Rental Potential

If you've bought a home or are considering doing so, you've probably learned all the arguments for "Don't Rent – Buy!" After all, it's better to build equity by owning than to put that money into the landlord's pocket. However, if you're considering selling a secondary property, there are some arguments for "Don’t Sell – Rent!"

Some investors may be prematurely panicking in expectation of a weakening housing market, and thinking of selling secondary properties. One real estate research firm, Reis, predicts nearly a three percent rise in rent this year. This is partly due to reduced rental stock that resulted from strong homebuying in recent years. A gentle rise in mortgage rates has also contributed, because more tenants are staying put instead of applying for financing.

A stronger rental market suggests that investors could boost their long-term property values by renting now instead of selling. But how to do so successfully? The biggest area of competition is rent. Once an investor determines the costs associated with the mortgage, taxes, maintenance, utilities and the like, how much wiggle room is left?

Find out what competing landlords are charging, and consider incentives like discounts for timely rent payments. When weighing the pros and cons, remember that many real estate agents specialize in this kind of property, and can provide a valuable resource in making your investment decision.

A Little Goes a Long Way!

You might be surprised to learn that the simpler the home renovation, the more likely you are to recoup your costs when you sell. Basic renovations should enhance your home’s "livability," while avoiding over-customization.

While buyers may pay top dollar for elaborate improvements in "hot" real estate markets, appropriate touch-ups in the kitchen and bathroom prove effective in more moderate markets. The kitchen and bath always draw the most attention from buyers, and remodeling those rooms will likely result in a quicker sale.

Without tearing up your kitchen and having to eat out for two weeks, you can simply install new cabinet fronts and hardware for a fresh look. Another easy and relatively inexpensive option for the kitchen and the bath is to replace dull scratched sinks and update the faucets.

In 2005, REALTOR® Magazine partnered with Remodeling Magazine to publish its Cost vs. Value Report. One unsurprising result that was reported is that major kitchen renovations typically recoup more than 90 cents on the dollar. Sounds pretty good, right? Then consider another result that reported minor jobs will recoup almost 100% of the cost.

Take care of these improvements in advance of your first showing, because when your home first hits the market is when buyers will have the greatest interest, and you will stand the greatest chance of an early sale at full price.

Just Do It!

Thinking of buying a home, but feel bewildered by conflicting reports about the state of real estate? Well, you're certainly not alone, but in a word, relax! Whether or not real estate is up, down or sideways, most people don't make their purchase decisions based on market conditions. Rather, it has more to do with lifestyle.

For most folks, a home is very much like a "durable good," similar to a washing machine. Sounds silly, but think of it this way: When you need a new washer, your decision is based upon that requirement, and you search for a machine that offers good value and service. You don't think about whether the price of washers will be going up or down in the coming months or years.

You can have greater peace of mind when your purchase is made out of necessity and not out of a desire to turn your property into a cash cow. You get the greatest value out of your home by simply living in it, and as long as you can continue to make mortgage payments, you run little risk of losing on your investment.

Speaking with a local real estate agent is a great place to get the ball rolling, so that you can learn about local market conditions and prices. Armed with knowledge, you can move forward and move in!

It's More than a "Sale"

Our culture is fascinated with the concept of Do-It-Yourself, and it's no surprise that homeowners sometimes consider a DIY approach to selling. It's even the subject of popular television shows. Court TV is popular, too, but most people wouldn't act as their own legal counsel after watching a few episodes!

The label "For Sale By Owner" is a bit misleading. That's because in fact, ALL homes are for sale by owner, since the homeowner holds the title. In most cases, real estate professionals are employed to facilitate the sale, but do much more than just "sell" the home. They represent the seller and market the property.

Once you go beyond selling, it becomes apparent that For Sale By Owner really translates to Unrepresented Seller. It sounds fun to sell something, but it's not fun to be unrepresented in a competitive industry. Think about it: most buyers seek the services of an agent to save time and money. The seller is at a definite disadvantage if not armed with the same representation.

Unrepresented sellers report that the three most difficult aspects of going it alone are:

1. Pricing correctly
2. Preparing the home effectively
3. Understanding and completing paperwork.

Unrepresented sellers face more liability issues and lower sales prices than their represented counterparts. There's a lot more involved in For Sale By Owner than just the "Sale."