Selling

Become a Landlord or List?

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It is rare that a person’s first home purchase is their “forever home” for a variety of reasons — from the cost of entering the market (especially in pricier markets like DC) to ever-evolving needs (as people marry, divorce, have children, grow older, etc.). When you make that decision that it’s time to find a new home, you also may have to decide if you want to keep your current home or find a new owner…and that can sometimes be an even tougher decision.

If you have paid off or down the mortgage on your first property, you may be in a position to buy your next home without selling (either your cash on hand and DTI ratio will allow or you may be able to apply some of the equity in your current home to help purchase your new home). When that’s the case, you are going to want to ask yourself a few key questions:

  • Do I want to be a landlord? If the answer is a definite “no,” proceed ahead talking with your agent about the best way to maximize your exit from your current property (considering timing and the three P’s). Similarly, if you live in a condo or coop that won’t allow you to rent out your unit (perhaps there is a blanket restriction or a limit on the percentage of units that can be rented), get ready to sell. However, if the answer is “maybe” or “yes,” proceed to the next question.

  • How will being a landlord impact my bottom line? If you have an outstanding mortgage, use that as the base for figuring out your break-even costs. Then take into account additional recurring costs, like condo and HOA fees, ongoing maintenance and paying a property manager (if applicable). Next, compare this to the going market rate for similar rental homes (have your agent gather comps for you and make a recommendation). If the carrying costs exceed or are close to your carrying costs, are you prepared to subsidize the difference to maintain ownership of the home? Also, don’t forget to keep in mind that your home will most likely not be rented 100% of the year and you will have costs to clean and prepare the home for the next tenant(s). Be conservative and calculate a 70-80% utilization if finances may be tight and re-run your numbers.

  • How will this impact my lifestyle? If you can’t afford to hire a property manager (or prefer not to), are you prepared to play that role, potentially getting late night calls when something goes wrong? If so, will you be local and be able to be hands on to ensure repairs are completed and handled in a timely manner? What if you run into larger issues with your tenant? For many people, this isn’t a bother at all. Thinking about how finances impact your lifestyle, if you will be running in the red to maintain ownership, don’t forget to consider how this will impact your purchasing power for your new home and your budget for daily living.

  • What are the potential long-term financial implications? Real estate is an investment and often the largest source of wealth for people. If you are more risk-adverse, real property can feel like a safe way of saving money (in fact, it is forced savings). However, if you prefer to play the stock market or identify other opportunities to invest, you may be able to put proceeds from a sale to a higher and better use. This is very personal consideration and there are no guarantees on returns in any investment, so engage your financial advisor to model out potential scenarios and choose what fits your risk profile and investment strategy. If you’ve dreamed of becoming a real estate mogul, this could just be the first step!

These are just a few of considerations I discuss with my clients during our one-on-one consultations. Being a real estate agent is about more than selling houses; it’s about helping people make their best housing and life decisions. There’s no singular best conclusion, but by enlisting the help of subject-matter experts — from your CPA and financial planner to a local Realtor — you can best discern the right path to your happiness at home.

And a shout out to Pearl and all the landlords out there…may you never have a tenant like this:

Amber Harris is the owner of At Home DC and a licensed real estate agent with Keller Williams Capital Properties working with clients in DC, Maryland and Virginia. 

The Amazon Effect: Real Estate Reality or Hype?

Amazon. It has impacted our daily lives — from how we shop to what we watch — for years…but now it may have a greater impact for residents of two east coast communities: Arlington, Virginia and Long Island City, New York.

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The selection process for Amazon’s HQ2 has been in the works for a while, so speculation about how it may impact the communities who were bidding for its business has been going on just as long. With the official announcement this morning that Amazon has selected two sites (and also will be bringing jobs to Nashville), the volume has been cranked up to 11.

Aerial View of Crystal City Circa 1980

Aerial View of Crystal City Circa 1980

From a residential real estate perspective, it is something that homeowners, potential buyers and sellers, investors and renters all should pay attention to (as if you could avoid it). What it is not is something that in and of itself is the reason to make an investment or decision to buy/sell. We will learn more details in the coming hours, weeks and months about the composition of jobs, timeline for hiring, etc. but here are some initial thoughts::

  • Not All Hires Will Be Moving Here: Part of what Amazon was looking for was communities with the right type of talent for their needs, so this doesn’t mean 25,000 new residents for the Washington, DC region necessarily. You will likely see talent pulled from other organizations (for example, Discovery Inc., which has made recent changes to how many employees it has in the area). The net impact remains to be seen, but the DC area is dynamic so, while significant, it’s not as big a percentage change as it could be for a smaller market.

  • Greater Buying Power: With attractive salaries, Amazon will likely bring on new talent who will see a salary bump, which means they may be more likely to make a real estate purchase — whether a first home, a larger home and/or an investment property. Higher salaries and attractive benefits also likely will put pressure on competing employers to match them to retain or recruit talent.

  • More Regional Moves: Current homeowners and renters who are hired by Amazon very well may decide to move to improve their commutes (as is common in an area known for commuter headaches). Expect to see greater interest in properties closest to Metro stations, especially on the Yellow and Blue lines. The region’s traffic woes are not going away anytime soon, so this will contribute to the trend of people seeking walkable communities with easy access to public transportation.

  • Rise in Renters: It is no secret that there has been a shortage of housing inventory for sale in the DC area for quite some time; meanwhile, the rental market has been less competitive. For those relocating to DC, they may choose to rent first and will be looking for nearby, updated options or those that provide a swift commute.

  • Catalyst for Change: The arrival of Amazon isn’t reason alone to buy, sell or invest but it is an important factor to consider — along with increasing interest rates, low inventory, etc. — when deciding what you best next move is.

So, what does this mean for YOU? The short answer is, it depends. If you have been dipping your toe in as a buyer, now may be the time to make that move before competition is likely to increase for the most desirable properties (as it normally does in spring but likely to a greater extent). If you are a homeowner looking to move up, you might want consider finding that new home sooner rather than later and evaluating whether listing or renting out your current home (for both the near- and long-term) is the best financial decision for you. And, if you are an investor or have been thinking about investing, there may be some good opportunities that come of this…but you’ll want to act swiftly (as many have already made their bets/investments).

There is no one answer for everyone and, no matter your feelings about the arrival of Amazon and its potential positive and negative impacts on housing affordability, traffic and more, it is a prime example of the complex dynamics you need to consider when making a real estate decision.

Is there a lot of hype? Absolutely.

Are all the accounts of potential impact exaggerated? No.

But, does hype have an impact on supply, demand and how people will act? Yes. Even if it’s more than it should have, it can work for and against you if you don’t think clearly.

Feel free to share your thoughts below and reach out if you’d like to talk about the potential impact on your 2019 (and remainder of 2018) real estate plans!

Amber Harris is the owner of At Home DC and a licensed real estate agent with Keller Williams Capital Properties working with clients in DC, Maryland and Virginia. 

Renovating with a Purpose: Setting Strategy Before Style

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When your space doesn't suit your needs as well as it used to, you may choose to make updates or move on to a home that's a better fit (which may also require updates, whether you are renting or selling). So, how do you decide what to spend your hard-earned money on?

With the proliferation of befores and afters on TV, Pinterest, Instagram and beyond, it's tempting to tear down walls and embrace the latest trend but, before making any changes, you should do so with intention. If you are choosing to sell, a top-notch real estate agent will advise you on what updates you should take on to maximize your potential profit and minimize time on market. If you're not there yet or haven't gotten advice, here are a few questions you should ask before you start shopping for contractors and finishes:

  1. Do I anticipate moving in five years or less? If you are planning to sell or rent your home immediately or in the next few years, you'll want to put the tightest filter on the renovations that you make. As you most likely have heard, kitchens and bathrooms often sell houses; however, that doesn't mean you need to re-do them. Sometimes simple updates like new appliances or countertops or painting vanities and staining grout are the smartest choice. If you are planning to keep the property but find tenants, your criteria should be even more selective and, in both cases for renovations that you do take on, remember that your goal is to not match your tastes perfectly but to appeal to the widest audience (while minimizing your investment within reason).
     
  2. How will my house stack up to its competition? If you are selling or renting, the biggest misstep is often not understanding the local market (and I mean hyper-local) and your competition. While sand-in-place hardwood floors and marble countertops and a decorative backsplash may be the best of the best, is that the norm for your neighborhood? Will prospective buyers or tenants pay a premium for that? This doesn't mean you have to throw style and aesthetics out the window, but you should run the numbers and choose the best option for your budget and your target audience, most importantly.
     
  3. Am I planning to stay indefinitely? If you do plan on staying in the home for years to come, it may make sense to splurge on higher-end finishes and custom features...if they will bring you joy (yes, happiness is worth investing in). In this case, think through the function and form of your spaces. What bothers you on a daily basis -- maybe kitchen drawers that stick or a lack of a laundry room near bedrooms? What have you seen in friend's homes that has you repeatedly saying, "I need that in my next home"? Finally, planning to stay doesn't mean you should inject every current trend in your renovation. Instead, make timeless choices and find less permanent/expensive ways to make your spaces current.

Of course, these questions are just the beginning of a project that should be purposeful. For some pouring over colors swatches and tile & hardware options is fun; for others, it's a chore. If you find yourself in the latter, don't hesitate to enlist the help of a professional. And, even if you enjoy it, an expert set of eyes can help you navigate a sea of choices at a range of price points.

Amber Harris is the owner of At Home DC, an interior decorator and a licensed real estate agent with Keller Williams Capital Properties working with clients in DC, Maryland and Virginia. 

Three P's of Selling Your Home

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In a hot real estate market, like the Washington, DC area, there sometimes is the misconception that all you need to do to sell a house is put a sign in the yard and list it on the MLS. However, there is much more that goes into selling a home...and doing it for the maximum price possible in the current market. 

While there is a list of more than 100 things I do before listing a home for a client, I like to focus on the "Three Ps" when advising homeowners on what to expect in our initial consultation:

1. Preparation: Depending on the condition of your home, the market and your ability to invest in repairs and updates, there may be a short or long list of recommended items to tend to. Some will be absolutely necessary, like ensuring major systems are operational or that there is fresh, neutral paint throughout; while others may be advisable to increase your potential of top dollar, like updating features and fixtures in kitchens and bathrooms or staging your home.

Every property is different, and we'll talk through the reasoning behind each recommendation and why it may be a smart investment. Some projects may take a quick trip to Home Depot and a day of labor and others may require more planning and a professional. For this reason, you should consult with a real estate agent as soon as you know (or are fairly confident that) you will be selling. This allows Realtors like me to prepare a recommended plan and timeline, so you don't add undue stress to the homeselling process.

2. Pricing: At every initial consultation with a client, I will be prepared with a range of market insights, including relevant comparables (aka comps), so that I can make a recommendation on list price after seeing a client's home. That recommendation begins as a narrow range and where we land ultimately depends on the repairs and updates made, recent sales and available inventory at the time we list and other circumstances and requirements (e.g., you need a buyer who will allow you to rent back your home for 30-60 days). 

Pricing, ultimately, is a means to an end...maximizing your net after paying off your mortgage (if applicable) and other closing costs. The right price will get the greatest number of potential buyers in the door and, in some cases, you may get multiple offers that could escalate above list price; in other instances, you may find the market telling you that it thinks your home is priced too high -- either by a lack of offers or only offers that are effectively below list. The goal is to price right from the beginning leveraging data but to be prepared to make a swift changed if needed.

3. Promotion: Preparing your home with repairs & updates, as well as staging and pricing it correctly are the foundation, but promotion is key to ensuring that you reach the right audiences. Promotion spans dozens of activities, including:

  • Professional Photography
  • Signage & Flyers
  • Custom Websites, Tours & URLs
  • Email Marketing to Agents & Potential Buyers
  • Open Houses for Neighbors, Agents & Buyers
  • Social Media Content, Especially Graphics & Video
  • Buyer Incentives, Like Home Warranties

There is no one-size-fits-all when it comes to promotion, so having an agent versed in PR, marketing and social media strategy is a huge asset. Strategic promotion will try to maximize the reach, but be targeted toward those who have the greatest potential of bringing or being a buyer.

As you can see in this brief exploration, there are seemingly limitless considerations that can have clear consequences on how much your home sells for (and how quickly). Ultimately, you're behind the wheel...but let a trusted agent be your navigator and partner on the road to the closing table. 

 

Amber Harris is the owner of At Home DC and a licensed real estate agent with Keller Williams Capital Properties working with clients in DC, Maryland and Virginia. 

Fall Is the Perfect Time to Start Getting Ready for the Spring Market

As the leaves are just starting to turn, spring may seem ages away...but not when you are considering selling and/or buying a home.

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Whether you are a first-time buyer or a veteran property owner, now is the time to start making your to-do list so you can be prepared when April and May arrive and so you have a head start on the competition.

Below are a some key tasks and tips for both buyers and sellers to get you going, but please reach out if you'd like to discuss your needs in more depth. I am already holding appointments with spring clients, and I'd love to meet with you!

Selling Your Home

  1. Forget spring cleaning, fall is the time! We've all been there when moving day is around the corner and your plans to organize and purge are thrown out the window in favor of dumping a drawer at a time into a box labeled "stuff." Take advantage of the cooler days to sort through everything from books and clothes to those dusty bins under beds and in closets. If you have't used it in the past year, if you have multiples or if it doesn't fit, it's likely time to find it a new home. By paring down your belongings (including furniture), you'll be a step ahead when staging your home (where less is always more) and when it's time to ultimately pack and move.
     
  2. Make those fixes you've been putting off. When you live in a home, you tend to overlook little imperfections -- from a cracked tile or two to a window that sticks. However, it's the little things that often catch the eye of potential buyers and leads them to assume they could be an indicator of bigger problems. Walk through your home with a critical eye and identify the fixes, big and small, that need attention and then tackle one a week.
     
  3. Interview and select your REALTOR®. Most agents, including me, are already looking toward spring and filling their books with clients. Partnering with an agent now allows you to develop a rapport and prepare a detailed marketing plan to maximize the potential return on your sale. 
     
  4. Identify smart upgrades that can help your house stand out with buyers. If you've done #3, this is something your agent will happily do with you, walking your home and identifying updates that will likely yield a faster sale and higher sales price. Upgrades may be painting woodwork white, upgrading a kitchen counter or even replacing light switches that are yellowed and showing their age. Together you can prioritize based on level of effort/expense and potential return.
     
  5. Follow the market! While spring undoubtedly starts the busiest time of year in real estate, there are lots of dynamics at play that can affect a market, such as rising interest rates and changes to consumer confidence. Your real estate agent will be your guide, but you should be engaged as well...especially if you are planning to buy!

Buying Your Home

  1. Check your credit. If you don't do so regularly and have not done so recently, get your free credit report from all three bureaus and make sure all the information is accurate (if not, you have time to try to remove incorrect information). You also can look for ways you can improve your credit score, such as lowering or eliminating credit card balances. 
     
  2. Interview and select your REALTOR®. While there is usually less lead time in getting ready if you are just buying, having an agent take you through the current market dynamics and home buying process (especially if you are a first-time buyer or someone who hasn't bought in many years) is essential.
     
  3. Understand your buying power and define your budget. You may already have a lender but, if you don't, your real estate agent can recommend trusted lenders...and you always should shop around. While you may have used an online calculator or app to approximate what you would be approved for, an experienced lender can give you the best idea of your buying power and what to expect in the coming months. This means you'll go into the spring market with clear expectations of what's attainable and ready for pre-approval.
     
  4. Start to research and explore neighborhoods. While you might have a good idea of where you want to live, now is the time to expand your consideration set (for example, if your budget means your ideal location may not be in reach). Read hyperlocal blogs, like Petworth News or Brookland Bridge, grab drinks or dinner at new-to-you restaurants and talk to friends about their communities. In the end, your new home may be where you least expected!
     
  5. Mind your finances. Even if your credit is stellar and you have a healthy amount in the bank, pay close attention to your spending habits to avoid penny pinching and stress closer to when you buy (and after). Most everyone is aware that there are closing costs associated with purchasing a home, but also remember you may need to hire movers, buy new furniture and more.

To set up a time for your free listing or buyer consultation, contact me today

Amber Harris is the owner of At Home DC and a licensed real estate agent with Keller Williams Capital Properties working with clients in DC, Maryland and Virginia.