Home for the Holidays

We hear those four words a lot at this season, but what do they really mean? There are layers.
 
In popular culture, it’s the title of a 1995 movie starring Holly Hunter and Robert Downy, Jr. about a highly dysfunctional family at Thanksgiving. It got mixed reviews. 
 
Going a bit deeper, it’s often about travel, to be with family and/or friends in a place where you grew up, but where you no longer live. And that can be a good thing. Or – depending on circumstances – not so much.
 
Deeper still, home is where the heart is. A cliché, I know. But most clichés, even the most threadbare, contain a kernel of truth. Where the heart is, is where we need to be.
 
And how does this relate to real estate? I’ve always got an angle …

A house is not a home.
 
These days, most realtors and most of our clients refer to a house as a home. Whether house, condo, farm, or trailer, it’s called a home. Buyers and sellers are called homeowners. Realtors talk about home sales, and helping buyers find their dream home.
 
I don’t. I talk about houses. 
 
A house is a container for life. A house does not become a home until people live there and life unfolds. Living life adds value to a property – house, or condo – but the value is intangible, and specific to the people living there. This is why I always try to disconnect the ideas of house and home. 
 
When buyers get too hung up on price, I try to counsel them to look at the intangible value that the house they are buying will accrue as they live there. It’s a financial investment to be sure, but it will also develop a great deal of value that cannot be measured in dollars and cents.  
 
Conversely, I counsel sellers to understand that buyers will not care about the intangible value that has built up over their years in the house. They don’t share your memories and attachments. They are looking at dollars and cents.
 
Home for the holidays
 
And this gets me back to the idea of home. You are at home where your heart is. So, I’m wishing all of you heartfelt joy wherever you find yourself. At your “home” address, or with family, or with friends. Here, there, or anywhere, may you find yourself "at home" this holiday season. 

Let’s hear it for life, family, friends!

The concept of gratitude is always appropriate – every day, all year – but since this is Thanksgiving month, it seems especially so these days. That said, the standard list – family, friends, health, etc. – can get a little repetitive. Dare I say, trite?
 
So, looking for a a different angle on this, a telling statistic emerged as I was doing my 2024 business plan last week.
 
In a planning session at the office, we were challenged to take a genealogical look at our business – trace the roots of every deal as far back in our lives as we could go. 
 
It was an enlightening exercise. 

I’ve had a few deals from chance encounters, but the roots of most go much, much deeper – like back to a friendship I made in graduate school, for example. Doing a little simple math revealed that 83% of my business over the past nine years has come from family, friends, referrals, and repeat clients. 

So, aside from being grateful for all the usual things friends and family bring to the table – love and support when the chips are down, good times and lots of laughs, good food, good drinks, good travels, all the things that make life a joy – there’s this: they bring me business!
 
Thirty-three deals with people who were already my friends before we workedtogether. Five deals with family members. Thirty-one with clients referred by family and friends. And fifteen with repeat clients.
 
I’ve always tried to be a good friend, brother, cousin, realtor – so I know I’ve had something to do with this. But it’s really a tribute to these people. No one has to be a good friend. No one has to work with me a second, third, or fourth time. No one has to be loyal, honest and true-blue. 
 
But these people are. They have been – for decades, some of them – and they always will be. 
 
So, here’s a great big shout out to this outstanding crowd. I could not be more grateful for all of you!!
 
What are you grateful for this Thanksgiving?

Spooky Stuff!

Today is Halloween. Conversation has been trending toward things that go BOO! for weeks now, and there does seem to be a good bit of fear and loathing out there these days. 
 
But I am drawn to the iconic line from Franklin D. Roosevelt’s 1933 inaugural address: 

 … let me assert my firm belief that the only thing we have to fear is...fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. 

 
In general, I totally agree with FDR! There’s really nothing to be afraid of. It’s always a great time to buy or sell a house, so buck up and jump right in. 
 
However … there are always specific things to be wary of, lest they jump out of the shadows and knock you off your pins – or worse.

A few things that could turn your real estate deal into a nightmare these days:
 
Overpricing
I can’t say it often enough: price it right and it will sell. But, if sellers are stuck in last year’s mindset, assuming they can pull a price out of the air and expect multiple offers, the house will be overpriced. And it will be on the market a for while until reality sets in.
 
Underbidding
The obverse of this situation occurs when buyers assume the market is dead in the water, and make a low-ball offer. Not smart. It’s still a sellers’ market. Unless the asking price is a couple of weeks old, the seller is going to hold there, and the low-ball offer will be rejected, or at the very least, countered. 
 
Interest Rate Panic
Yes, rates are currently almost 8%, and yes, no one knows when they will float back down. But if you let that scare you away from buying, you are succumbing to exactly what FDR warned about in the teeth of the great depression. You’ll allow fear to paralyze you – and you’ll still be scared.  
 
Shady Terms
Low earnest money, slow earnest money, crazy-high offers with long due diligence periods, sight-unseen offers, unverified cash to close, bogus wiring instructions, weird stuff in Special Stipulations … the list goes on. There are plenty of shady operators out there who will be happy to slip a few – or a lot of – bucks right out of your pocket.
 
Freelancing
And here we get to the fundamental truth: real estate is not for amateurs. If you are tempted to try a DIY deal, run, do not walk, into the arms of your licensed realtor. That’s the best protection from all the scary stuff. 

Death and Taxes

That’s true, of course, but unlike death, taxes are rarely fatal.
 
In fact, taxes can be a sign of good fortune.
 
Many years ago, I had a conversation with an aunt who was furious about a tax bill. While settling my uncle’s estate, she found she owed an additional tax that in today’s dollars would be almost $200,000. She was irate, but my only thought at that point – I was in my 20s – was that I wished I had enough money to be taxed at that level. 
 
She went on to live in luxurious circumstances in a beachfront condo for the rest of her days, so I don’t think the tax bill cramped her style. But her anger certainly spoiled the mood that afternoon. And it offered a life lesson for her nephew.
 
So, what does this have to do with residential real estate?

Given the huge runup in real estate values over the past decade, a great many homeowners are sitting on a big pile of equity. I’ve heard lots of people gripe bitterly about paying tax on capital gains if they sell. And, I’ve actually heard people talk about not selling – simply because they didn’t want to pay the tax. 
 
Well, if you find yourself holding a huge amount of equity in a piece of property, there are a couple of ways to approach this “problem”.
 
First and foremost: celebrate your good fortune! You bought low and now can sell high! Isn’t that the point? Sell if you want to, pay the tax, and enjoy the remainder. You haven’t lost anything. You’ve made a bundle.
 
Kick the tax can down the road. If you can and want to, hold the property until you die (that is going to happen regardless of your tax status) and let your heirs handle it. If your will is in proper order, they likely won’t be taxed much, if at all, when they sell after your demise.
 
Take action with a 1031 exchange. If you cannot or don’t want to stay where you are, sell and buy something else using a 1031 exchange. A 1031 will postpone (not eliminate) the tax liability. There are very specific rules that must be followed, so you will need expert counsel. But if done correctly, a 1031 will allow you to buy something new and can kick the tax can down the road, as above.
 
In any case, always remember that you are being taxed on a gain – not a loss! You’ve come out ahead. Rejoice in your good fortune, and don’t be like my aunt. 
 
Your glass is more than half full!

Repaint or rehab? How much and when?

When I’m working with sellers, questions about how to get the house ready for showing always come up. What should we do to make the house sell faster, and sell for more?
 
Good question! But the answer is seldom straightforward. As we so often say, it all depends …
 
Budget, tolerance for hassle, timing, and desired proceeds all come into the picture. The combination of factors can look complex, and there can be moving parts. 
 
Over my years in this business, I’ve developed some basic ideas that seem to help sellers get clear and make the best decisions – decisions that can help get the deal done most effectively, but that also work with the rest of their lives.
 
So, what shall we do?

Clean, tidy, and fixed – always!
Deep clean. Hire a cleaning service. Don’t forget the windows, and don’t forget pet and cigarette smells. Nothing turns buyers off like dirt and odors. 
 
Declutter. All horizontal surfaces should at least be visible, if not empty. And de-content the closets, attic, and basement while you’re at it. People want to see the house, not piles of your stuff. This concept applies to the yard as well. Trim, mulch, get rid of junk, sweep the walk.
 
Fix anything that’s broken. Drippy faucet? Cracked windowpane? Non-functioning light fixture? Fix it! If you don’t, buyers will assume things they can’t see are also broken.

Judgement Calls
From here, it’s about pitting one factor against another for the best result. Hassle vs. speed. Money vs. hassle. Speed vs. money. The key is deciding how to balance these factors for your best result. Does unloading the property asap top your agenda? Or is maximum dollar more important? Can you afford to repaint or replace a fogged window? Can you tolerate the disruption?
 
An example: Houses generally show best with neutral paint (we call it relocation gray) in all rooms. People may or may not like your color choices, but if everything is neutral, buyers can mentally repaint it as they see fit. However, if your ready-to-show budget is exhausted, or you can’t stand the smell of paint, or your pack-and-move process is already chaotic, maybe repainting isn’t worth doing. 
 
Paint or no paint, in this market your house will sell. It may sell slower because of fewer showings, or for less money because buyers factor the cost of new paint into their offer. So, balance the factors and make your choice. 
 
Forget about major renovations!
Do not wait until you are ready to sell to undertake projects like a totally new kitchen, or refinishing all the hardwoods. You won’t get all your money back in the sale, and you’ll miss the pleasure of having a nice new kitchen or floors the color you want them. So, do that now and enjoy it for a while.
 
If you’ve lived with major projects un-done, accept less money and let the new owners make their own choices. They may not like your taste in counter tops or floor finishes anyway.