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Make the most of your home investment

Ask Our Broker
We’ve had trouble with our
homes since the market
went sour. What can we do?
Q: About two years ago we refi-
nanced our home in Michigan and
got a $550,000 mortgage. The prop-
erty was appraised at $950,000. We
‘This Blank Canvas Needs a Pretty Picture’
“WHAT SHOULD I DO with this
big empty living room? It’s a
funny shape and it looks so lone-
ly without furniture,” said my
client. She needed a quick sale
and to maximize her sale price,
as she and her family had already
moved into their newly con-
structed home across town, leav-
ing this house vacant. Her Realtor
had explained that vacant homes
usually sold for less and lingered
on the market longer than staged
New Year,
MAKEOVERS
homes. She was overwhelmed
with the prospect of staging it on
her own, so she called me in to
help.
I usually stage “lived-in”
homes, using only the furniture
and artwork the homeowner
already owns, so I looked forward
to working with a blank canvas.
After touring the house, we sat
by Kit Davey
down on the floor to create an
action plan.We decided to fully
stage the living, dining and family
rooms, using a combination of
her things with rented furnish-
ings.We would accessorize the
kitchen and bathrooms and leave
the bedrooms vacant.
This is a plan I suggest to
homeowners who can’t or don’t
want to live in the home while it
is on the market. If at all possible,
do not show a vacant home.A
vacant home feels and looks
lonely, brings up questions in the
buyer’s mind about why the
property is being shown in that
way, and makes any flaws in the
house stand out. It may seem like
a good deal of effort and an
unnecessary expense, but your
efforts will be paid off with a
See MAKEOVER, Page 2

iStock photo
took the $550,000 and paid off two
existing mortgages worth $275,000
and put the rest of the money,
another $275,000, into certificates of deposit and
interest-bearing accounts.
NEW
We also purchased a $325,000 vacation cottage
in Michigan. This property is being financed with
a land contract that required $50,000 down and
Strategies
$50,000 more every six months.
Since refinancing, our local housing market has Here are the best plans for
gone sour. Our primary home has been on the selling your home in 2008
market since early 2006 and not sold. We also put
the vacation home on the market last year for
$359,000 and have been trying to sell a Florida BY CHARLES SCUTT
CTW FEATURES
condo for $175,000.
We’ve made payments of $200,000 on the vaca-

T
he start of a fresh new year
tion home, with another $50,000 due shortly. Our offers the opportunity to
monthly mortgage payment is $3,600. turn over a new leaf – and
We’re just about out of money. We have $45,000 turn over an existing home to a
in stocks and mutual funds and $61,000 in an IRA. new owner, as well. But to realize
your 2008 resolution of selling
What should we do? your home quickly, experts say
you’ll need to plan properly for
A: By the standards of most people you are rich, and the spring buying season and face
yet your essential financial worries are similar to those the realities of a challenging real
faced by many households: declining asset values, the estate market that has carried over
obligation to pay debt and huge cash-flow needs. In from 2007.
While experts continue to
essence, your situation is proof that a falling tide lowers debate exactly when the spring
all boats. homebuying season kicks off,
You had a plan that assumed that real estate values Sheila Siderow, president of
would remain at a given level and that your properties Siderow Kennedy, Chappaqua,
could be sold at some price.The first assumption gener- N.Y., says that it starts right after
ally makes sense given the historic record of cash New Year’s. So it’s important for
buyers to be prepared even
prices for real estate, but not always. Home prices have before the last echoes of “Auld
declined in selected local markets at various times, and, Lang Syne” are heard.
as we are seeing, it can happen again. Michigan and According to Darralyn Bowers,
Florida are among the states most impacted by the a broker with ERA Bowers &
toxic mortgage meltdown.Alternatively, if you lived in Associates, Southfield, Mich., sell-
Seattle, Salt Lake or Rapid City you wouldn’t have your ers can look forward to a more Adapt-ability:When selling a home in 2008, it’s critical to revisit the listing price with your agent every 30 days, as evolv-
favorable market in 2008, but are ing market conditions may require an adjustment to help keep your home appealing to prospective buyers.
current problems because these local markets are far cautioned to tread carefully.
stronger than Michigan or Florida. “The initial shock and scare of rapid decline will cease to cause made by the government. Street and the Fed and the
The second assumption, the ability to sell at some 2007 has ebbed, and the absorp- panic selling.The properties that “Home sales will stabilize in President and local news pundits
price, is generally true.The problem is that “some price” tion of the foreclosed properties will sell will be those in the best 2008,” he says.“Historically, first- all line up with negative view-
may be far less than anticipated. has been accepted as a necessary condition, priced closest to mar- quarter sales are better than points and wobbly prognostica-
Your immediate need is to reduce monthly cash flow evil,” Bowers says.“The loss in ket value, and in the best loca- fourth-quarter sales from the pre- tions for housing and financial
property values will experience tions.” vious year, due to typical seasonal outlooks, more than a few home-
and adjust your finances. If this is not done you could stabilization, and there will be Steven Kleiman, founder and distractions, weather, and year- buyers will head for the side-
some normal market conditions CEO of Oakington Realty, end tax and income considera- lines.”
See ASK OUR BROKER, Page 2 returning to certain areas.Values Houston, says sales depend on tions, all of which impact buyer- The New Year will bring “pru-
will not increase. However, the the kind of financial predictions seller conditions. But if Wall See STRATEGIES Page 2

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MAKEOVER
CONTINUED FROM PAGE 1
higher selling price and a quick-
er sale.
Since the living room is the
first visible space in the house,
we needed to make it warm and
inviting and look fully decorated
and lived in.After deciding on a
space plan, we flipped through
the furniture rental catalog and
made a call to set up a delivery.
My homeowner said she would
meet me the day of the staging
and bring along a box of acces-
sories to “fluff up” the space.
Most rental companies offer silk
trees, a few area rugs and lamps
STRATEGIES
CONTINUED FROM PAGE 1
dent buyers seeking to obtain the
most house for their money,”
Bowers says.“The issue of a soft
market has been drilled into their
consciousness, and they are care-
ful and cautious, having learned
from the mistakes of others.The
financing of the properties pur-
chased in 2008 will likely be for
fixed-rate loans with long-term
amortization periods.”
“Any reason for optimism in
2008 will likely be tied to histori-
cally low mortgage rates and the
fact that many have held off sell-
ing or buying in late 2007,” says
Jay Hummer, vice president and
regional director for RE/MAX of
New England, Natick, Mass.
“Factors that could kick-start the
spring buying market include ris-
ing foreclosures, with more pre-
dicted in 2008, and falling prices
in the entry-level home buying
marketplace.”
How the 2008 season begins
“will reflect the size of 2007
Christmas bonuses and job reten-
tion,” Siderow says.“These days,
MAKEOVERS
BEFORE
but do not rent smaller acces-
sories.
BEFORE
• The room had an odd
shape, no fireplace and a long
wall opposite the seating area.
With no furniture, these “flaws”
really stood out.We needed to
create a conversation area that
invited you to sit down and that
de-emphasized the room’s
weaknesses.
• We needed to add some
color and personality!
AFTER
• We rented a basic couch
and matching chairs, along with
a coffee table and companion
buyers have more choices. But if
you price a home realistically, it
will sell, especially if it’s in a high-
demand market location.”
If priced appropriately,
Siderow says a seller should
expect to get an offer within
three weeks, after which the
buyer should consider reducing
the asking price.
“Properties in an extremely
competitive market should sell
within 59 days after being placed
on the market,” Bowers says.
“Today’s market should be char-
acterized as exceptional, and it
may take as long as 89 days to sell
a residential property. It’s critical
that the seller and agent revisit
the offering every 30 days due to
the fact that adjustments in price
may be dictated by changing mar-
ket conditions.”
To maximize selling price and
shorten the number of days a
home stays on the market, sellers
need to research homes directly
comparable to their own,
Hummer says.“Recent sales and
current pending sales of similar
properties can be telling.”
Despite the home-selling slow-
down of the past two years,
end tables.The arrangement
filled out the entire space and
welcomed visitors into the
room.
• We added color and a bit of
personality with accessories.We
searched through the rental cat-
alog for a large piece of artwork
to place over the couch. Once
we found one we liked, we
selected pillows, an area rug
with complementary colors and
lamps with color-coordinated
bases. Staging the room in this
manner minimized its flaws and
created a warm, inviting atmos-
phere.
Our staging efforts worked
Siderow says that some rules of
real estate have not changed.
“It still comes down to loca-
tion, location, location,” he says.
“People will also continue to
search for the best schools, best
transportation options and realis-
tic pricing,” she says.“Also impor-
tant are consistent and targeted
advertising and promotion and a
good Internet presence.”
Hummer says that more than
80 percent of homebuyers begin
their search online.“So it’s critical
to ensure that online representa-
tion is top-notch,” she says.“Your
online presence should include
professional photos and virtual
tours.”
Additionally, the current mar-
ket “demands tip top conditions
for attracting buyers,” Bowers
says.“The appearance of the
property is a key factor.The stag-
ing that a homeowner can effec-
tively execute will inspire the
imagination of buyers and cause
them to act quickly before some-
one else gets their ‘perfect’
home.”
Kleiman recommends thinking
like a buyer and starting at your
curb.“First impressions still and
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AFTER
like gangbusters.The house sold
for $28,000 more than the ask-
ing price in just a few days.
© CTW Features
Kit Davey, an
interior
designer
based in
Redwood City,
Calif., helps
clients redeco-
rate their
homes through the creative use
of their existing furnishings.
Email Kit your questions:
kit@contentthatworks.com
always do count,” he says.“Make
sure the landscaping is fresh and
colorful. Clean all windows to
draw a buyer’s view into and
from within the house. Clear out
the clutter, and improve or
upgrade the lighting. If the side-
walk is cracked, broken or tilted,
make the needed repairs.”
Also,“assure that the home is
available to show at odd hours
and days, and respond promptly
and fully to all buyer inquiries,
whether by phone, e-mail, et
cetera,” Kleiman says.
Choosing the right profession-
al to help you market and sell
your home is one of your most
essential strategies as a seller in
2008, Siderow says.
“A seller should engage a full-
time, proven Realtor for a bro-
ker’s market opinion and then
have a licensed appraiser validate
the findings,” Siderow says.“The
seller shouldn’t just be swayed by
the highest price.Ask for a full
marketing plan.Ask about the
media plan to market the proper-
ty, and look for accountability.”
As for the agent’s piece of the
pie,“your best bet is to negotiate
the commission on a perform-
Ask Our Broker
CONTINUED FROM PAGE 1
face foreclosure and bankruptcy.There are several
strategies to consider:
First, sell the $950,000 property for $675,000 or
more.Why $675,000? It’s not selling at $950,000 and
you need to pay off $550,000 (the approximate loan
balance on your prime residence) plus $75,000 (the
approximate loan balance on the vacation home) and
closing costs related to the sale (say $60,000).
Selling a “$950,000” house for $675,000 or there-
abouts may sound like a steep discount, but the reali-
ty is that the $950,000 valuation is an illusion. It was
the value of the property at one time, but that time
has past. Moreover, selling for $675,000 means you
have two mortgage-free properties and monthly
expenses that have been reduced by $3,600.You also
will save big dollars in property taxes, utilities and
insurance costs.
Second, change the way the prime residence is mar-
keted. Instead of offering it for $749,999 and then
bargaining, offer it for $749,999 with a 6-percent sell-
er contribution to the buyer.This leaves enough cred-
it so that someone can purchase without closing
costs.
Third, a “land contract” is an installment sale.You do
not get title until some or all payments have been
made. Given your equity in the property, why not
finance with a 30-year, $100,000 loan?
Fourth, look into renting the Michigan vacation
property and the Florida condo if your prime resi-
dence remains unsold. Rents could offset monthly
costs and that would help.
Unlike many borrowers, you have the advantage of
equity in each of the properties’ value above mort-
gage debt. If you did not have equity in each then the
story would be different.You would likely try to
negotiate a “short sale” with each individual lender or
the properties would be foreclosed.
In too many cases borrowers around the country
are “upside down,” meaning the value of their proper-
ty is less than the balance of their debts.That’s not
your situation and that is an advantage.
Also, you have kept up mortgage payments and
therefore preserved your credit standing.This is enor-
mously important because once you get past your
current difficulties -- and yes, you will get past them –
you will have both equity (about $500,000) and good
credit.This may not be as good as your situation two
or three years ago, but many people would surely
trade places with you if they could.
© CTW Features
Need real estate advice? Peter G. Miller, author of “The
Common-Sense Mortgage,” would love to hear from you.
Send your questions to peter@ctwfeatures.com. Due to the
volume received, not all letters may be answered.
ance-based scale,” Siderow says. er should have a predetermined
Also, consider offering a broker number in mind that they are
incentive “with a bonus or a high- willing to negotiate toward and
er commission than offered on be reasonable with demands if
competitive homes.” the buyer’s demands are also rea-
Lastly, when it comes to deal- sonable,” Kleiman says.
ing with buyers in 2008,“the sell- © CTW Features