Divorce and real estate - it takes a team

When things go south in a marriage and divorce seems to be the only way out, the people involved may think of calling their priest or pastor and they may call friend s to commiserate; they may even have already called a lawyer; but, they seldom think of calling a Realtor® and they should.

Divorce is an extremely emotional process, filled with remorse, doubts, regrets and sometime (maybe too often) distrust and hate. It is a time of great vulnerability for all parties involved and a time when there are many decisions to be made, none of which should be made in haste or in hate and without professional advice.

While it may not be top of mind at the time, making good decisions about the single largest asset that most married couple have – their home – is critical for the future of both parties. Make bad or hasty and ill-advised decisions and they might haunt you for years, as you try to rebuild your life.

There is so much complexity surrounding the real estate (and other assets) that may be involved in a divorce that you really need to assemble a team to help you and your Realtor can be the person who does that for you. On the team, you’ll need a good divorce lawyer, your Realtor, your insurance agent, an appraiser, a tax/financial adviser and a mortgage adviser. Your Realtor can probably make recommendations or assemble the rest of this team.

Why all of those folks? Well, each one will either be providing you with advice about products that you already have (insurance, for instance) or products that you will need to get (a new mortgage) in order to move on with life. You need to understand your current homeowners policy – who’s listed as the policy owner (s) and who as the beneficiaries? What happens to that insurance when the divorce is final? Who needs to be listed then and who will be paying for it? As for the tax adviser or financial adviser (it probably will take two people for this), you need to understand the tax consequences of the divorce and make sure that you can file for your fair share of things after the final decree. You may need to have a good idea of the value of the home,is it is to be sold as part of the decree. You also need to understand the consequences on any long-term financial plans or policies or shared assets that you had in place. And, when the dust settles, you may need to get a new mortgage, in order to move on with life. How will this divorce leave you in terms of qualifying on your own for a mortgage? Can you do anything until your name is off the old mortgage or that mortgage has been discharged? Where will you go may be an easier question to answer than how will I afford it?

So, why I’m I writing about this? Because I care, for one, and because I have the team members already in mind to be able to help, from one of best family and divorce lawyers that I know, to a great insurance person, to a very thorough financial adviser and a great tax accountant and a mortgage rep that can make it possible for you to move on in life. These are people that I've worked with and trust to advise you on the aspects that go beyond my real estate capabilities. More importantly they are people that I trust with your fragile emotional state during this very trying time. I can introduce you to a team of professionals that will work with you through this process in a caring, respectful and empathetic way that will lift a lot of burdens from your shoulders and let you start the healing process.

So let’s start off by agreeing that divorce sucks and try to go forward from there the best way that we can, with a caring professional team of people on your side who can make sure that you make the right decisions during the process to come out whole on the other side. Call me and put my team to work for you. If you already have some people for some of these roles, great; let’s just add them to the team. If you don’t even know where to start; call me quickly so that you don’t spend another day by yourself in this process.

Look for knowledge and problem solving ability; not time on the job

“Experience is something you don't get until just after you need it.” – Steven Wright

I like that little saying that I saw on a blog somewhere. A corollary might well be, “Knowledge is something that you don’t get until after an experience.”   In real estate this is particularly true. The barrier to entry into the real estate business is relatively low. Just about anyone with a few hundred bucks and the ability to learn and be tested can get a real estate license. That and a few bucks more will get you a coffee at Starbucks, but you still won’t be a Realtor®.

Realtors work within a proven system. The most important component of the system is the brokerage, which is responsible for taking the newly minted real estate agent and turning him/her into a Realtor.  Of course there is also the local Multi-List Service, the local Realtor Association, perhaps a state association and the National Association of Realtors. All of these groups provide bits and pieces of the system that the Realtor must learn to work within. That is a part of the experience that the beginner gets, which hopefully starts the process of the accumulation of knowledge.

Good brokerages will have extensive training programs and perhaps a mentoring program that pairs the newbie with an experienced agent. The broker himself (or more likely the local office manager in larger, multi-office brokerages) will be responsible for the training of the new agent and for monitoring his/her work through their first few real estate transactions. The broker (or manager) serves as both a manager and counselor during this start-up phase. Most brokers and managers have years and years of experience and tons of knowledge about the real estate process.

One can often tell very quickly how successful the new agent will be by watching how he/she uses this important resource. Those who fail and leave the business are most often those who try to go it on their own and don’t leverage the resources of their office to help them over the start-up hump. Many of them get into deep trouble by not asking for help. Conversely, those who cling too tightly to this help and are afraid to try things on their own are also doomed to failure or a career of mediocrity. One must be able to wean oneself from the security of never making a decision on one’s own. A real estate agent is an independent contractor, after all, and must eventually become independent.

A key to turning the experiences that one has into knowledge is the ability to stop and look back over the experience to see what one can learn from it. Maybe the knowledge gleaned is “I’ll never do that again” or perhaps it is. “OK, I see what I did wrong and how to avoid that problem in the future or work around it if I hit it again.” Both are correct, but the latter is more valuable knowledge because it contains the thought process of learning from the experience and not just avoiding similar situations.

There is something to be said for seeking out an experienced Realtor, but if you happened to encounter a relatively new agent that you otherwise think is a nice person; ask them how they get help within their office and perhaps ask to meet with their manager or broker. Let that manager know that you expect that they will be assisting the new agent with any issues that come up during your client relationship and see what they say. A new agent will be eager to please you and probably work very hard; you just need to be sure that they understand how to work within the support system that they have around them to get help when they need it.

A final note is that time on the job alone does not assure that the person putting in the time has gained the knowledge that they should have from the experiences that they’ve had. I’ve met way too many “experienced” agents who still did not fully understand the process or have the ability to work through issues. Many times, one agent or the other in the normal scenario where there are two agents involved (a seller’s agent and a buyer’s agent) will have to take on tasks for both sides in order to get the deal closed; even if both sides are represented by “experienced agents.” Just because an agent can say, “I’ve been in the business for 10-15-20 years”, doesn’t necessarily mean that they’ve accumulated a lot of knowledge during that time or that they can handle situations that may come up well.

Unfortunately there isn’t any easy way that you can really test the knowledge base and problem solving ability of agents whom you might interview before signing up with them. An in-depth interview that focuses more on how they do business than just how long they’ve been in the business or how many transactions they closed last year is probably the best thing. Asking to talk to 1-2 past clients might also help (assuming that you aren’t the first client) or reading their reviews from past clients, if the company does that sort of thing. You can also ask questions like; “What was your toughest sale/client and how did you handle that?” You should then listen for their problem solving approach and their honesty about the situation and how they handled it. They should be sharing the knowledge that they gleaned from that experience.

Visit your home like a buyer does....

An educational technique that I often use with would be listing clients is to take them on a visit to their own home, through the eyes of a would-be buyer. I haven’t yet gone all the way to loading them up in the car and driving around the block to get to the visit; but, I do normally start outside in the driveway, where a Realtor and his client(s) might park. Sometimes we have to start discussing things right there, if the driveway has been neglected, is cracked and has grass growing through the cracks.

One of the most often neglected places in a home is the front walk and front door. As side-entry garages became prevalent, more and more homeowners got into the habit of popping the garage door open and driving in. They then make their way into the house through the garage door, which often opens into a mud room. Many can’t even remember when the last time was that they used the front door; and it shows. Realtors don’t bring visitors in through the garage; they use the front door.

Overgrown front walks and neglected front stoops or porches and front doors are very common. People put in all sorts of cute little bushes or plantings along the walk or beside the porch and then forget about them. Often one has to step off the walk to get around the overgrowth from the those cute little bushes that have now grown into monsters. Porches or stoops are also often left with little attention, even when they start to deteriorate. Often that bright brass coach light that looked so cute when it was installed is now dull and rusted and is cocked off at a slight angle, just to call extra attention to itself.

Just getting to the house up the walk may be a challenge, especially in the coming winter months. If it’s not uneven concrete flags to trip over; it might be icy spots on the walk or porch. Since the homeowner doesn’t use that entrance sometimes they forget to shovel it off when it snows or to spread ice melter when it is cold.  Don’t make a visit to your house a survival course.

The next challenge is often the Realtor struggling with the lockbox. As we get into shorter and shorter days, showings will more often fall in period of darkness. I can’t tell you the number of times that I’ve struggled on a dark front porch trying to work the combination on a lockbox because the seller forgot to leave the front light on (yes, that same pathetic, rusty brass light). I carry a flashlight in the winter just for this case.

Once inside, especially if it’s snowy or rainy, you’ll probably be ask (or want to) take off your shoes. Many homeowners forget to provide a chair for shoe removal and putting them back on; so that can mean leaning against a wall while trying to accomplish this feat. Hopefully, they have provided a mat of some sort to put your snowy shoes or boots upon; so the snow doesn’t melt all over their foyer.

The entrance foyer can set the tone for the rest of the visit. Visitors will make note of what they see just inside the door; even if it only views of the stairs and a couple of rooms off to the side. The worst that I’ve seen is a foyer with a view up a straight set of stairs right into the bathroom at the top, with the toilet prominently on display. No sale on that one!

If you’re doing this “visit” with a Realtor watch were their eyes go. They will be looking at or looking for things that you just may not notice any more. They will scan the ceilings in every room, looking for any evidence of water stains that are clues of leaks somewhere. They will scan the walls looking for plug and switch covers and for extra amenities, like wainscoting or ceiling molding. They will be looking at the lighting fixtures – types, how many and do they work. They will note the paint job in each room, looking for evidence that it was a badly done DIY job. They will note the condition of the kitchen – appliances, cabinets, countertops and layout. In baths they will note the condition of the grout around tubs and in tile work and look for signs of rust staining that indicates iron in the water.

Of course the Realtor will be seeing and noting any issues with clutter and cleanliness, so that they can discuss that with you, too. He/she is not trying to make you feel bad about your house or your housekeeping. They know that people fall into patterns of comfort about how they live in a house. The Realtor just needs to get you out of that comfort zone enough so that you see the house as strangers will see it when they visit. They may suggest hiring a cleaning service for a one-time deep clean.

After the visit, you should sit and discuss the results. Let me give you a hint at a line not to use with the Realtor – “Well, it’s good enough for me, so it should be good enough for them.” Maybe you should turn that thought process around and think, “If I make it good enough for them, it will be great for me.” You may rediscover something that you surely had at one time; but, which might have gotten sort of pushed aside for a while – pride of ownership. Once you have that again, it will shine through to visitors and help your house sell itself.

Even if you aren’t about to sell your house, make a visit to it every year, so that you can see the stuff that you need to get to in order to keep it up. I guarantee you that once you’ve gone through this experience with a good Realtor, you’ll never walk into any house again without noticing more than you’ve ever seen before.

Watch the donut and not the hole...

 “As you go through life, make this your goal. Watch the donut, not the hole.” (Burl Ives)

That would be good advice for real estate as well as for life. Too often both the sellers and the agent involved in marketing the house put too much time in on watching the hole – things that aren’t there; instead of things that are. There are almost always shortcomings in most houses, whether it is the design and layout, a smallish kitchen, small bathrooms, no garage or whatever.  Those are the holes. What needs to be the focus is the donut. That might be the great location, the cozy warmth of a smaller place, the features of character that may not be found in newer homes.

You and your Realtor, working together, can figure out how to best show the donut and minimize the attention paid to the holes. Some Realtors give staging advice themselves and some may bring in a stager. It’s amazing what someone with an eye for furniture placement and accessories can do to make the donut look so great that you don’t even see the hole. Sometimes it may require a little paint to change the character of a room or just removing some of the stuff in the room to make it feel bigger. Little things, like adding knobs to kitchen cabinets can change the look of the whole kitchen and is a relatively cheap update. Just doing a deep clean on your bathrooms to make the tile and grout sparkle can change your view about that room. There are many other small and inexpensive tricks that your Realtor will be able to suggest.

One way to make the holes disappear is to take care of all of those little maintenance things that you’ve been putting off. That broken switch plate or missing plug cover is a hole in your donut. The piece of door molding that your cat has used as a scratching post for the last few years is a hole in your donut. That water stain on your ceiling from a leak that happened before you got the roof replaced is a hole in your donut. That wobbly bottom step on the front porch or the loose hand railing are holes in your donut. You may have grown comfortable living with those things, but a buyer will just see them as holes in your donut. Fixing them lets the buyers keep their eyes on the donut.

 So, while it is good advice to stay positive and keep your view on the donut; when the time comes to sell you’ve got to fix those holes that you’ve been living with.  Ask your Realtor to help you by walking through and helping you make a list of the holes that need attention. You may be surprised at the number of things that he/she sees that need attention and that you’ve just gotten so used to that you don’t even notice them anymore. You want your home to come across as a crème puff and not a stale old donut.

In real estate, mind your Ps and Cs…

 

There is an old phrase “Mind your Ps and Qs” the origins and meaning of which there is not a consensus. Various learned sources trace it back to various uses in England in the 1500 – 1600’s. Google it to read all of the various sources that are referenced.

In real estate, I tell my clients that in order to sell their house they must mind their Ps and Cs, and I do have a explanation for them about that.   

What I tell them is that, when it comes to selling a house, there are three Ps and Three Cs in real estate, which are primarily things that they control. There are certainly lots of other factors that they can’t control, such as location, the local economy and the style of the house (once a tri-level, always a tri-level).

Here are factors that they do have personal control over:

The three Ps – Price, persistence and perseverance.

Price -  Sellers always have input and the final say on the price at which the property will be offered to the market. Hopefully, they have retained a good, local Realtor® to help them properly price the home within the market context and have listened to that advice. Sometimes it’s hard to hear that the market doesn’t care what you need to get for the house or what you think it is worth. That has been especially hard for those who have been underwater on their mortgages. Setting the right initial price can mean the difference of a quick sale at asking price vs. lingering on the market for months and slowly, begrudgingly lowering the price to where it should have been. Normally homes that linger on the market for months end up selling for less than they would have, had they been properly priced at introduction to the market.

Persistence – Selling your house means consistently and persistently having it ready to show. It means getting into a routine with your family of straightening everything up before you leave for work or school in the mornings and being ready to leave on relatively short notice to accommodate showings. Sometimes it means having to accommodate the inconvenience of leaving your home for a showing when you’d much rather just stay warm and comfortable inside on a blustery winter day. Sellers with small children may benefit from creating a game-like environment with the children to see who can get their rooms picked up and ready fastest before school or for a showing. Having a crate for Fido or Tabby, or taking them with you is also highly recommended.  Showing Realtors hate being challenged by the showing instructions - “Don’t let the cat out”- when they call to show your house. 

Perseverance - This means giving the real estate process time to work. In today’s tight inventory market you may not have to preserver quite as long as in the past; however, you can’t be like the children in the back seat saying “Are we there yet?” to your real estate agent every day. Even though you hear about and read about fast sales in today’s Sellers’ Market; it may take months, rather than days or weeks to find the right buyer for your home. You also need to understand that there is a process involved with getting from an accepted offer to the closing table that can take 30-45 days. Hang in there!

In addition to the three-Ps, there are three Cs that are definitely the responsibility of the seller. Without a commitment to the three-Cs the sale process may stall or be drawn out and the sale price will likely be lower.

The three-Cs – Condition, Clutter and Cleanliness.

Condition – this has to do primarily with the things that some people get too used to living with – a gutter that needs cleaning, the marks on the door where the dog chewed, that window with the broken seal that fogs up in the cold weather, that missing knob on the cabinet drawer. This is mainly about maintenance or the deferral of maintenance. It could be something big, like the leaking roof or the air conditioning that no longer works, but more often than not it’s a whole bunch of little things that the owner has just gotten used to looking past and living with. Those things need attention before you put the house on the market or they will kill a sale or lead to much lower offers.  This is an area where a good Realtor can also help by doing a critical walk-through of you house to provide you with a list fo things that he/she sees need to have attention. In some cases, it may even be worth it to hire a home inspector to do and inspection and give you a list of things that will be found later anyway. For $300-400 up front, you can avoid (or at least know about) the bigger issues that may kill a sale later. Keeping the place in good condition during the listing is also the sellers’ responsibility.

Clutter – Having too much stuff in a house is the most common issue that Realtors face with sellers, especially those who have lived in the home for many years. De-clutter is usually the first piece of advice that a seller will hear. Buyers don’t really want to spend time looking at all of the family pictures that you’ve collected over the years. They could care less about your bowling trophies and fish mounts. Would be buyers need to be able to walk through the house without having to navigate around a labyrinth of furniture and knick-knacks and souvenirs from all of your family vacations. When they open the door to a closet they do not expect to have to catch the stuff falling out on them.  De-clutter, de-clutter, de-clutter and then de-clutter some more.  If you can’t bear to part with some things, consider renting a storage unit to put them in until you move. Moving will likely force you to re-think things, since many people are downsizing and won’t have room for all of that stuff. If you need help with this, have your Realtor give you de-cluttering and staging advice or hire a professional stager (whose first piece of advice will likely involve de-cluttering).

Cleanliness – Potential buyers aren’t going to inspecting the cleanliness of your home with white gloves, but they will notice the dust bunnies or cobwebs under the tables or in the corners of the rooms. They will see whether or not you have kept the grout clean on floors and walls. They will see the dark streaks that can build up on cathedral ceilings and wonder what is causing that. They might notice a dirty washer or dryer and wonder what other appliances you have neglected. The point is that lack of cleanliness just brings unwanted attention to things and ignites the imagination of the buyer in ways that aren’t usually good. I often recommend that a seller hire a local cleaning company for a thorough deep cleaning, especially if the sellers both work and don’t have time to do the cleaning themselves. It will still be up to them to keep it clean during the listing.

So, now you know about the Ps and Cs that you will need to mind, if you are selling your home. You really need to think about these and make the commitments that are necessary to do your part in the sales effort. Your Realtor will be focused upon the marketing of the property and getting buyers through to take a look. Most of what they see is up to you. Call me if you'd like my take on your current Cs and to discuss the Ps of selling your house.

Is it time to list your home?

Everything that you read about the real estate market these days seems positive; so, is it time to list your home? That still depends upon when you bought or what you did when you last re-financed the house and what you still owe on it.  The market has definitely switched over to a sellers’ market. That just means that there are fewer homes on the market than there are buyers out looking. Inventory is down and the pent up demand caused by the last few years of paralysis in the market is starting to manifest itself. Multiple offer situations are the norm right now on low-end houses and even nicer homes in the mid-range.  Sellers are getting at or sometimes above their asking price (if the house is priced to the market).

So, does that mean that you’ve re-gained all of the value lost in the “Great Recession?” No! Values dropped anywhere from 30-50%, depending upon the area. Those losses aren’t going to come roaring back in a few months. While we are seeing positive appreciation in some areas, in general the good news has been that value losses have slowed or stopped and some prices are even inching their way back up. Do the math on how long it will take to recover a 30% drop in value, if he appreciation rate settles in at the historic norm of 3% to 4% and you can see that it will take a decade or more to get back to the 2005/6/7 value levels.

Remember that even with multiple offers at or maybe even above asking price, the place still has to appraise for a value high enough to support the mortgage. That is currently one of our bigger challenges in the market. Appraisers are quicker to adjust than assessors and distressed sales (foreclosures and short sales) are declining dramatically as a percentage of total sales in most markets; so, the “comps” that they use will be a better reflection of the current market and values will not be as impacted by distressed sales. That’s good news. I suppose that you can take the fact that assessors have overshot the mark in the downward direction as good news too, since taxes will be lower longer as their upward adjustments will lag by a year.

The real question remains whether it’s time for you to list. The standard answer is “that depends.” Did you buy at the peak of the market? Did you re-finance at the peak and take the equity value out for other uses at that time? If you answered yes to either of those questions it’s still probably too early for you to consider listing (unless you had a big down payment when you bought and are willing to take some loss on that). Having a house that is now worth less than when you bought it is called being “underwater.” If you are underwater on your home and don’t have the cash to make up the difference a short sale may be your best option.

Many people aren’t really underwater on their homes. They don’t owe more than it’s currently worth. They just can’t let go of the “paper profit” that they thought they had when values were high. I run into many older homeowners who might have bought their home in the 60’s or 70’s for right around $100,000 and watched in delight as it increased in value to around $300,000 in the early 2000’s. Then things crashed; and now they are sitting in a home that might only be worth $170,000 to $200,000. In many cases these people were fiscally conservative and did not cash out equity with refinances; so , many of them owe relatively little on the house.  What they can’t let go of is that “$100,000 loss” that they just took on paper. Sometimes it’s because the value of their home was a big portion of the nest egg that they thought would fund their retirement. So, they are holding on and hoping that the value comes back soon. That’s just not going to happen soon.

The sad thing is that many of the retired folks who feel trapped in their homes would be just as well off to bite the bullet and sell now for what they can get and get on with life. There are so many a deferred dream of retirement that I hear that it’s a shame. That is unfortunately all too true for many Baby Boomers who did treat their McMansions like piggy banks, taking loans out for the boats and new cars and other toys along the way. They really are trapped in their homes and many did not plan well for retirement and have little in the way of funds to use to cover a shortfall at closing. For them a short sale may be the only way out.

For the rest of the would–be sellers in the market the answer remains that the value loss that you might take on the sale of your home will be made up partially or in total by the great value deals that you can get right now on a new home. That works best for those trying to move up in the market. You may be taking a $30,000 hit on your home, due to lost value; however, if you can buy a new home that has experienced a $100,000 loss in value, you are actually coming out ahead when things recover. It’s not so good if you are trying to downsize or maybe move from a house into a condo. You’ll still get a good deal, but you likely won’t make up all of your loss on the two transactions.

The best time to list your home is really more about your life needs. Do you want to retire and get on with life? Do you have to move to take a new job? Is your current home sucking all of your savings down with it?  Are you just tired of taking care of the yard and property? Do you want to move to be closer to family? Has your life situation changed dramatically and now your old home just doesn’t fit? All of those are good reasons to decide to list. You may have to take the course of pursuing a short sale and just get out from under the house.  You may even have to take money to the closing in order to sell.

It’s a good time to sell right now. The real question is whether selling at the current market value works for you. Talk to a real estate professional about your options and which might work best for you. Call or email me for an appointment to discuss your options. If you’d like to read about the short sale option, go to my web site www.MIShortSales.com and read through the FAQ section.  If you want to see what houses are selling for inthis are, go to my web site www.movetomilford.com and browse the data under the What have homes in this area sold for