years could look like. Are you interested in planting roots, or is there a strong chance you’ll relocate in three to six years? If the latter is a possibility, Phillips said he wouldn’t generally advise buying now because the closing costs and commissions are likely to negate the benefits.

Rent premium versus ownership premium

Sure, renting is expensive. From 1985 to 2020, the national median rent price rose 149%, while overall median income grew just 35%, according to an analysis of publicly available data by Realestatewitch.com.

But homes are also pricey, even though they fell 0.77% from June to July. That’s the first monthly decline in nearly three years, according to Black Knight, a mortgage software, data and analytics firm, and prices have softened significantly in recent months relative to historical data. But the median price of an existing home sold in August was $389,500, still up 7.7% from a year ago.

Prospective buyers need to remember that the premium they are paying in rent is temporary, said Karl A. Wagner III, partner and senior wealth advisor at Milford, Pennsylvania-based Biondo Investment Advisors. “The premium you are paying to buy is not temporary; it’s a long-term commitment,” he said.

So in the least, do not force a decision to buy if your financial situation provides good reason to be more deliberate.

Determine whether you have enough money for a down payment or might you be better off delaying a purchase until you do. Phillips offers the example of a client who is looking to buy a house in the $200,000 to $275,000 range. He’s now saved enough to put 15% down, which would mean he would only have to pay private mortgage insurance for a few years — a form of mortgage insurance often required by lenders if the buyer does not initially have 20% for a down payment. He can continue to save until he finds his dream home, getting closer over time to the 20% mark that would allow him to avoid private mortgage insurance.

Moving and other miscellaneous costs

Moving, whether to a new rental or newly purchased home, has its costs.

Prospective buyers need to make sure they have enough set aside not only for moving expenses but also for home maintenance — initial and ongoing. These costs aren’t necessarily a drop in the bucket. The average cost of a local move is $1,250 and $4,890 for a long-distance move, according to Moving.com.

What’s more, “there are almost always costs that you forget to include in your move, and those you did add are usually expensive,” said Courtney Klosterman, home insights expert at home insurance provider Hippo.

And in addition to hiring movers and home repairs, homebuyers need more money set aside for buying new items and furniture. Additionally, if there is a gap or overlap between moving, buyers may have to pay double the mortgage or stay in a hotel until their new home is move-in ready.

Your income and personal financial security

Would-be buyers should also consider how their financial picture could change in the near-term, said Gregory W. Lawrence, certified financial planner and founder of Lawrence Legacy Group in Estero, Fla. What happens, for example, if a spouse wants to stay home to raise the children? Or what if one of you gets laid off? Can you afford to live on one income? Also consider the source of your income? Is it secure in a recession? And what’s your future spending likely to be?

“Don’t buy at a peak, get laid off and not have the money to pay for a house that you just put a bunch of money in and is now under water because the market declined,” Lawrence said.

If you have a great buying opportunity, but are concerned about your finances, it could make sense to put down a smaller deposit, even though it will mean private mortgage insurance, Lawrence said. “I would not be putting 20% on a house unless I had enough assets that I was assured I would never lose the house,” he said.

Wagner strongly recommends first-time house buyers wait out what he sees as a bubble destined to pop. He cautions people to remember the housing crisis of 2008 and how many people took major losses on homes purchased at the peak. “I fear that we’re in a similar situation where excessive speculation and excessive liquidity and low interest rate have led to this real estate boom,” he said.

“We know historically that nothing goes in one direction forever. If it’s possible for you to wait, I would.”

Home Buying • Real Estate News • Tips and Advice • October 25, 2022

Should You Buy a Home in 2022? Here’s What You Need to Know

by Shay Brunson

Should You Buy a Home in 2022? Here’s What You Need to Know

Alix Langone

Will rates continue rising? When will more inventory be available? Here’s what to consider before buying a home this year.

Right now, home prices are still seeing double-digit growth nationwide and all-cash offers still make up around a quarter of housing bids, according to Jessica Lautz, vice president of demographics and behavioral insights at the National Association of Realtors. Does that mean you should try to hold off until prices start going down? Not necessarily.

The first thing to keep in mind is that expert predictions are imperfect. No one knows what’s going to happen with the economy, even with warning signs for events like recessions. And timing the market, or trying to make decisions based on what you think will happen to prices or rates in the future, is generally not a sound strategy. “With housing, buyers tend to obsess over home values and how buying at a certain time may be better for appreciation and equity,” said Farnoosh Torabi, personal finance expert and editor-at-large at CNET. “That’s important, but your monthly housing payment is what really matters in the end.”

Even if you have a plan, be prepared to pivot in this market. Maggie Moroney, 27, is trying to buy her first home in the Washington, D.C. area, but can’t find anything affordable. Between sales and rentals, there’s low inventory in both markets.

“I probably could try to buy something, but it’d be a little bit of a stretch, especially with interest rates,” she said. Moroney doesn’t want to rush the decision and plans to wait it out if she doesn’t find a home she likes, with the hope that more inventory will start to hit the market. “I’d rather have a rental I’m not super in love with than a home I’m not in love with.”

If you’re teetering between buying a home and waiting, here are some factors to keep in mind.

1. Mortgage rates and price trends

In today’s housing market, high prices along with home loan rates are two of the most important factors at play. Although mortgage rates fluctuate daily, they are expected to remain between 5-6% for the rest of 2022 — though what happens next with inflation will tell where rates are headed. So far, rates are already more than 2 percentage points higher than this time a year ago and passed the 5.5% mark in June, but seem to be evening out since the announcement of the Fed’s fourth rate hike in July.

Although rates dipped slightly with the most recent interest hike, it’s still important to understand how the rate you lock in for your mortgage will impact your monthly payments, as well as the total amount you’ll pay over the lifetime of your loan.

For example, if you take out a 30-year fixed-rate mortgage to buy a $500,000 house at a 5.2% interest rate, you’ll pay $488,000 in interest over the life of your loan. But if you wait and buy a $450,000 house at a 6.5% interest rate, you’ll end up paying $574,000 in interest over the course of your mortgage. So even though you paid less for your home, you’re paying more than the difference in price due to interest over three decades.

Scaling back your budget and looking at homes that may be smaller or in less-expensive neighborhoods is an option to consider if higher mortgage rates have made your previous housing goals unattainable.

2. Financial and personal goals

Homeownership is still considered one of the most reliable ways to build wealth. When you make monthly mortgage payments, you’re building equity in your home that you can tap into later on. When you rent, you aren’t investing in your financial future the same way you are when you’re paying off a mortgage.

Another factor to take into consideration is how long you plan to live in the house. If you expect to live there for a decade or longer, you’ll likely be able to refinance your mortgage to a lower rate, reducing your monthly payment in the process. However, if you plan to move in a few years, it likely won’t make financial sense for you to refinance. In that case, it’s worth considering an adjustable-rate mortgage, which can help offset today’s high mortgage rates by offering you a lower initial interest rate that only adjusts or increases later on in your mortgage term.

3. Future housing trends and recession risks

As buyer competition decreases when buying a home becomes increasingly unaffordable, it could mean that inventory opens up where you’re looking. In June, the national inventory of available homes grew by 18.7% this year compared to last year. More available inventory means that you have more homes to choose from, increasing the chances you can buy something you actually want this year versus scrambling in a bidding war for whatever is available in your budget.

But there’s also talk of a looming recession. If you wait to buy instead, you could avoid potentially overpaying for a home that could lose its value in an upcoming economic downturn, said Torabi. Plus, if the economy slows down, it’s possible the Federal Reserve will raise interest rates less aggressively, which could benefit potential homeowners trying to lock in a better rate on their mortgage.

Is it better to rent than buy right now?

It depends, especially when we’re dealing with an unpredictable period of high inflation.

On one hand, if you buy a house and secure a fixed-rate mortgage, that means that no matter how much prices or interest rates go up, your fixed payment will stay the same every month. That’s an advantage over renting since there’s a good chance your landlord will raise your rent to counter inflationary pressures. Right now, rents are rising faster than wages, and if homebuyers are priced out of the housing market, there’ll be more pressure to rent, which will increase competition. Many are already experiencing a red-hot rental market, leading to rental bidding wars and evictions.

On the other hand, even though a fixed-rate mortgage can offer you more predictability and budget stability, “as long as inflation continues to outpace wages, there could be benefits to renting right now as the economy worsens,” said Torabi.

For example, one advantage of renting over buying is that you can save the cash you would have otherwise needed to use for a down payment. In a time of economic uncertainty, if you don’t have to worry about coming up with a down payment and emptying most of your entire bank account to secure yourself a home, you can stay more liquid. Having more cash on hand can offer you added security if a recession negatively impacts your financial situation.

“It’s important to know the differences in cost of owning a home versus the cost of renting,” said Robert Heck, vice president of mortgages at Morty, an online mortgage marketplace. “How much is homeowners insurance going to cost? How much are the annual property taxes? Maybe you’re not used to paying property taxes if you’ve been renting. Consider the costs that will go into maintaining a home.”

Ultimately, whether you rent or buy often comes down to practical considerations like whether you need more space to start a family, or your lease is ending — regardless of market conditions.

Real Estate Investment • Tips and Advice • September 21, 2022

Becoming A Landlord: Do You Have What It Takes?

by Shay Brunson

Becoming A Landlord: Do You Have What It Takes?

Michelle Honeyager

Whether you have extra cash you’re looking to invest or extra space in a home you already own, it can be tempting to jump into the landlord game. After all, earning passive rental income can seem like easy money. And with today’s high inflation and tough real estate market, who couldn’t use some additional income?

Jill Wente, a Realtor with Better Homes and Gardens Real Estate Gary Greene in Spring, Texas, says that many of her clients entertain the idea of establishing a rental property and becoming a landlord. “Most clients are thinking about buying a move-up property for themselves and holding on to their current home to turn into a rental property,” she says.

But before you decide to rent out your home or buy something new, ask yourself, are you really cut out to be a landlord? Here are some of the key things you should consider.

Landlords manage both property and people

Being a landlord isn’t just sitting back and watching the rent checks flow in. It’s a lot of work: Not only do you have to manage the property itself, making sure everything is in good repair and all bills are paid, you also have to stay on top of your tenants and how they treat your investment. This is not a job for the laid-back, or the non-confrontational.

Financial considerations

Real estate can be a good investment. But as a potential landlord, you need to be realistic about your ability to afford the property — whether rent checks are coming in or not. Something unexpected will always come up, and you need to make sure you can cover both routine maintenance and emergency repairs.

“Chances are, your rental will be vacant from time to time,” says Wente. “Your next renter rarely comes walking in the next day. It may only be a couple of days, or it may be as long as 60 days.”

Doug Quattrochi, executive director of MassLandlords, a nonprofit association based in Massachusetts, echoes that sentiment. He advises prospective landlords to ask themselves this question: “Will the rents pay for the mortgage, taxes, insurance and repairs, with extra, in case I have a vacancy?”

It’s not a get-rich-quick game, Quattrochi continues. “Real estate can be very worthwhile, but it’s usually ‘get rich slowly.’ You should invest thinking about your retirement, your children and the long-term.”

Tenant risks

Being stuck with a bad tenant is one of the main reasons landlords fail. “One bad renter can ruin you,” says Quattrochi. He recommends building a network of support to help deal with tenant-related issues: “Join your local landlord club or association. Other landlords can be invaluable when it comes to knowing what to do or who to hire when problems arise.”

It’s crucial to have a good grasp of local landlord-tenant laws. “Always know and understand your federal, state and local rental laws,” says Brittney Benson, chief operating officer of the National Association of Independent Landlords. “Many landlords learn the hard way that not being knowledgeable about the laws can end in costly lawsuits or lost rental income.”

You also need to be prepared to be the bad guy when necessary. It’s important to assess if you can emotionally handle tenant relationships, Wente says: “Ask yourself if you can be objective. When a tenant is unable to make the rent payment because of the saddest story you’ve ever heard, what are you going to do?”

One thing all experts agree on: Tenant screening is a must. “Do your due diligence when selecting renters,” says Benson. “Do as much screening as you possibly can, regardless of the cost associated with it.” Taking the time to screen a prospective tenant before a lease is signed could save you a lot of hassle, money and unpleasantness — including a potential eviction.

Typical landlord expenses

Down payment: If you’re investing in a rental property, you’ll be forking over what is likely to be a sizable down payment. When purchasing a second property, most lenders will require at least 20 percent down to secure financing. “The good news,” says Wente, “is that you will have the opportunity to gain price appreciation on 100 percent of the property while having only 20 percent in it.”
Insurance: Insuring a rental property is more expensive than insurance for a home you live in. If you decide to rent your current property, you’ll see a change in your homeowners insurance. “Because your home is no longer owner-occupied, your homeowners insurance is going to increase,” says Wente. Landlord policies are typically 25 percent higher than standard homeowner policies, according to the Insurance Information Institute.
Maintenance: Upkeep costs can add up quickly — if you’re not the handyman type, be prepared with a reserve fund to pay for fixing things like broken pipes or electrical issues. It’s also smart to compile a list of people you trust, and can afford, to hire. “When repairs are needed, do you have contractors you can depend on to get the plumbing fixed and the air conditioner back on?” asks Wente.
Vacancy: There will likely be periods when your rental is unoccupied, or tenants simply don’t pay the rent on time. And that can cause cash-flow problems. Benson suggests potential landlords ask themselves, “Do I have the extra funds to cover rental costs, such as mortgage payments or property taxes, if there is a problem with tenants not paying rent?”

Other common hassles

Money isn’t the only thing that can make a landlord’s life difficult. Time management can cause problems as well. “Many people decide to leave the rental property business because of time constraints and attention required,” says Benson. “Maintenance requests, lock-outs, repairs, evictions and numerous other potential time-consuming surprises” are all part of the process, she says.

Remember, you will be your tenant’s very first text or phone call anytime something goes wrong — no matter what time of day that might be. Wente asks clients “if they’d mind getting a call on a Saturday morning with a toilet emergency, or at 11 o’clock at night because the air conditioner isn’t working.”

Quattrochi suggests carefully considering the logistics of managing a property: “Who is going to have keys for an emergency, or am I able to get there quickly myself?”

And don’t forget about the work needed to market the property to prospective tenants. Photographing, listing and showing the property, screening applicants: The entire rental process takes time.

Should you hire an outside property manager?

As a landlord, you’ll need to decide whether you want to manage the property yourself or pay someone else to do it. Hiring a property-management company to handle things makes landlord life easier — but also, of course, more expensive.

“Property managers can be an incredible resource for some landlords,” says Benson. “If the owner lives out of state or far from the rental property, a property manager might be a great option.”

It’s important to know exactly what your property manager will charge, and what he or she will handle versus what is still your responsibility. Don’t make assumptions. And make sure to thoroughly read your contract — and ask questions — before signing on.

Another thing to consider is how much control you might be giving up. “Property managers will manage the way they want, not necessarily the way you want,” says Quattrochi. “Get to know how they screen tenants, supervise contractors and bill their fees. Don’t assume that just because you have a manager, you don’t need to audit their handling of maintenance issues and renter/customer service.”

Becoming a landlord checklist

If you’re ready to try your hand at being a landlord, do some extra planning to avoid winding up with more headaches than profits. Here’s a checklist of things to make sure you take care of:

Calculate how much rent you’d need to charge to cover all your costs
Familiarize yourself with laws about fair housing and landlord-tenant rights
Create a list of contractors you can depend on and trust
Weigh the pros and cons of using a property manager
Network with other landlords to create a support system
Carefully and thoroughly screen potential tenants

“It’s a hard business to be in for some people,” Benson says. “But if you’re prepared and perform your due diligence, it can be very easy as well.”