Real Estate Q&A by Peter Miller

COLUMN:
Real Estate Q&A

Frequency: weekly

Target audience: Real Estate classifieds sections; Home Furnishings and Home Improvement sections; professionals

Delivery method: download

 

 

 

 

 

 

Why Didn’t Home Upgrades Translate into Higher Selling Price?

Q. A year ago we needed to sell our home quickly. We had spent many, many weekends creating a beautiful yard with new trees and flower islands. Inside we painted every room and had coordinating window treatments. We also had a double lot. In the end, the house sold in one day – but it didn’t sell for much more than nearby homes. How come?

A. The general rule in real estate is that buyers seek the least expensive home in the most expensive neighborhood they can afford. Between the double lot, landscaping and interior work you had a great house – that's probably why it sold in a day.

But to sell a home for a significant premium above neighborhood prices is tough and sometimes impossible. Alternatively, without improvements the home may have taken longer to sell.

As to the price of other homes, a word of caution: Sale prices do not always reflect real deals. For instance, suppose two homes each sell for $200,000 but one owner agreed to replace the roof ($5,000), pay for a new washer and dryer ($1,000) and provide a “seller credit” to the buyers at closing worth 2 percent of the sale price ($4,000). Here you have homes with the same “sale price” but different bottom lines – one reason to use a local broker who knows how neighborhood sales are really structured.

The odds are that with your better house you had fewer concessions, if any, when compared with other local sales.

Should you fix up again? Sure. You'll get more pleasure and enjoyment from your home.

Q. I've recently graduated from college, pay cash for everything, have no credit cards and live at home. How do I establish credit since I ultimately want to buy a house?

A. In the usual case mortgage lenders might measure your credit standing by looking at utility bills, car payments, savings and rental information. However, your situation calls for a different approach: You need to build a credit history. Here’s how.

Apply for basic credit cards with a gasoline company and a department store. Make purchases each month. Pay your bills in full and on time. Then apply for a general credit card with Visa or MasterCard. Same deal. Make small purchases each month and pay your bills in full and on time. In six months or so, speak with local mortgage lenders and real estate brokers. Explain your interests and ask about entry-level mortgage programs. Be sure to have a lender review your credit report.

Q. We are buying an older home and suspect there may be mold. What can we do?

A. You bet the house has mold – EVERY house has mold. As the EPA says, "it is impossible to get rid of all mold and mold spores indoors; some mold spores will be found floating through the air and in house dust."

There are two issues here. First, some people are especially sensitive to given molds. This is a medical concern – suffers should speak with a doctor if mold is bothersome. Second, some homes have more mold than they should. The solution? At the very least, look for plumbing leaks, direct rain water away from the home, and keep the house well ventilated.

Q. Is it better to get a loan from a mortgage broker or a mortgage banker?

A. There are numerous home financing sources in today's marketplace: mortgage brokers, mortgage bankers, credit unions, banks, savings and loan associations, etc. The real test is not how the lender is organized, it's whether they can deliver the best loan for your circumstances.

For instance, if fixed-rate 30-year financing is generally available at 6 percent and a lender offers 5 percent you have to wonder why the lender does not want full market value for its investment. Or, if a loan is magically available for 1.95 percent in a 6-percent market you might ask how long this "teaser" rate will last, what rate will kick in after the teaser period ends, the maximum interest rate for the loan, and whether there are any prepayment penalties.

There is also the matter of delivery. The best mortgage quote in the world is useless if the lender can't deliver the loan on time and with the terms that were promised.

Peter Miller, author of The Common-Sense Mortgage, specializes in real estate. You may e-mail questions to peter@ctwfeatures.com. Sorry, no personal replies.