Consumer Reports: How to Bargain on Home Brokers' Commissions

Yes, you can get your real estate broker to accept a lower commission. That's the word from the September issue of Consumer Reports, which offers home sales tips and a survey on brokers fee.

Here's a news release they sent to me:

"HOME SELLERS CAN HAGGLE ON BROKER COMMISSIONS; PAYING LESS MAY NOT HURT SERVICE OR SALE PRICE -- CR

Many real estate brokers are willing to negotiate their commission rates with sellers who try to haggle, according to an exclusive survey from Consumer Reports September issue.

• Forty-six percent of sellers CR surveyed attempted to negotiate a lower commission rate.
• Roughly 71 percent succeeded.
• The survey also found that sellers who paid commission rates 3 percent or lower were just as satisfied with their brokers’ performance as those who paid 6 percent or more, suggesting that haggling can’t hurt.
• Respondents who paid extra, in fact, were more likely to say they had regrets about the selling process. Nearly one-third said they should have been more assertive in negotiating their agent’s fee.

Sales Tips for Home Sellers:

• Price it right. Homes sell most quickly if they are put on the market at a price that’s just a bit lower than those of similar homes in the area. Don’t waste time floating a high price out there just to see if you get a nibble. If you don’t get an offer in four to six weeks, drop the price 4 to 6 percent.

• Think round numbers. About 80 percent of people buying and selling homes today get information by searching online multiple-listing sites like Realtor.com, which is run by the National Association of Realtors. To conduct a search on that site, buyers specify a price range, beginning and ending with round numbers. So if you price your home that way, more people will see it.

• Pick the right improvements. You might want to update your kitchen or a bathroom for your own comfort, but don’t expect to recoup the project’s whole cost when you sell your home. In today’s market, you might get the best return if you spruce up the outside of your home by adding a wood deck, energy-efficient windows, or new siding. CR’s September issue has a list of the most popular home improvements and whether they pay off.

• Consider the type of listing. If you’re using a broker, there are two common ways to list your home: designating it as an exclusive agency listing, which means you have one broker but can still sell it yourself and save the commission. The second, an exclusive right-to-sell listing, means only the broker you designate can offer your home during the listing term (often six to 12 months), and you can’t sell it yourself.

• Interview more than one agent. Ask around for recommendations and meet with several possible candidates. They should clearly explain how they would market your property and describe how they handle open houses and newspaper and Internet advertising. Ask whether there will be any advertising costs, transaction fees, or other incidentals that you will be expected to pay.

Broker Fees & Services

Paying less [in fees] won’t hurt the quality of [broker] service. While some of the survey respondents who paid lower commissions got fewer services from their agents, the gap wasn’t significant. For example, 81 percent who paid 3 percent or less said the agent provided a competitive market analysis of their home, compared with 87 percent of people who paid 6 percent or more.

“Finding satisfying real-estate services shouldn’t be too hard. All the major chains and independent brokers scored very well in our survey,” said Amanda Walker, senior project editor, Consumer Reports, “So if you’re looking for an agent, shop by personal recommendation or commission split.”

Other Brokerage Fee Survey Findings:

• Eighty-two percent of respondents who sold with the help of an agent received $5,000 less, on average, than their original asking price.
• Almost all of the 17 percent who sold their homes without an agent said they received about what they originally asked.
• Sixty-six percent of Consumer Reports’ readers who used a real estate agent in buying a home paid an average of $5,000 less than the listing price, and the 34 percent of buyers who negotiated their own deals, without an agent, paid close to the asking price.
• Eighty-six percent of CR’s readers who put their homes on the market made a sale; only 8 percent of would-be sellers eventually gave up and took their homes off the market. (The rest were still trying to sell when the survey was completed.)

Consumer Reports’ September issue offers a complete real estate guide with helpful advice for selecting the right broker, and tips for buyers and sellers. Here are some highlights for sellers. For more survey results, helpful tips for buyers and sellers, advice on how to buy a foreclosed home and which home improvements matter most, the Consumer Reports September issue is available on newsstands August 5 or online at http://www.consumerreports.org/."

source: Consumer Reports

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Should We House Hunt? Nah! Plus: Tips for Preparing for Home Ownership

The reality gap in real estate prices continues. Although I would love to have a backyard for my kids, dog and garden, I'll wait a while to start house shopping. Sticker shock is still a real issue in my area.

For sure, the drop in prices is huge in my neighborhood. From my affordable rental apartment, I've seen prices drop from the $1 million-range to $600,000-- and still there are very few buyers or offers. Hmmm. I remember when some of those homes were selling for only $200,000 to $300,000 and my memory is not that long.
Oh well. Based on the inventory that I see in my local market, I'm willing to sit on the sidelines for the next two years or so. I'm looking for advice:

So, please drop me a note (email) or a comment with your estimate about the length of the housing slump. When do you think the market will hit bottom?

In the meantime, I will continue to get my fiscal house in order. Due to a few new opportunities, I will be saving more money. These tips from CCCS make sense to me, especially the recommendation about considering the total costs of home ownership.


"CCCS suggests that all consumers consider the following before buying a home:

• Know why you want to buy. There are many advantages to owning your own home, including the building of equity and the potential tax savings. Current housing prices and mortgage rates may also make it more appealing. It is important to understand why you want to buy a home and why now is the right time for you.


• The big picture-what owning your own home really costs. It is easy to get so caught up in the excitement of buying a home that we don't take the time to investigate the real costs associated with purchasing and maintaining it. The down payment, closing costs, and insurance are all significant investments you will make before you even get to move in. Once you move in, there may be repairs that need to be made or necessities that need to be purchased, such as appliances or window treatments. Once you move in, there are other costs to consider. You may need to outfit your shed or garage with a lawnmower and other maintenance tools. If you live in a neighborhood with a clubhouse, a gated entrance, or other community amenities, you will likely have monthly or quarterly association fees. Utilities may be higher in your new home. You are now responsible for property taxes and homeowners' insurance. By taking a realistic view of the costs of home ownership, you will be better prepared to determine how much you are prepared to spend on your new home.


• Shopping for a home. Identifying what you need in a new home is an important first step. If you aren't prepared to make repairs or changes to a house yourself, you might consider a newer home. While you might not easily add another bedroom, don't ignore the perfect house because it doesn't have a fenced yard or swimming pool-these can always be added later. If you have or are planning to have children, you might want to focus your search around a particular school or family-friendly community. A real estate professional can help you narrow your search to homes that fit your criteria. Before purchasing any home, plan for a thorough home inspection.


• Shopping for a loan. There are many different ways to finance your home, including fixed and adjustable rate loans and varying terms. Familiarize yourself with mortgage options and consider pre-qualifying for a mortgage before you start shopping. While you may qualify for a higher mortgage amount than you thought, set a payment limit that you will be comfortable with. If you haven't checked your credit report recently, now is a great time. You can request a FREE copy of your report once every 12 months online at www.annualcreditreport.com or by calling (877) 322-8228.


• Getting started. CCCS offers free pre-purchase counseling and homebuyer education workshops for consumers on the path to homeownership. A private one-hour counseling session can help prospective homebuyers learn the basics of the process. A six-hour homebuyer education workshop will help consumers assess readiness for homeownership, take a realistic view of the costs involved in purchasing and maintaining a home, and evaluate their credit and financial situation to determine how much house they can really afford. Workshop participants will also learn about the various mortgage options and what to look for in a lender, and explore the tremendous benefits of home ownership, from stabilized housing costs and appreciation, to the many tax benefits. And for first time home buyers, the certificate you will earn may qualify you for down payment assistance or special mortgage products available through participating lending institutions.

To register for an upcoming workshop, call 1-866-616-3720.

"Whether you are buying your first home or moving to a new one, the time you spend preparing to become a homeowner is as important an investment as the home you purchase," said Jessica Cecere, president of Consumer Credit Counseling Service (CCCS) of Palm Beach County and the Treasure Coast. "Realistic goals and careful planning are essential to making the best choices for you and your family."

source: www.cccsinc.org

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Digg!

Sell Your Home Faster with DIY Home Staging: Make Your Home Look Like a Hotel

If you want to sell a home, look at a hotel. Most specialize in depersonalized and clutter-free areas designed for mass appeal. That concept is a winner in residential real estate, say home stagers.

''Staged'' properties sell about 50 percent faster than homes stuffed with quirky collections, unique interiors and personal photographs. Many professional tricks are easy and affordable.

• Create curbside appeal. An unkempt lawn, dying plants and a dirty walkway will discourage sellers, says Angelina Perez, owner of Bertone, a home-staging company based in Aventura. She recommends sprucing up the lawn with affordable plants, fresh mulch and the use of a pair of clippers.

• Hire or rent a pressure cleaner. Clean the driveway, walkway and exterior walls. Consider new paint for the facade. And look out for small handprints or paw prints on doors and windows.

• Depersonalize. Remove personal collections, one-of-a kind accessories and even family photographs, says Mark Baratto, a certified home stager and real estate agent at http://www.binnovational.com/, a South Florida-based home staging company.

• Streamline. Too much furniture and clutter detract from the basic bones of a home. ''If you can't see it, you can't sell it,'' Baratto says.

• Hit the sales. Baratto recommends buying vases, candles and generic art from the sales section of Pier I and other retail chains. Look for generic items. ''You gotta think hotel,'' Baratto says. Also keep an eye out for lightly scented candles, especially those that smell like just-baked apple pie or chocolate chip cookies.

• Spruce up the bathroom. Toss out the old shower curtain and replace unmatched, thread-worn towels. Shop for looks and don't fret over the quality of the towels, Perez says. ``It's more of a show. You're showcasing your home.''

• Clean, clean, clean. If you're not a competent housekeeper, hire a professional crew to do your dirty work. Rent a carpet cleaner or hire a professional.

It all goes back to the hotel-room concept. If a room appears dirty or untidy, hotel guests promptly check out and leave.

This is from my latest column in the home & design section of the Miami Herald.

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Previous Posts

Yesterday:

My Mom Fired Her Holiday Presents
Insights on Suze Orman & Other Links I Liked: My Weekly Reader

Jan. 1: New Financial Aid Season for Students Begins: Tips for 2008

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Sharon Harvey Rosenberg is the author of The Frugal Duchess of South Beach:How to Live Well and Save Money... Anywhere! , which will be published in May of 2008 by DPL Press.

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Study: Housing Prices Still Untouchable for Paycheck-to Paycheck Workers

A local Miami hospital is providing housing subsidies as a work benefit, according a recent report in the Miami Herald. Why? Even with the steep drop in housing prices, home ownership is an American Nightmare for many.

Here's a report from Reuters.

'U.S. home prices may have dipped over the past year, but many American workers would still struggle to afford a median-priced home in major cities, a new study said on Wednesday.

"American workers are really not gaining ground and they're so far behind in the first place," said Barbara Lipman, research director for the nonprofit Center for Housing Policy, which conducted the study.' Source: Reuters

Here's the full text of the news release from the non-profit group:

HEALTH CARE WORKERS PRICED OUT OF HOMEOWNERSHIP IN MAJORITY OF U.S. METRO AREAS, NEW STUDY FINDS
Joint Announcement:
Center for Housing Policy Releases Disturbing New Housing Data for More Than 200 Metro Areas and 60 Occupations

Homes for Working Families Delivers New Resource Handbook of Proven Solutions to Help Ease the Housing Crisis


Washington, DC (January 10, 2007) – Health care workers are priced out of homeownership in the majority of U.S. Metropolitan areas nationwide, according to a new study of more than 200 Metro areas and 60 occupations released today as part of a joint announcement by the Center for Housing Policy and Homes for Working Families.

Specifically, the groundbreaking Center study Paycheck to Paycheck: Wages and the Cost of Housing in America found that licensed practical nurses would not qualify to purchase the median priced home in an astounding 187 of the 202 Metro areas studied, followed by registered nurses at 115 and physical therapists at 104, while nursing aides and home health aides are priced out of homeownership in all the Metro areas studied.

To address these and other housing challenges that key community workers face, Homes for Working Families has released Increasing the Availability of Affordable Homes: A Handbook of High-Impact State and Local Solutions, which identifies 22 proven high-impact policies that state and local leaders can implement to expand the availability of affordable homes within their jurisdictions.

“With Americans living longer and the baby boomer generation aging, our communities will need more health care workers to meet the growing demand. However, if these workers cannot afford to become homeowners, as this study shows, it will likely become difficult to attract a sufficient workforce,” said Center Chairman Kent Colton, president of K Colton LLC and senior scholar at the Joint Center for Housing Studies of Harvard University. “It is also clear from this study that housing affordability concerns stretch beyond the health care field to a spectrum of other occupations.”

“The lack of affordable homes for America’s working families is nothing short of a crisis, but solutions do exist. We are determined to bring those solutions to the forefront and provide decision-makers with practical policies they can adopt using tools such as our new resource handbook,” said Beverly L. Barnes, executive director of Homes for Working Families.

Paycheck to Paycheck Analyses
Health Care Workers

The Center’s study found that, overall, in the United States, an annual income of $84,957 was needed to qualify to purchase the median priced home of $248,000 in the third quarter of 2006. Yet, during this period the median annual salaries of registered nurses ($58,640), licensed practical nurses ($37,127), nursing aides ($24,745), physical therapists ($62,417) and home health aides ($20,414) all fell short.

Significant rental findings for health care workers in the 210 Metro markets studied reveal that nursing aides cannot afford to rent a typical one-bedroom home in 80 of the Metro areas or a typical two-bedroom home in 147 of the Metro areas studied. Home health aides cannot afford to rent a one-bedroom home in 144 of the Metro areas or a two-bedroom home in 201 of the Metro areas studied.

Additional Community Occupations

As part of its latest Paycheck to Paycheck study, the Center also performed a housing affordability analysis for the community workers on which the popular annual study traditionally focused in the past – elementary school teachers, police officers, nurses (data provided above), retail salespersons and janitors.

The study found that police officers would not qualify to purchase the median priced home in 161 of the 202 Metro areas studied, followed by elementary school teachers at 157, and retail salespersons and janitors who are priced out of homeownership in all the Metro areas studied.

Nationwide, the median annual salaries of elementary school teachers ($47,104), police officers ($45,780), licensed practical nurses ($37,127), retail salespersons ($24,597) and janitors ($23,724) all fell below the $84,957 annual income needed to qualify to purchase the median priced home of $248,000.

On the rental side, significant findings for the 210 Metro markets studied reveal that janitors cannot afford to rent a typical one- bedroom home in 91 of the Metro areas or a two-bedroom home in 177 of the Metro areas studied. For retail salespersons the typical one-bedroom home is unaffordable in 78 of the Metro areas and the typical two-bedroom home is unaffordable in 162 of the Metro areas studied.

New Resource Handbook Solutions
Increasing the Availability of Affordable Homes offers solutions to the growing crisis identified in the Paycheck to Paycheck study by detailing strategies and policies that can be implemented at the state and local levels to begin increasing the availability of homes affordable to working families. The handbook, prepared by the Center’s Executive Director Jeffrey Lubell, is part of Homes for Working Families’ efforts to increase access to homes affordable for working families through meaningful policy change at the local, state and national levels.

Six Strategic Categories and 22 Diverse Policies

The user-friendly policy handbook serves as a practical reference tool for state and local leaders – including elected and appointed officials, employers and other decision-makers – by first identifying six broad strategies for increasing the availability of affordable homes and then detailing 22 diverse policies within those strategic categories.

The six strategic categories are: 1) Expanding the availability of sites for the development of affordable homes; 2) Reducing red tape and other regulatory barriers to affordable homes; 3) Harnessing the power of strong housing markets; 4) Generating additional capital for affordable homes; 5) Preserving and recycling the resources that make homes affordable; and 6) Empowering residents to purchase and retain market-rate homes.

The handbook highlights 22 diverse policy solutions such as: making publicly owned land available for the development of affordable homes, revising zoning laws, leveraging employers’ interest in the creation of affordable homes, and using shared equity mechanisms to create mixed-income communities.

Increasing the Availability of Affordable Homes is among the first tools Homes for Working Families has created to promote state- and local-level solutions that mitigate the affordable housing crisis. Homes for Working Families will make the handbook available to opinion leaders and other advocates on its Web site and will also use the handbook as a “best practices” guide as it focuses on advancing policy changes in some of the nation’s highest-cost housing markets.

About Paycheck to Paycheck
The Paycheck to Paycheck study is provided in online, interactive format. Logon to Paycheck to Paycheck to compare homeownership and rental data for the more than 200 U.S. Metropolitan areas and more than 60 occupations studied.

Acknowledgments
Paycheck to Paycheck is released annually by the Center for Housing Policy, the research affiliate of the National Housing Conference, based on funding from Freddie Mac. The Homes for Working Families publication Increasing the Availability of Affordable Homes: A Handbook of High-Impact State and Local Solutions was developed with funding from the Annie E. Casey Foundation.

Data Sources for Paycheck to Paycheck
Wage information is as of the third quarter 2006 and was provided by salary.com, a private provider of salary information, which maintains a database of salaries by geographic location.

The home price data are from the third quarter 2006 and include new and existing home sales figures provided by the National Association of Home Builders (NAHB). In select cases where the data from NAHB were not available, existing home sale price data from the National Association of Realtors are provided.

Following conventional mortgage underwriting guidelines, the study assumes that not more than 28 percent of household income should be used to pay the mortgage, property taxes and insurance. The study further assumes a downpayment of 10 percent.

>Typical rents in each metropolitan area are based on the 2006 Fair Market Rents, issued by the U.S. Department of Housing and Urban Development. The weighted average 2006 Fair Market Rent nationwide was $821 a month for a two-bedroom home (the comparable national figure for a one bedroom home is unavailable). The Hourly Wage Needed to Afford (found in the Paycheck to Paycheck online tables) is the hourly wage that must be earned so that this rent does not exceed 30 percent of income, a standard measure of affordability.


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The Center for Housing Policy is the research affiliate of the National Housing Conference (NHC). The Center works to broaden understanding of America's affordable housing challenges and examines the impact of policies and programs developed to address these needs. For more information, please go to www.nhc.org.

Homes for Working Families is a nonprofit, charitable organization dedicated to advancing policy changes that enable more of America’s working families to find safe, good-quality homes they can afford. It focuses on the families of teachers, police officers, retail associates, office workers and others who struggle to find homes they can buy or rent in the communities they support. It pursues its mission at the local, state and national levels. For more details, please go to www.homesforworkingfamilies.org.

The Frugal Duchess Boutique

Kiddie Houses that Look Like the Big House

Forget the refrigerator box house, a blanket/tented villa or even the fabled tree house!The latest trends: kiddie houses that are real structures and exact replicas of mom-and-dad's house, according to this feature in today's Wall Street Journal.

The price tag: $15,000 for one mini-me playhouse and some price tags top $100,000.

"The lavish replicas, which can include such grown-up amenities as hardwood floors and media rooms with satellite TVs, generally cost from $10,000 to $100,000. Some run even higher than that, exceeding the median price of a single-family home ($218,000 in November."--Source: WSJ

In my house, we're divided over this issue. My husband, an interior designer/construction maven, is thrilled over the concept. "I kinda like it," he said, when I waved the hard copy of the WSJ under his nose.

Me? Give me blocks. Give me boxes. Give me blankets and give me the money that's spent on little houses that look just like the big house.

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The Frugal Duchess Boutique
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I Told You So: Renters Gloating About Popped Housing Bubble, WSJ Says

Disclaimer: I'm a long-time renter. My apartment has golden handcuffs: large space, cheap rent and an ocean view. But still, I have major regrets about the little house (smaller than my apartment!!) that was selling for $200,000 in 1996. In about 10 years, that same house has appreciated to almost $1 million. OUCH!

Of course, now the market has dropped and some renters are gloating and singing: I told you so! Others are thinking about bargain-hunting. That's the gist behind this recent article from the Wall Street Journal.

The WSJ article has a great chart (from Fannie Mae) about the pros and cons of renting versus home ownership.

My vote for the smartest renter goes to Dean Baker --of Washington, D.C. -- who bought a place, sold at a huge profit, then rented for a while.

Dean Baker, an economist, believes that the slump validates his decision to sell a two-bedroom condo in Washington's Adams Morgan neighborhood two years ago. Mr. Baker says he received $450,000 for the unit, which he had bought for just $160,000 in 1997. Since unloading the condo, he and his wife, Helene Jorgensen, also an economist, have been renting an apartment nearby for about $2,300 a month. -- Source: WSJ

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The Frugal Duchess Boutique
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Carnival of Real Estate Investing

The Landlord Blog has put together a helpful string of posts about the real estate market in the Carnival of Real Estate Investing.

The selection of articles includes tips for getting the greatest real estateinvestment bang from Craigs List, the value of investment mentors, and a post about insanity & the mortgage market.

I'm pleased to be included on that menu. Thank You Landlord Blog.

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WSJ: Condos Falter & Spark Lawsuits

In Southern Florida, it's been tempting to invest in condos. With low interest rates, the ocean breeze and a constant wave of visitors, condos seemed ripe for flipping. And for a long time, many investors and homeowners made tidy profits by trading in and out of homes. But recently, the condo market has been ailing in Southern Florida and other parts of the country.

I've heard that the latest trend in condo conversions is "reversions" in which condo buildings revert back into rental units, where there has been a real shortage of frugal or affordable units. (Many residents in Southern Florida have been turned out on the street, while their rentals were "converted" into upscale condos.)

Today's Wall Street Journal has an excellent piece about the condo market and the rash of lawsuits that have been filed in the real estate market.

With once-hot condominium markets across the country in sharp decline and many real-estate professionals predicting a further weakening, some developers are facing more than a glut of unsold inventory. Angry condo buyers from Boca Raton, Fla., to San Diego are taking them to court, alleging everything from breach of contract to fraud.

Some of the lawsuits claim that the amenities featured in glossy marketing brochures and model apartments never made it into the final product. Others involve much-hyped projects that went bust, leaving hundreds of buyers with contracts for condos that will never materialize. --WSJ

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The Frugal Duchess Boutique
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