Q: Although we have our home up for sale, we have so many people interested in renting that we are considering taking it off the market to have it rented, as we need to have monies coming in to cover the mortgage.
We had it on the market in 2008, and took it off and rented it for awhile then. When we relisted it last year, we listed it at $50,000 less than we had it listed for in 2008. I am anticipating that the market will get better if we take it off and rent it now and then sell it at a later date. Do you see this happening? –Nicolae
A: Ah, if only I possessed the real estate crystal ball, that ultimate holy grail of economists, media pundits, politicos and real estate consumers alike. Unfortunately, I don’t. And that seems to be what you want and need: a prediction about whether to sell later will be to sell higher.
There is no way to know whether this will be the case for certain, especially in the fairly near term. If you were telling me you planned to rent the place out for 10 years, I’d tell you it’s possible that it’d be easier to sell then. But next year? The year after? No can do.
And frankly, even in the five- to seven-year time frame, massive shifts that are currently in the works in the mortgage market (namely, the elimination of Fannie Mae and Freddie Mac) may narrow the availability of homeownership, so that many fewer Americans are even able to own homes. By that token, it could also be more difficult to sell your place then. No one knows for sure.
What most everyone does know, or believe, is that the recovery of home prices from their current depression will undoubtedly be spotty and slow, on a national level. As with everything in the über-local realm of real estate, urban and suburban, Midwestern and Southern, coastal and noncoastal markets were all impacted differently by the housing crisis — and are all recovering (or not) at different rates. By this token, the answer to your question will depend heavily upon where exactly you live.
It does seem that areas with positive net population growth, strong job markets and home values that are affordable for a high proportion of local households will suffer less of a hit to home values in the long run, but these also tend to be areas where appreciation is generally slow and steady.
If your area has been overbuilt, has been hit very hard by the foreclosure crisis, and/or has a high rate of unemployment/low rate of projected job growth going forward, your home’s value could take a long time to recover, and may get worse before it gets better. I urge you to talk with several local real estate pros to get their sense for what sort of market yours is.
Timing the market accurately with precision — especially this market, which has been and will continue to be manipulated by governmental forces, for better or for worse — is an extremely difficult thing to do. So don’t. Or try not to, anyway.
In 2008, you probably thought that if you rented the place out for a year or two, the market would come back and you’d be back in business. Well, that time has come, and you still aren’t able to sell it — even listed $50,000 lower! Is it possible that you’d have the same result next go ’round? I’d be lying if I said it wasn’t.
The better strategy here is to stop trying to use the market to drive your decisions. Get clear on your priorities, and use them to drive your decisions, given what you know about the market.
If closure, avoiding throwing good money after bad, and being able to move forward in life without the lingering obligations associated with the place is what you’re after, consider doing what it will take to offload it now, even getting advice from an attorney and tax adviser about all your options, including short sale and a deed-in-lieu of foreclosure.
If closure is less of a concern and you are able to move onto your next home without getting this one sold, and your absolute priority is getting top dollar for the property, then you might consider selling it with seller financing like a wraparound trust deed at an above-market price and interest rate to a buyer who is cash-flush but may be credit- or down-payment-impaired.
You might also consider leasing your place on a lease-option, charging a premium rent (if possible) and securing a tenant who would like to own the place in a couple of years.
Tara-Nicholle Nelson is author of “The Savvy Woman’s Homebuying Handbook” and “Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions.” Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.
It has been four years since I worked with my first short sale. I listed a townhouse for a friend and while it was on the market she stopped making payments and I ended up with my first short sale.
The process was stressful for all parties. It worked out, and we are still friends — which will always be more important to me than a commission.
We got bank approval on an offer after only three months, but the “file” was sold to another institution two days before the anticipated closing, which caused more delays. But it did eventually close.
Personally, I would have come out much better if I charged an hourly rate instead of a sales commission.
Short sales are more common than ever, and I think that is a shame. Many short-sale attempts end in foreclosure.
And even if successful, a short sale hurts the credit rating almost as much as a foreclosure does. As agents we need short sales and they can be good for business. There are classes real estate professionals can take to become more skilled in working with short sales.
Sellers can go through a lot of drama and pain over a short sale, and after months of waiting they may discover that banks can foreclose on a loan much faster than they can approve a short sale.
Short sales can be tough on buyers, too. And buyers seeking bargains may be better off buying a bank-owned home — they could even choose to wait to buy from an investor who purchases, fixes and flips bank-owned homes.
Some of my buyers have ended up with beautiful homes that are almost like new but were less expensive than new construction.
Some agents believe that they are helping people who are upside down and or behind on their mortgages by offering short-sale services. There are sellers who believe that a short sale is a way to prevent foreclosure and that it is preferable to a foreclosure.
Perhaps it seems more honorable to some owners to give the bank some of what is owed than to give them the house and walk away. Either way, their credit rating is harmed.
A short sale may not be the best path to avoid foreclosure, and we should not be selling our services to distressed homeowners as a way to prevent foreclosure — as that may be the outcome for the owner.
I get calls and notes from homeowners asking about short sales. There are some who think that if they are upside down on a mortgage they can complete a short sale.
In some cases, they can afford the payments but they just don’t want to make them anymore. They don’t understand that banks may be more likely to approve a short sale if there is a hardship, such as a job loss or a serious illness.
There are sellers who believe that they can get approval for a short sale, sell the home, and then turn around and borrow money to buy another. More than half of the sellers who contact me are looking to sell a home that they have owned for less than five years — they can afford the payments but they just don’t want to.
Homeownership does not come with any guarantees of wealth or happiness, and having purchased a home that is dropping in value should not be considered a hardship.
It has been a year since I have represented a short-sale seller, and two years since I have represented a short-sale buyer. In general, I avoid short sales.
And I don’t have any problem with letting others have the business.
Teresa Boardman is a broker in St. Paul, Minn., and founder of the St. Paul Real Estate blog.
Outdoor Survival Skills: How to Start a Fire
Find out how to get a blaze going with these five fire-starting methods.
A comprehensive primer on self-sufficiency, “When Technology Fails” will give you the know-how you need to fend for yourself and your family in times of emergency or disaster.COVER: CHELSEA GREEN
The following is an excerpt from When Technology Fails by Matthew Stein (Chelsea Green, 2008). This excerpt is from Chapter 4, “Emergency Measures for Survival.”
Use dried corn husks and corn cobs to start a fire. A Country Lore tip from the October/November 20…
Keep shredded paper out of the landfill by using it as kindling to start wood fires….
Starting a fire and stacking the wood for efficiency….
Mel Borden shares a recipe for home cold and cough soother; Julie Normand uses a grocery bag as a m…
Your ability to start a fire is important for staying warm in cold climates, for cooking food and for sterilizing water. I’ll start with simple instructions for building a campfire with matches and paper, and then proceed through the more Spartan methods, ending with the difficult process of starting a fire by rubbing two sticks together.
Starting a Fire With Matches
I like to separate my materials into piles by size. Start by gathering a couple handfuls of tinder, about one-third of a shopping bag’s worth of kindling, at least half a shopping bag’s worth of small sticks (1/2 to 2 inches thick), and at least a shopping bag’s worth of thicker wood (2 to 12 inches thick).
Any kind of material that takes very little heat to start on fire can be used for tinder. Paper makes great tinder, if you have matches. If you don’t have matches and are attempting to build a fire with a spark (see “Starting a Fire with Flint and Steel,” below), you will need extra-fine dry tinder. Dry pine needles, fine dry grasses, shredded paper, birch bark, dried moss, bird down, mouse nests, cotton balls, wood shavings, pulverized dry pine cones and fibrous inner cedar bark all make good tinder.
Kindling must catch on fire within a few seconds from burning tinder, yet burns for only a few minutes to ignite the larger pieces of wood. Dry pine needles, still stuck to branches, are perfect. Small twigs, 1/8- to 1/4-inch thick, are also excellent. Test the sticks to see whether they are wet or dry. If the sticks can be bent and twisted without snapping, they are wet and will not do for kindling. If all available kindling is wet, you can still burn green pine needles, but otherwise you must find standing wood, which can be split with an axe or shaved down to find a dry core. You can make “feather sticks” for kindling from larger sticks of wood by carving many shallow cuts with a knife to create fine, curved shavings protruding from the side of the sticks.
Positioning the Fire
Now that spring is on its way, it’s time to get going on that long list of projects that has been building during the wet, cold months.
Reviewing some basic safety points is part of shaking off the cobwebs. Occasionally, we’ve had to learn this the hard way. There were a couple of doozies early in our careers and, frankly, we consider ourselves lucky that we’re still here to tell about them.
Years ago, Bill was using a pneumatic nail gun to install a soffit in a rental house in Boise, Idaho. With just one more nail to go, he decided to lean and stretch rather than climb down and reposition the ladder. His hand slipped, the gun fired a 16d nail between his thumb and index finger, and we got to make a trip to the emergency room.
As for Kevin, he was using a reciprocating saw (the one that looks like a swordfish) to cut a cripple stud away from a mudsill when we were replacing a foundation. While he was foolishly pulling the saw toward him, it kicked back and plunged into his leg. There wasn’t much blood, but it did make mincemeat of about an inch of his quadriceps muscle.
Underwriters Laboratories, the product testing group that’s been around for 115 years, recently sent out an email with a list of safety precautions. Today, we would like to pass along some of these tips and add a few of our own.
Suit up properly
If spraying paint or herbicides, cover up from head to toe. Same goes when installing insulation. Wear shoes and socks, long pants, a long-sleeved shirt, appropriate gloves, head covering, safety glasses or goggles, and an appropriate respirator. When painting indoors, open all doors and windows and use fans when practical.
If the job is noisy, wear earplugs.
Invest in a good pair of safety glasses and use them.
Beware of heights. Use the 4-to-1 rule for ladder placement. For every 4 feet of ladder height, the bottom of the ladder should be 1 foot away from the wall or object it is leaning against. This works out to about a 75 percent incline. Pay special attention to the ladder weight and height limits. As a general rule, the third step from the top is the limit of safety. Always use a ladder that is long enough for the job. Overreaching or balancing on the top rung is an invitation for disaster.
Inspect the ladder before you use it. A cracked wooden ladder or bent metal one is an accident waiting to happen.
10 rules for power tools
1. Inspect your tools before use. Inspect especially for frayed power cords and cracked or broken casings. If the tool is damaged, have it repaired by a qualified technician or toss it.
2. Follow instructions, not intuition. Maintain and use power tools in accordance with the manufacturer’s warnings, precautions and instructions.
3. Check the switch on power tools and garden appliances to make sure it’s in the off position before you plug it in.
4. Keep your tools in shape. Don’t carry tools by the cord and never yank the cord when removing it from an outlet. When disconnecting the cord, always grasp the plug, not the wire. Keep the cord away from heat, oil and sharp edges.
5. When necessary, use clamps or a vise to hold work in place. This frees both hands to operate the tool.
6. Buy a saw with a blade guard and don’t disable it. Before operating saws with guards, make sure they are in place and in proper working order. Kevin’s father-in-law was a master brickmason. To increase productivity, he wired the blade guard on his circular saw in the open position. Production increased until the day he set the still-running saw in his lap.
7. Prevent against kickback. If a saw blade begins to bind, immediately stop the cut and hold the saw and work piece completely still. Wait for the saw blade to stop before pulling away from a cut.
8. Discard saw blades that are chipped, bent or in any way damaged.
9. Never leave an active power tool unattended. Unplug power tools before leaving the room and store them out of children’s reach.
10. Remove all jewelry before using power tools.
Other things to consider
Be aware of your surroundings. Make sure you know where others are at all times to prevent accidents or injuries. Keep kids and pets away from tools and projects.
A clean, well-lit workspace is a safe workspace. Store power tools, sharp tools or dangerous materials on high shelves or in a locked storage cabinet out of a child’s reach.
Use the proper extension cord. If you’re tackling outdoor home improvement projects, make sure extension cords are rated for outdoor use.
Take your time. Rushing can lead to accidents, injuries, and more often than not produces an inferior finished product.
Finally, keep a first-aid kit on hand. Even the most careful among us can have accidents. It’s the nature of the home improvement beast.