Monday, August 20, 2012

How to Stage Your Home for a Successful Sale


With such a glut of listings in the housing market, as a home seller, you need to do anything you can to set your home apart so it will be noticed. One big thing you can do is to stage your home well.  Here are some tips from HGTV.com on staging your home:

1.     Say goodbye to clutter: While you may be proud of your shot glass collection, to a potential homebuyer, it just makes your home look cluttered. Put away most of your collections, so your home doesn’t appear busy and cluttered. Furniture can also contribute to a cluttered look. This doesn't mean you need to strip your house to unusable bare bones, but even removing that one extra chair from your living room can make a difference.

2.     Pull the furniture away from the walls a bit. It makes the room look bigger. Use good judgment when doing this though—if pulling furniture away from the wall a bit means that you can’t comfortably walk through a room, don’t do it.

3.     Rearrange furniture: just because a piece of furniture was purchased for a specific room doesn't mean that it has to stay there. Experiment.

4.     Make spaces valuable: if there ‘s a room or area in your house that just gathers junk, turn it into a reading nook or small office space. Turn an unfinished basement into an exercise area with the addition of some padding on the floor. Use your imagination to figure out the wasted spaces in your home, and how you can utilize them to increase your homes’ value.

5.     Lighting: good lighting is hugely important in staging your home. If rooms are dim, add lamps or other accent lighting, and increase wattage in lamps and fixtures. As an added bonus, use compact fluorescent bulbs, which last much longer than traditional light bulbs, and are no longer much more expensive.

6.     Décor: a general rule to keep in mind is that groupings of décor look best in odd numbers.
7.     Flowers: If you have flowers or other plants in your yard that cut well, be sure to regularly stock your house with one or more arrangements. Something living adds a lot to a room.

8.     Bathroom: polish tile in the bathroom. Set out coordinating towels and candles to give a spa-like feel.

If you follow these tips, there’s no guarantee your home will sell but it will have a better chance. And if nothing else, your home will be more pleasant while you live there! 

Wednesday, August 1, 2012

Sinking Funds For Peace of Mind...and Wallet!


If you’re a homeowner, (or want to be!) you probably know that along with home ownership come some big expenses, both foreseen and unforeseen.  You can plan for both types of expenses using one or more sinking funds. 

For instance, you know that in five years your roof will need to be replaced. If you plan to have this professionally done, that can easily cost $10,000. For most people, that’s a large amount of money. If you don’t plan ahead, you’ll likely need to take a loan or tap into savings or retirement funds. But let’s look at the same scenario with a sinking fund. Ok, so five years out, you start saving for a new roof. You get paid bi-weekly. So how much would you have to set aside from each paycheck to save $10,000 in 5 years (interest aside)? $10,000/5=$2,000 per year. $2,000/26=$76.92 per paycheck, or $38.46 per week. If you eat fast food or drink expensive coffee regularly, you could easily pay for a new roof just by cutting back on those things.

Another instance where a sinking fund can be useful is to make up for varying utility costs. You can call your utility company and find out the average monthly utility cost for your home. Or better yet, find out the exact amount billed each month over the past twelve months. Divide that number by twelve and set aside that amount each month. If you can, deposit some extra money at the beginning of the year. You should accumulate enough extra during lower than average months to cover your expenses during higher than average months.  If you have a budget (which is an absolute necessity, in my opinion!) this will help to keep things smooth.

Some other examples where a sinking fund would be useful are homeowners insurance, car insurance, home remodel, and purchase of a new car. Really though, sinking funds can be used for just about anything. Whether they’re for  larger purchases, or small routine expenses, sinking funds can help to temper financial extremes, and give you some financial peace of mind.

Monday, July 30, 2012

Five Big Mistakes Homebuyers Make


Its easy to get caught up in the excitement of buying a home…imagining yourself and your family in your dream house, making it your own, all the little projects you’d like to do…but don’t get so caught up that you forget these five important things:

 1.     Home inspection: Yes, it’s a big deal, even if you’re looking to buy a brand new house. It will cost you a few hundred dollars, but it could cost you a whole lot more than that if you don’t get one, and then find out your home has major problems.

 2.     Budget: Unless you’re among the tiny fraction of people to whom budget is not an issue, don’t forget your budget when looking at homes. Don’t be pushed into buying something you can’t afford, or that you aren’t comfortable with.

 3.     Agreement with your spouse/partner: Don't go out and buy a house without being on the same page as your spouse or partner. Relationships are enough work without adding a long-term element of strife like a house.

 4.     Additional expenses: When calculating your budget, did you remember to add costs such as property taxes, homeowners insurance, mortgage insurance (unless you’re putting 20% down), and possibly increased utility cost if you’re moving into a larger home or to a climate that has significantly higher heating and cooling needs? What about a sinking fund for the new roof you’ll need in five years? You may be able to afford the principle payment on a house, but that’s far from the only cost you’ll need to pay.  

 5.     Location: Maybe you’ve found your dream home, but you have two small children and it’s on a very busy street. Or maybe its in an area hose climate would exacerbate a severe health issue you have. Location is important. Without taking it into consideration, your dream home could turn into more of a nightmare.

      While this isn’t an exhaustive list, keeping these things in mind when you’re in the process of buying a home will help you to stay on track, and keep the home buying process much more pleasant. 

Thursday, April 12, 2012

Short Sales: They've Always Been Good, But Now Are They Getting Even Better?


For those looking to get a 20-30% discount on the purchase of a home, the short-sale market holds potential for some very good deals. Likewise, on a distressed property owner’s end, a short sale is a much better option than a foreclosure. Unfortunately, the price for some of those deals is mountains of paperwork, unresponsive banks, and an overall lengthy process. This may seem counterintuitive—shouldn’t banks be eager to sell these houses, rather than let them go into foreclosure, where they 1) often sit on the market for long periods, and 2) eventually sell for an even greater discount—i.e., banks get even less of the money they are owed? But I digress…

There may be some good news though. A new bill was introduced which would oblige mortgage companies to respond more quickly to inquiries about potential short sales.  The bill, aptly entitled, The Prompt Notification of Short Sale Act, would require mortgage companies to give a written response to home owners within 75 days about whether or not their home could potentially be sold as a short sale. This is also good news for potential buyers.

Currently, a short sale generally takes between four and nine months from start to finish. Because of the length of this process, it’s not uncommon for a home to be foreclosed on, even if a short sale is in progress. A shorter response time would potentially decrease the number of foreclosures.

Will the bill pass? Stay tuned…

Tuesday, April 3, 2012

Real Estate Season


Birds are singing, flowers are blooming, the sun has decided to make a more regular appearance…so what does that mean?

It’s real estate season!

Probably not what you were expecting me to say, but since we’re on the subject, let’s talk about it…


Relal esltate sealson [ree-uhl, reel ih-steyt see-zuhn]: adjective

1. A term used to refer to the time of year, primarily March through early August, when the greatest number of home purchases and sales occur. 




Now what we’ve established what real estate season is, let’s talk about what that means for you as a potential homebuyer or seller.

Buyers: First of all, as we enter real estate season, your choice of homes is likely to dramatically increase. The weather is getting nice, the school year is coming to a close, and you may have a tax return coming that could be a potentially used as a down payment.

According to Bankrate.com, the greatest number of home moves occur during the summer. As a potential homebuyer, this can be either an advantage or a disadvantage.  Due to the fact that there are so many more homes for sale during “real estate season,” your choices will drastically increase. This gives you a better chance of really finding a home you like. Unfortunately, there are also a lot of other potential homebuyers looking for homes as well, so if you find something you like, you may need to act quickly so you don’t miss out.

Sellers: For the same reasons mentioned above, real estate season is a great time to put your home on the market. Similarly, there are both potential advantages and disadvantages to selling a home during this time of year.  Due to an increased number of potential buyers, you may have more offers on your home, so you may be able to afford to be a little more picky about which offer you accept. But you also take the risk of being too picky, and not selling your home.

Do everything you can to put your home in “selling condition” (more on that later!) so that it stands out. Do a few things to increase your home’s curb appeal. Highlight the things about your home that would make it appealing to potential buyers. Does it have a great view? Make sure that’s not obstructed. Gourmet kitchen? Clean it up and really make it sparkle.  (“Freshly baked”—but not overpowering, smells don’t hurt either!) Swimming pool or Jacuzzi? Make sure they’re clean and at their best!


Regardless of whether you’re a potential homebuyer, or a potential home seller, know that this time of year holds some great opportunities. Take advantage of them!

Monday, February 27, 2012

The Big Mac Index

My goal for this blog, as the tagline says is to make “economic principles understandable to regular people.” And what’s more understandable than a Big Mac? Unless you’re a vegetarian…in which case, um…sorry.

In any case, in Economists’ long quest to make economic principles relevant, they’ve come up with something called the Big Mac Index, to measure what’s known as purchasing power parity. I dare you to say that ten times fast.

Basically, that’s a complicated sounding term that just means that you should be able to buy an identical good in two countries for the same price when the price is expressed in the same currency.

In Big Mac terms, if you were to travel to another country, you should be able to purchase a Big Mac for roughly the equivalent of whatever a Big Mac costs in the US.

So why does this even matter?

Big Mac Index
Well, the theory behind the index is that if you can’t purchase a Big Mac in another country for roughly the equivalent of the price that you can purchase it for in the US, the foreign currency is either overvalued or undervalued.

The implications of an overvalued or undervalued currency are a post for another time, but here’s a quick explanation. When a currency is overvalued, you’re paying too much for a Big Mac (or any good you buy!). If a currency is undervalued, you’re paying too little for a Big Mac.

The advantage to overvaluing a currency is that people who have that overvalued currency can buy goods from other countries very cheaply.

So, for example, we see that according to the Big Mac Index, Switzerland’s currency, the Franc, is overvalued. A Big Mac costs the equivalent of $6.81. If someone exchanged their Swiss Franc’s for United States Dollars, they could buy the equivalent of about 1.5 Big Macs. If they wanted to get an even better deal, they would exchange their Franc’s for an undervalued currency like India’s Rupee, and purchase just over 4 Big Macs. Sounds like a pretty good deal, eh? We’ll talk about the downsides of an overvalued currency later.

On the other hand, in a country with an undervalued currency, goods can be sold to other countries very cheaply. According to the Big Mac Index, India and China have undervalued currencies...those also happen to be two countries that the USA buys a lot of cheap goods from.

Anyway, back to the original point. The Big Mac Index may sound a little silly, but it’s a useful tool for gauging your purchasing power in other countries. 

Thursday, January 5, 2012

Equality of Opportunity vs. Equality of Outcome

You may or may not have heard arguments over the concepts of equality of opportunity versus equality of outcome. Many of these arguments stem over the role of government—what is the government’s job—to provide equality of opportunity, or equality of outcome? (And no, the government cannot provide both—the two are mutually exclusive, but more on that later).

First, we need to understand what the terms equality of outcome and equality of opportunity mean.

Simply put, equality of outcome that the general living conditions, wealth, etc. of everyone in a society are similar. This involves redistribution of wealth from wealthier individuals to poorer individuals. So, everyone ends up basically the same.

In stark contrast, equality of opportunity means that everyone should be treated roughly the same. For example, job seekers are hired based on being the most qualified for a position, and are not discriminated against. You’ve probably heard the term “equal opportunity employer,”—well, that stems from this concept.

As you can see, the two are mutually exclusive—they cannot exist together.
The argument lies in one’s view of fairness, which can be looked at in terms of proportionality—so what does that mean?

Generally speaking, those with a more liberal political leaning view proportionality in terms of outcomes, and view disproportionate wealth accumulation as unfair.

Those who are more politically conservative view proportionality in terms of effort, where wealth acquired in a way that is proportional to effort is fair.

Many political and social ideologies have arisen because of these concepts—most notably, communism, socialism, and capitalism. We’ll discuss those another time, but for now, as you listen to presidential hopefuls, perhaps you’ll have a better understanding of some of their stances on economic and social issues.