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Make the most of your home investment

Ask Our Broker LOOKING

iStock Photo
Clean counters, neutral colors
and the elegant furnishings
may catch your eye, but don’t
I live in an up-and-coming let them distract you from the
polo/equestrian community. reality of living in a home

Is it wise to invest in the land? BY BARBARA BALLINGER

CTW Features
Q: I live near an area that has
IN RECENT YEARS, staging has
been dubbed the new Polo Capital
become an increasingly popular
of the World. It has some expensive practice to help homeowners
horse farms plus equestrian com- sell their houses – often faster
munities, polo farms, etc. Prices and for higher prices than they
have been going up like crazy would have without cleaning,
around there. de-cluttering and rearranging.
The strategy has attracted
I’m very interested in getting into this market,
enormous attention in the
if not to live, just to invest in some property. I media, with a number of TV
have a low budget (under $100,000) and the shows informing viewers how
prices run approximately $10,000 to $15,000 an to mimic professional stagers’
acre. Is this a good place to buy investment efforts of taking too-busy or
property? Should I buy a lot in a overly personalized rooms, as
well as empty ones, and making
community/subdivision (usually two to 10 acres)
them into universally appeal-
and just hold on to it (and pay homeowner’s ing, neutralized spaces that
dues) or buy undeveloped property and just more buyers can imagine them-
wait? selves living in.
But not all practitioners and
A: There is insufficient information to discuss a par- brokers are thrilled.A report by
the National Association of
ticular community or property, but let’s look at the
Exclusive Buyer Agents said that
general concept of buying land. some common staging prac-
You have a limited number of dollars. If you buy land
you will lose the interest you now earn on your cash, Extreme Expectations: Home Edition tices can influence a buyer in
purchasing the wrong home or
and if you finance you will have monthly mortgage one with defects.
costs. In addition, with raw land you will face property What to Expect When You’re Expecting a New Home “The whole intent of staging
is to get the buyer emotionally
tax and insurance expenses.
involved with the home,” says
At the very least, look at your local rental market. Jon Boyd, the 2007 president of
Would it make sense to consider rental properties? BY CHARLES SCUTT largest investments you’ll make in your lifetime, says NAEBA.“Our member agents
What about buying a two- to four-unit property, living CTW Features Ray.“For this reason, it’s critical that you research a want homebuyers to see things
in one unit and renting out the rest? With rental prop- range of builders, conduct interviews, obtain refer- logically.There’s nothing philo-

erty you get income and depreciation and if you live in f you’ve made the decision to have a new home ences and make sure you feel comfortable spending sophically wrong with staging,
built from the ground up, be prepared to feel a bit the next several months working with them.” but buyers and others need to
one unit you can get owner-occupant financing. Speak
like an expectant parent.You’ll want to monitor Indeed, depending on the customization, size and be able to see past the staging.”
with local lenders and brokers for specifics. progress by checking in for regular visits with the level of detail required, the construction process When NAEBA surveyed its
professionals.The delivery date can come earlier or itself can span anywhere from approximately four brokers and practitioners last
Q: Is the Supreme Court going to revise or later than anticipated.And you’re bound to feel a months for a tract home up to 18 months or longer August, 82 percent of respon-
reverse its Kelo (eminent domain) decision? In range of emotions during the waiting period – from for a one-of-a-kind custom residence. dents stated that buyers were
my state, property seizures by government are a giddy excitement to nail-biting uncertainty. “It actually takes a shorter amount of time to likely to be distracted from
But, as with a pregnancy, so long as you head into build today, as many materials come pre-assembled important issues when viewing
problem because owners are not being paid fair-
the new-home building process well informed and and ready to install, whereas years ago materials a staged home.Among some
market value. with realistic expectations, you can count on a more were assembled and even made on site,” says problems, the survey found,
satisfying and less stressful experience, say the Fernanda Forman, managing director at Bond New were sellers using small furni-
A: The “taking” clause of the Fifth Amendment per- experts. York in New York City. ture to make a room appear
mits government to acquire private property for “pub- For starters, it’s crucial to select the right builder Nevertheless, it’s important to brace yourself for larger, and covering up real
lic use” but only with “just compensation” for the prop- for the job. Many buyers opt to have a semi-custom unexpected delays and costs, says Beth Lindahl, problems by using rugs atop
(tweaked from a set floor plan) or completely cus- associate principal and project manager at Orren damaged floor or curtains to
erty owner. For instance, when a new road is being
tom home built on an infill or teardown site of their Pickell Designers & Builders, Lincolnshire, Ill. conceal rotted window sills. In
built, government must have some way to acquire choosing, or they choose to erect a new home in a “Unforeseen factors like soil or water issues, new short, buyers sometimes
property along the route.As to the road, it is plainly for subdivision or development where the builder is framing conditions and weather are typically the focused on pretty furnishings
public use. featured.Wherever your chosen location, be sure to most problematic,” Lindahl says.“If it rains for many they thought they were buying
The 2005 Kelo decision involved property owners choose a reputable builder known for quality crafts- weeks, for example, this will slow down framing.” rather than the home itself.
and the city of New London, Conn.The city govern- manship that meets your budget and shares your Change orders, inspections, labor and lead time E.Adrienne Van Dooren,
vision for the finished product, says Michael Ray, for special materials also can extend the construc- author of “The House That Faux
principal of The Housing Group,Atlanta.
“Building a new-construction home is one of the

STAGING old windowpanes sealed with proper perspective: • Be sure your salesperson or

Keep your eyes peeled

duck tape and the missing wash-
er-dryer hookup.They might have
• Focus on the house’s struc-
ture. Remember, you’re buying the
broker pays close attention.“I’ve
developed my X-ray vision,” says Ask Our Broker
bought the house with a different house, not its furniture, says Max Dobens, associate broker CONTINUED FROM PAGE 1
agent.” Christopher P. Ramey of The with Prudential Douglas Elliman
CONTINUED FROM PAGE 1 And, of course, a seller’s disclo- Florida Luxury Marketing Council in New York.“I look through the
sure statement should detail any in Coral Gables, Fla. Once the fluff and see all that’s really there ment condemned private property and then re-sold
Built” (East Cambridge Press, and all problems, even if they’re house is sold, the furniture and and point out things. I believe in a the property to private developers, an arrangement
2007), found that she was taken not visibly apparent, says Barbara lighting usually go with it.You get long-range relationship and hop- that the Supreme Court accepted on the grounds
in by staging.The prior owners of Wulfing, a practitioner with Janet the floors, walls, ceiling, says ing some day to be able to sell the that there was a justifiable “public purpose.”What
her home had covered an uneven McAfee Inc. in St. Louis. NAEBA’s Boyd. place, which will be harder if was that public purpose? Increasing the local tax
dirt/mortar floor with heavy wool Nevertheless, some buyers get • Be a bit paranoid regarding a there are problems.”A good
carpet and concealed crumbling fooled, distracted or simply staged listing, says Ramey.Take the buyer’s agent must be constantly
plaster with wallpaper, and she haven’t been through the buying attitude that any rug, chair, art- on the lookout for the disguise, Writing in dissent, Justice Sandra Day O’Connor
never questioned what was process enough to know all do’s work may hide something.“I’ve pointing out anything and every- said that with the Kelo decision “the Court abandons
underneath. Once the carpet was and don’ts. First-time buyers and seen people place rugs strategical- thing that the seller may be hid- this long-held, basic limitation on government power.
removed, mold came into view. single homebuyers are particular- ly to hide broken ceramic floor ing, adds Barb St.Amant of Harry Under the banner of economic development, all pri-
Correcting the problems cost her ly vulnerable, the report found. tiles. It may not even be done Norman, Realtors,Atlanta. vate property is now vulnerable to being taken and
$8,000 and delayed her move-in Also, many don’t grasp that stag- deliberately, but the homeowner • Be sure your salesperson
transferred to another private owner.”
date. Her advice:“Don’t get car- ing, no matter how fabulous, can’t doesn’t want to look at broken keeps their emotions in check.
ried away by the staging.” add square footage, improve loca- tiles,” he says. Saying,“It’s beautiful” can be a dis- The Kelo decision created immediate controversy.
A conscientious practitioner – tion, enhance the quality of fix- • Try not to get emotionally service since it helps hook them Many states, as well as the federal government, enact-
or another pair of eyes – can help tures or construction, change a wrapped up in décor, even if you emotionally, Roesch says. ed legislation that effectively limits or reverses the
keep potential buyers focused on floor plan, alter views or a neigh- love it.“Staging can trigger an • Read between a disclosure’s Kelo decision.Why? Because under Kelo a politically
the house, even when the emo- borhood, or increase the emotional response and cause the lines.“Sellers are required to connected developer who could not purchase a
tional connection is powerful. appraised value, says Boyd. uneducated buyer to become dis- reveal defects in a written disclo-
home on the open market effectively could have it
Gloria Roesch of New Idea Realty “The good news for many buy- tracted,” says Craig Ackerman, sure – it’s the law,” says Moore.
in Council Bluffs, Iowa, had a ers is that the downturn in sales owner of Ackerman Realty Group • Hire a reputable inspector.A bought by a pliant local government and then re-sold
client who fell in love with a has led more sellers to focus on in San Francisco. Haley Hwang, a home inspector should peel back to him.
home because of the staging. the condition of their homes and sales associate with Coldwell carpeting and look at windows to The Supreme Court works in a deliberate manner,
“They had taken an empty house make appropriate upgrades and Banker Residential Brokerage in be sure what’s adequately and it may be years before the Kelo decision is recon-
and brought in everything – repairs before selling,” says Dan Glenview, Ill., counsels buyers to installed or if there’s a leak in the sidered. Until then, the debate is a political matter
leather sofas, a nice fluffy throw Steward, president of Pillar to Post look at the reality – the home’s shower pan, says Moore.
and you are best served speaking with elected offi-
on the sofa, beautiful dining room Home Inspection,Tampa, Fla. location, lot size, floor plan and • Always exercise your right
table and great paint colors,” she “We’ve seen a significant increase whether the overall condition is for a final walkthrough.With pho- cials at all levels of government to voice your views.
says.“I had to tell them,‘Let’s look in sellers conducting pre-list something they want to live with. tos and carpeting removed, you
at the house.’They said,‘We love it home inspections in preparation • If you love the looks, dupli- can see how good – or bad – the Q: An investment property bought a few
this way,’ but I reminded them to sell,” he says. cate them.“You can take a photo house is,Ackerman says. years ago has become a terrible problem. I
they weren’t buying the furniture Here are some additional tips and reproduce the look in the can’t rent it, the price drops every month and
and instructed them to notice the to help buyers place staging in house you buy,” Boyd says. © CTW Features
the mortgage cost is set to escalate. I’m over 60,
own my house free and clear, and I don’t want
to fool with the investment property any
longer. What can I do?
NEW HOMES says Laura Meyer, a real estate Janice Leis, associate broker of upheaval of having to rent a place
attorney in Los Angeles. Bocadelphia Real Estate, Boca or live with family or friends A: If you’re age 62 or older you may be able to get
“With a project as big as the Raton, Fla., recommends arrang- before the new home is ready. In
CONTINUED FROM PAGE 1 a reverse mortgage on your current residence. If suffi-
building of a new home, it is rea- ing a construction site visit with this market, though, one has to
sonable to expect communication the builder and having a represen- keep in mind that, on average, cient, the money from the reverse loan can then be
tion period from a couple of about how the job is progressing tative from the company join you homes are taking much longer to used to pay off the investment mortgage. Since a
weeks to a few months, Forman on a weekly basis,” she says.“If during the visit.“Or you can hire sell than when the market was at reverse mortgage does not require monthly cash pay-
says. you’re dealing with a design/build an engineer to check on each its peak.The conservative ments, the investment unit could be rented at a
Additionally,“with the credit firm, you should probably talk to step of the new construction,” she approach from a financial stand- below-market rate until (hopefully) the market
crunch happening, many other- the lead contractor or construc- says. point is to sell first.”
wise financially sound developers tion supervisor.There also are When visiting the site or talk- Lastly,“buyers should closely
and builders are experiencing times when there are multiple ing with the builder, however,“do consider the living conditions Or don’t rent the investment property. Instead, get
shortness of capital funds, result- people involved – an architect, not be annoying,” Leis says.“The they will encounter,” says Daniel a broker to sell it and then use the proceeds from the
ing in either delays or unfulfilled contractor and perhaps a design- more you pester the builder or his Greenspun of Wagner Real Estate, sale to pay off some or all of the reverse financing.
obligations,” says Forman.“It’s er – and you may have developed crew, the less likely you are to get Inc., Philadelphia.“While many Since a sale might take some time, it will be easier to
important for buyers to be very more of a rapport with one per- a timely response.Write down owners find it advantageous to hold the property if you don’t have to face the
vigilant and stay on top of the son or another. But if there are your questions or e-mail them so get in early on a new housing
monthly cost of a mortgage.
process, particularly if things concerns that aren’t easily you have documentation of the development when the price is
seem to not be going as they had resolved, it’s imperative to com- time of the query as well as the affordable, what they are not con- In other words, consider the use of a reverse mort-
previously or if major deadlines or municate with the party with response.” sidering is living in a neighbor- gage to buy time, reduce cash flow and make the
timelines are missed.” whom you have the construction If you also have an existing hood that could be under con- best of a difficult situation.
Keeping an eye fixed on contract.” home to sell, it’s important to struction for the next few years. For details, speak with reverse-mortgage lenders
expenses is important, too, as cost If there are any serious dis- carefully consider the timing of For some, the money gained in and also get an attorney who specializes in elder law
overruns are not uncommon with agreements, such issues your con- that transaction, says Meyer. increased property value far out-
to help with the decision making before you sign any
new construction, says Lindahl. tractor will not resolve,“then you “Some buyers will need to pull weighs any inconvenience of
Some clients may spend as much may need to consult with an out the equity from their old building-material debris, early- paperwork.
as 20 percent more than their attorney,” Meyer says. home to finance the construction morning construction noise and © CTW Features
original budget, she says, with the If you want to visit the job site, costs for a new home and may eyesores like waste containers
average being around 5 percent. keep in mind that different com- want to make sure the old home and portable toilets that may sur- Need real estate advice? Peter G. Miller, author of “The
During construction, commu- panies have different policies is sold before they get into a con- round their new home.” Common-Sense Mortgage,” would love to hear from you.
nicating regularly with the builder about this, depending on insur- tract for a new one,” she says. Send your questions to peter@ctwfeatures.com. Due to the
and keeping tabs on the progress ance and other restrictions, says “Other buyers can handle the © CTW Features volume received, not all letters may be answered.
of your future home is a must, Lindahl. costs and don’t want the